Kathmandu-Revenue of five star hotel Mechi Crown Plaza has grown significantly in recent years. The rise comes mainly from an increase in Indian tourists and visitors from nearby border markets.

According to rating agency ICRA Nepal, the revenue of Vegas City Entertainment Pvt Ltd, which operates the five star casino integrated hotel Hotel Mechi Crown Plaza in Mechinagar, Jhapa, has increased notably in recent years.

The company was established in mid July 2014. It started operations in February 2021 with 102 rooms. At the beginning of fiscal year 2024/25, it expanded by adding 103 more rooms, bringing the total to 205 rooms. The expansion led to a sharp rise in revenue.

The company’s operating revenue was Rs 187 million in fiscal year 2021/22. It increased to Rs 277 million in 2022/23. Revenue reached Rs 293 million in 2023/24 and climbed further to Rs 444 million in 2024/25. The nearly 52 percent growth in a single year is attributed to the hotel expansion and casino operations.

The hotel’s operating profit margin remained stable between 57 percent and 59 percent over the past two years. This indicates controlled costs and a stable income structure.

The casino inside the hotel has been leased to Vegas Recreation Nepal Pvt Ltd. The company operates it under a monthly rent arrangement. Rental income from the casino contributes significantly to the hotel’s overall revenue.

However, the share of casino booking revenue in total income has declined from about 52 percent in the previous year to around 31 percent now. This shows that the hotel’s revenue sources are gradually diversifying.

Mechi Crown is located about six kilometres from the Nepal India border. Built to attract tourists and casino players from West Bengal and Bihar, it has established itself as the first integrated casino resort offering five star facilities in eastern Nepal.

Even after the room expansion, the average occupancy rate has remained around 35 percent. This is seen as a positive sign in a competitive market.

Debt burden declining but still a challenge

With rising revenue, the company’s debt servicing capacity has improved. The interest coverage ratio reached 2.5 times last year, while the debt service coverage ratio rose to 1.8 times. In the previous year, these ratios were 1.6 and 1.3 times respectively.

However, the debt to equity ratio remains high at 2.3 times. The cost per room is about Rs 10.5 million, while debt per room stands at around Rs 5.9 million.

Since the company’s entire business is concentrated in a single hotel, geographical concentration risk remains. The cyclical nature of the hotel and casino industry, competitive pricing pressure, and interest rate fluctuations could create challenges in the future.