The 1 June tragedy has not only left an indelible mark in modern Nepali history but has also severely impacted industry and business, although few are talking about it. Many business and industry leaders we met were unsure if this was an appropriate time to discuss losses and declined to speak on record. Others were more forthcoming, and though not as concerned about immediate losses, were more worried about how business would fare in the days to come.

Cancellations began flooding hotels and travel agencies almost as soon as the story of the royal palace bloodbath began to make headlines early Saturday. Airlines flew in almost empty and tourist arrivals dipped to all-time lows. Even tourists already in the country cut their visits short as curfew-bound Kathmandu was rocked with street violence.

Tourism was just recovering from serious trouble-riots and hotel worker strikes in December and March had already caused some concern among potential travellers. The Maoist insurgency had not affected trekking, but news of fighting was making an impact. The palace shootout and the resultant protests and curfews served the final blow. About the only hotels that were in business were those putting up international news crews, and now even they look deserted.

The Yak & Yeti, where most international correspondents were staying, had roughly 53 percent occupancy, while the rest lingered in the high twenties at best. If hotel occupancy in the first week of June is an indication, say industry sources, we may as well write off the $168 million tourism brings to Nepal every year. One of the largest hotels in Kathmandu, the Taragaon Regency that opened last year, had just four international guests last week.

The numbers compiled by the Hotel Association of Nepal (HAN) tell the rest. Occupancy at most of the hotels was about half compared to June last year (see box), itself a very bad year for tourism. That was the month Indian Airlines had resumed flights to Nepal, after the December 1999 hijacking. Nepali tourism officials were hoping to reverse the trend in Indian arrivals, and had launched a special marketing campaign in India with the now ironic-sounding slogan: "Nepal Festival of Life". The strategy was aimed at getting more Indian tourists to fill up hotel rooms in the June-September low season. The other tourists in Nepal in the monsoon are booked on tour groups flying to Tibet, and even that has been hit.
Nepal's tourism has been on the downslide since end-1999. It began with the hijacking of an Indian Airlines aircraft after take-off from Kathmandu, and continued shortage of airline seats until the Indian Airlines flights resumed, political instability, strikes and increased publicity on the Maoist insurgency all further disrupted arrivals.

Last year's arrivals were down 11 percent to about 435,000 from over 490,000 in 1999. Indian arrivals, which make up one-third of total annual visitors, slumped by about 32 percent, down to just over 100,000. The low arrivals mean price cuts are snowballing. A manager of a five-star hotel told us he is selling rooms at three-star rates and still there are very few takers. These cuts are on top of already low overnight five-star rates in Nepal in the summer, where an average room goes for less than $150.

Both bad luck and the inability to control the damage have brought things to this pass. Arrival figures had started to pick up in May with the Nepal Tourism Board's Festival of Life campaign in India. Festival posters still greet the few tourists arriving at the Tribhuvan International Airport everyday, but not many are the Indian tourists the campaign is directed at. On 1 June, Indian arrivals were a little over 580, by 9 June, the figure was down to 48. The NTB has suspended its marketing programmes as part of national mourning, but does not know how to handle the rest of the campaign that was to end next month.

"Tourism will definitely suffer but international tourists are good at getting information and we expect them to start coming as soon as we return to normalcy," says Tek Bahadur Dangi, director, Tourism Marketing and Promotion at NTB. The tourism board is also planning a survey on the impact the royal tragedy has had on tourism. The NTB may be hoping against hope that all the different political and non-political forces that seem to have been working overtime to ensure more instability will let life come back to normal.

But the industry is not. "It will take as long as two years to boost the confidence of international travel agencies and their clients after the damage the street protests and curfew have done to our image," Madhav Om Shrestha, executive director of Hotel Association of Nepal, told us.

Bad press can be won over by good press, or by getting accurate information out before bad news and rumours spread. But that is where government has failed badly: not only did it not provide the right information, but it was totally unable to correct the confusion created by contradictory information given out from the palace secretariat.

Early this year Nepali Times predicted that Nepal would need to attain a robust seven percent increase in tourism traffic for the coming two years to regain the business lost in 2000. But things seem to be going from bad to worse, at least partly because no one seems to care. Even so, the situation is bad, but not dire. Bookings for the first two weeks of June were cancelled, but reservations for the coming months stand, Shyam Bahadur Panday of Shangri La Hotels and Resorts told us. "So there is still time for us to take corrective action. We can prevent cancellations by re-building our image. The more negative news there is about us the more it will affect us," he adds. Government and the opposition politicos should listen to him.