KATHMANDU: During the wedding season, party venues are busy catering to the demands of guests. Although the burgeoning business seems to imply an outwardly celebratory mood, stakeholders claim transactions have dropped by as much as 50 per cent.
Current crisis The catering business was in a progressive mode around five years ago, when the number of party palaces was limited. Shree M Singh, president of Events and Venue Association of Nepal (EVAN), says, “Mushrooming party palaces,
economical crisis, imposed VAT and escalating market price of raw materials are the major reasons for decline of almost 50 per cent in
the party palace transactions.”
Previously, party palaces organised around 250 parties annually, while these days they have to struggle to get 80 assignments per year. “If a party venue is able to organise 80 parties in 365 days, we term it as a great success. EVAN has surveyed several party venues, and some
of them are in such a deplorable condition that they are about to shut down,” explains Singh.
Another hassle to the business is the lack of guidelines and criteria to establish party palaces. Manee Rajkarnikar, managing director of Viva Banquets, says, “After recession in real estate, people — without having proper knowledge about hospitality — dived into the party palace business, which divided customer attention and created unhealthy competition in the market.” According to EVAN, there are 150 party venues in the Kathmandu valley alone, with middle and lower-middle class income group accounting for the major clientele.
Stakeholders also complain of the unscientific VAT system eating into their earnings. The government’s justification for imposing uniform law to party palaces is that conducting parties in sophisticated venues comes under the tax net. However, business owners demand categorisation of the venue and its facilities. Shiva Bhakta Ranjit, owner of Celebration Events Height and Singh’s Party Venue, says, “Customers opt out of our full service because of extra charges.
So we’ve turned into mere venues for organising parties.”
But, Bishnu Prasad Nepal, deputy director general at Department of Inland Revenue, says, “Any company or organisation that has earnings of Rs one million or more per year falls under tax net, abiding by which all party palaces have to pay VAT.” Reasoning that clients who cannot afford the expenses will not host parties at sophisticated venues, Nepal says, “Yes, parties and ceremonies are indispensable part of Nepali culture, but that’s no reason to waive the VAT bill.”
Singh, on the other hand, points out that their business needs to be categorised separately from other hospitality businesses as it is seasonal, deals with only one client per day, does not serve beverages, targets middle and lower-middle class, and is an essential business. He explains, “There are party venues that can accommodate over 1,000 people at a time and those that can only hold few hundreds. Only accurate categorisation will benefit customers and business community.”
Singh also accuses the government of lacking in adequate homework and research before imposing laws. “Phase wise introduction of rules and regulations is necessary,” he says. Stating that business operators are ready to pay tax, he adds, “However, laws that turn our business insecure should be revised and amended. As we directly and indirectly employ 10,000 people, the unemployment problem will escalate if our business collapses.”
Other challenges to the business include political instability, scarcity of essential materials, lack of government surveillance and skilled manpower. Ranjit says, “Scarcity of essential materials such as gas, diesel, electricity and water is a constant headache, not to mention fluctuating prices of vegetables and other raw materials and heightening labour wages.” His major complaint is that although they faithfully pay taxes to the government, they do not receive assurances of security or supply of essential materials.
Meanwhile, such business people are also troubled by the inability to maintain their accounts perfectly under VAT. Ranjit explains, “Around 90 per cent of people who supply fresh raw materials to us are local traders not registered in PAN, and hence their bills aren’t considered valid. This creates more problems for us during auditing.”
But Nepal points out if caterers are buying goods from unregistered shop or vendors, they can make vouchers for that. “If a trader is not registered, we need to be informed so that we can initiate the registration procedure,” he says.
Even with all these hassles, there is no doubt that the business holds scope. Hectic modern life, power cuts and lack of manpower are leading the majority of people to hand over the tensions of planning, managing and arranging parties to party venues. Their clientele has also increased from hosting weddings and rituals like bratabandha and pasni to include events organised by corporate houses and business community. “If we receive adequate orders for off season events like birthday parties, anniversaries, annual general meetings and other corp-orate functions, our business can be smoother,” opines Rajkarnikar. Highlighting the practicalities of party palaces, he says, “We not only provide facilities similar to five-star hotels at half their cost, but also relieve clients of problems related to fuel, parking space, dining space, and so on.” Ranjit says, “As we work in large volume, the costs are considerably lesser than organising events individually.”
According to Singh, EVAN intends to bring all the catering bus-inesses of Kathmandu valley under one umbrella while also monitoring good business practice and raising the standard of operation by conducting workshops for cleanliness, hygiene and staff trainings.