Kathmandu-The process of reconstruction of the 'Hilton Kathmandu,' destroyed by arson during the Gen-Z movement, has begun.

The Shankar Group, which invested about eight billion in the hotel, closed it after setting it ablaze on September 9,  a year after its inauguration. They plan to restore it and reopen it within a year.

The insurance company settled a claim of about 4 billion , allowing the group to expedite reconstruction. The investor believe the funds are sufficient, as the initial assessment didn’t reveal significant structural issues.

A Japanese engineering firm, Miyamoto, will assess the hotel’s structure. The report is expected next week, and construction will start in 2026.

The insurance claim settlement will source  Rs 4 billion from two reinsurance companies and one non-life insurance company. Himalayan Reinsurance will contribute Rs 2.25 billion , Nepal Reinsurance  Rs 750 million , and Oriental Insurance Rs 1 billion . The hotel was insured solely for the loan amount of Rs 5.2 billion secured from banks.

The initial assessment showed partial damage to the earthquake-resistant external structure. Some structural components collapsed during the fire, and the upper floor suffered significant damage.

The hotel has about 70 percent  bank debt out of its total investment. It has a loan investment of Rs 502 million from nine banks: Nepal Investment Mega, Everest, Nepal SBI, Nabil, Prabhu, Machhapuchhre, Nepal Bank, Agricultural Development Bank, and Muktinath Bikash Bank. The remaining Rs 3 billion is the promoter’s equity investment.

Upon the 2016 construction announcement, the hotel’s estimated cost escalated to Rs 8 billion.

Situated in Naxal, Kathmandu, it was the tallest hotel in the city, boasting 174 rooms, a rooftop bar, a banquet hall, a spa, an all-day dining restaurant, and a heated outdoor swimming pool.

Since mid-July 2024, the hotel has been fully operational after being closed since a fire incident in September.

Hilton Kathmandu, the American international hotel chain’s inaugural establishment in Nepal, marked a significant milestone in its expansion in the Indian subcontinent.

However, the subsequent arson incident raised concerns about the security of investments in Nepal, affecting tourism professionals and investors.