The accumulated neglect, mishandling and bad planning of the past ten years is finally catching up with Nepal's tourism industry. This is when the chips are counted, and it does not look good. Flights on the money-spinning Kathmandu-Delhi sector that had to be booked months in advance flew empty in January, hotels are vacant, the squares of Bhaktapur and Basantapur are deserted. Thamel is in deep gloom. No one wants to gamble with Nepal anymore: the casinos are empty.

The reasons range from political instability to labour unrest. Here is a brief list of things that have gone wrong:

- The hijacking of IC814 in December 1999 and the sustained bad press

- Suspension of Indian Airlines flights, and Royal Nepal Airlines' inability to increase capacity during the worst crunch

- A series of crippling bandhs dampened arrivals in the autumn season just as business was picking up

- Hotels evicted guests on 11 December, adding more bad publicity

- The riots of 26-27 December wiped out whatever was left

- The lingering threat of a hotel strike after next week has left tour operators undecided, and

- Threats of more political instability in 2001 is making the travel trade nervous

"The downslide of overall tourism numbers is quite alarming," says Prasidha Panday, Managing Director of Shangrila Hotels and Resorts. "I think we're beginning to see the impact of everything that happened in the past, culminating from breakdown in security to strikes." The first month of this year was worse than even the post-hijack period. Overall, tourist arrivals in 2000 went down by 11 percent, Indians by 32 percent. Indians have traditionally made up a third of the over 400,000 tourists who visit Nepal annually, and free-spending Indian visitors pump in a sizeable chunk of Nepal's roughly $160 million annual income from tourism. Even assuming an average annual growth rate of seven percent, it will take two whole years for Nepal's tourism to make for last year's lost business.

"So many things have gone wrong in the past year, we now have to redesign marketing and focus on India," says Pradip Raj Pandey, CEO at the Nepal Tourism Board (NTB). The trouble is that Pandey's promotion body does not even have a board at the moment, and only a sit-in tourism minister after the last one resigned over a controversial deal to lease a jet from an Austrian charter operator.

And it's not just Indians, even third country arrivals have dwindled. "The normal occupancy range in December should be about 70 percent. It was about 50 last month," says Ribhu Chatterjee, general manager of Soaltee Crowne Plaza. Other hotels are reporting less than 30 percent occupancy. But the worst may still be ahead: shutdowns planned by transport workers this month, and the looming threat of another hotel strike after 11 February. The industry bought time to sort things out with a two-month reprieve, but positions have actually hardened and both hotel owners and the two unions seem to be in no mood to compromise. There is a sense of d?j? vu about this brinkmanship, by the time the two sides reach an agreement or even a postponement of the strike, there will already have been massive cancellations and it won't really matter whether the hotels remain open or not.

NTB says it is working on strategies to counter the adverse publicity that followed the December riots, especially in India where there was widespread coverage of the violence. A normal January sees as many as 9,000 Indians in hotels in Pokhara and Kathmandu. Post-hijack January 2000 saw just 4,000. Official figures were not in by Wednesday but the January 2001 numbers are expected to be much less. With no Indians in the hotels, there are fewer gamers at the casinos. "December-January last year were complete washouts because of the hijacking, this year could be worse," says Rakesh Wadhwa, executive director of Nepal Recreation Centre.

The Everest Hotel, where Indian guests make up nearly half of the business, has seen a 30 percent drop in December-January arrivals from India. Hotels have slashed prices. In fact, it has never been cheaper for Indians to visit Nepal-something NTB could use as a selling point in its promo drives. A roundtrip Bangalore-Kathmandu flight costs Rs 16,000, four-star hotel stays for three nights in Kathmandu come for Rs 5,999. "The feedback we're getting from our Indian sales offices is that people are still wary, but a few have finally begun to make inquiries," says Raju Bikram Shah, Everest's resident manager.

NTB is launching a marketing blitz in India from this week, and a group of Indian journalists are being brought over for a familiarisation junket. NTB derives its income from a two percent tax on all sales in the industry, but it is a vicious cycle: if tourism is down NTB has less money to promote tourism. Some trade officials say Nepal can learn from countries like Sri Lanka which gets half a million tourists despite a raging civil war because it has coherent promotion and an efficiently-run national airline. "Our hope is to revamp Royal Nepal Airlines and use it to cash in on NTB's promotion," says Shangrila's Panday. "We can take in a million tourists, but someone has to get them here."

But the national airline is paralysed by politically-inspired corruption. There's talk of privatising the airline but no one seems sure if politicians would actually go so far as to block off this perennial source of slush funds. "A management contract of the RNAC may be the immediate solution," says Shangrila's Panday. "Good managers with clearly defined performance goals may be able to work a turnaround."

The industry wants more solid efforts to lure Indians and overseas visitors, but all the marketing in the world is not going to make a difference as long as Nepal continues to get bad press, is plagued by strikes and is stuck with a national airline that is not allowed to take off. Says one exasperated hotel owner: "We need political stability. Without that, all promotion efforts is just a waste."