Tourism Policy, Possibilities and Destination Service Quality Management in Nepal by Bista Raghu Thesis Submitted for the Degree of Doctor of Philosophy at the University of Macedonia - Economics and Social Sciences Department of Applied Informatics, Thessaloniki, Greece Thesis Supervisor: Professor Zoe Georganta Doctoral Thesis Bista Raghu Tourism Policy, Possibilities and Destination Service Quality Management in Nepal by Bista Raghu Thesis Submitted for the Degree of Doctor of Philosophy at the University of Macedonia – Economic and Social Sciences Department of Applied Informatics, Thessaloniki, Greece Thesis Committee: Professor Zoe Georganta Professor Anastasios Katos Professor Vaios Lazos May 2009 Doctoral Thesis Bista Raghu 2 Acknowledgements Firstly, I would like to express my gratitude to all members of my supervising committee, Professors Zoe Georganta, Anastasios Katos and Vaios Lazos, for their valuable advice and academic supervision since my arrival to Greece. Their intellectual guidance has always motivated me to complete this Thesis. I am grateful to Dr. Christos Vasiliadis (Assistant Professor at the Department of Business Administration) for his continuous constructive support and scholar encouragement during all my stay in Greece. I am also thankful to the academic and administrative staff of the Department of Applied Informatics as well as the Department of Business Administration of the University of Macedonia, Economic and Social Sciences, who have greatly supported me in scientific and administrative matters, respectively. I am obliged to the Greek State Scholarships Foundation (IKY) for providing me with a four-year scholarship without which I would not be able to complete my research. I wish to express my thanks to friends from Greece and Nepal for their help and cooperation in various matters relating to the completion of this Thesis. The Civil Aviation Authority of Nepal has kindly helped me with the data needs of my research and I am really indebted to them. Finally, and most importantly, I want to thank my wife, Sudha, who carried out so successfully an incredibly complicated job, both working as a teacher and at the same time caring for our children, and also looking after my parents, while continuously motivating me. I express my admiration and gratitude to her for all this. Yet, I remain responsible for the inadequate use of the English language in this Thesis and any mistake the reader may find herein. Raghu Bista Thessaloniki, May 2009 Doctoral Thesis Bista Raghu 3 Curriculum Vitae Name: Raghu Bista Date of Birth: November 03, 1970 Place of Birth: Kirtipur 12, Kathmandu, Nepal Nationality: Nepali Mother Language: Nepali Other Language: English, Greek and Indian Education: Bachelors Degree in Business Administration in 1993 from Tribhuvan University and MBA from Tribhuvan University, Kathmandu, Nepal in 1995 Seminars Participated: 1. Two days Training on Strategic planning, 2000, Kathmandu, Nepal 2. Five days Seminar on Population and Development Integration in Nepal, 2001, Kathmandu, Nepal 3. Six days Training on Poverty Monitoring and Analysis, 2004, Kathmandu, Nepal Professional Positions: 1. Teacher in Everest Boarding School, Lalitpur, Nepal since 1996 -1998. 2. Training and Research Officer in Nepal Administrative Staff College, Lalitpur, Nepal, since 1998 to till now (Since December 2004 till now under study leave) Doctoral Thesis Bista Raghu 4 Table of Contents Acknowledgements I Curriculum Vitae II List of Tables VII List of Figures IX Abstract X Abstract in Greek XI Chapter 1: Introduction of the Study 1 1.1 Introduction 1 1.2 Background of the Problem 2 1.3 Research Objectives 4 1.4 Research Question 4 1.5 Hypothesis 5 1.6 Originality of the Research 6 1.7 Structure of the Thesis 7 Chapter 2: Tourism in Nepal: Evolution and Present Situation 9 2.1 Introduction to Tourism 9 2.2 Tourism Policy and Planning 14 2.2.1 Tourism Policy 14 2.2.1.1 Essentiality of Government involvement in Tourism 15 2.2.1.2 Tourism Policy Objectives 16 2.2.1.3 Formulating Tourism Policy 18 2.2.1.4 Tourism Policy and Other Policies 19 2.2.2 Tourism Planning 20 2.2.2.1 Tourism and Environment 22 2.2.2.2 Community Participation and Tourism 24 2.2.2.3 Sustainable Tourism Development 24 2.3 Nepal: A Himalayan Country 26 2.4 Evolution of Tourism in Nepal 30 2.5 Contribution of Tourism to the Nepalese Economy 34 Doctoral Thesis Bista Raghu 5 2.6 Analysis of tourist Arrivals in Nepal 36 2.6.1 Number of Tourists Visiting Nepal 36 2.6.2 Tourist Arrivals by Major Nationalities 36 2.6.3 Tourists’ Purpose to Visit Nepal 39 2.6.4 Length of Stay and Tourists’ Expenditure 40 2.6.5 Seasonality of Tourism in Nepal 41 2.6.6 Demography 42 2.6.7 Sources of Information Used by Tourists 42 2.6.8 Nepal and Other Destination Countries 42 2.7 Growth of World Tourism and Nepal’s Situation 43 2.7.1 Growth of World Tourism 43 2.7.2 Future Prospects of World Tourism 44 2.7.3 Present Situations of Tourism in Nepal 46 Chapter 3: Service Quality 49 3.1 Introduction to Quality 49 3.2 Quality Award Model 54 3.3 Concept of Service 57 3.4 Service Quality 59 3.4.1 Service Quality Conceptualisation 60 3.4.2 Perceived Service Quality Components/ Determinants 61 3.4.3 Service Quality and Customer Satisfaction 63 3.4.4 Service Quality and Profit 64 3.5 Measurement of Service Quality and Development of SERVQUAL 64 3.5.1 Critiques on SERVQUAL and Support for SERVPERF 65 3.6 Alternative Ways of Measuring Service Quality 66 3.6.1 Critical Incidents Technique (CIT) 66 3.6.2 Importance – Performance Analysis 68 3.6.3 Kano Model 70 3.7 Destination Service Quality Measurement 75 3.7.1 Concept of Tourism Destination 75 3.7.2 Destination Service Quality, Revisit Intention and Quality Measurement 76 Chapter 4: Research Methodology 79 4.1 Generation of Sample of Items and Development of Survey Questionnaire 79 4.1.1 Items Generation 79 Doctoral Thesis Bista Raghu 6 4.1.2 Questionnaire Development 80 4.2 Data Collections 81 4.3 Data Analysis 82 4.3.1 Factor analysis 82 4.3.2 Explorative Factor Analysis 82 4.3.3 Confirmatory Factor Analysis 82 4.3.4 Analysis of Variance (ANOVA) and Scheffe Test 83 4.3.5 Independent Samples T test 83 Chapter 5: Analysis of Tourism Possibilities and Review of Tourism Policy in Nepal 84 5.1 Tourism Possibilities in Nepal 84 5.1.1 National Parks, Wild Life Reserves, and Conservation Areas 84 5.1.2 Trekking in Nepal 94 5.1.3 Mountaineering in Nepal 98 5.1.4 Rafting in Nepal 105 5.1.5 Cultural Attractions in Nepal 106 5.1.6 Some Particular Places of Interest 118 5.1.7 Other Adventure Tourism Related Activities 119 5.1.8 Accommodation Facilities in Nepal 120 5.1.9 Entertainment Facilities 122 5.1.10 Restaurants and Dining in Nepal 122 5.1.11 Shopping Facilities 123 5.1.12 Conferences and Conventions in Nepal 123 5.1.13 Transportation in Nepal 124 5.1.14 Facilities of Information Centres, Banking, Money Exchange 127 5.1.15 Other Infrastructures 127 5.1.16 Trekking, Mountaineering, Travel Agents and Tour Organizations 128 5.1.17 Human Resource Development 129 5.1.18 Tourism Management and Administration in Nepal 130 5.2 Tourism Planning and Policy in Nepal 133 5.2.1 Planning History of Nepal 133 5.2.2 Review of Five Year Plans from 1956 to 2007 134 5.2.3 Tourism Policy 1995 155 5.2.4 Rules, Regulations and Other Policies Relating to Tourism in Nepal 157 5.2.5 Prospects and Problems of Tourism in Nepal 160 Doctoral Thesis Bista Raghu 7 5.3 Strength Weakness Opportunity Threat Analysis for Tourism in Nepal 160 5.3.1 Strength and Opportunity 161 5.3.2 Weakness and Threats 167 Chapter 6: Analysis and Presentation of Empirical Part 174 6.1 Result of Exploratory and Confirmatory Factor Analysis for the Survey (2006) 174 6.1.1 Demographic Profiles 174 6.1.2 Result of Exploratory Factor Analysis for the 2006 Survey 175 6.1.3 Result of Confirmatory Factor Analysis for the 2006 Survey 176 6.2 Result of Exploratory and Confirmatory Factor Analysis for the Survey (2007) 177 6.2.1 Demographic Profiles 177 6.2.2 Result of Exploratory Factor Analysis for the 2007 Survey 177 6.2.3 Results of Confirmatory Factor Analysis for the 2007 Survey 178 6.3 Comparison of Fit Indexes 179 6.4 Destination Service Quality Perceptions of Tourists to Nepal 180 6.5 Test of Hypothesis 181 Chapter 7: Finding and Recommendations 184 7.1 Key Findings about Tourism in Nepal 184 7.2 Proposals 191 7.3 Conclusion and Implications 202 7.4 Prospects 206 Appendix Appendix A: Questionnaire for Destination Quality Variable Survey 209 Appendix B: Destination Quality Measurement Questionnaire 210 Appendix C: International Air Services in Nepal 215 Appendix E: Man Power so far Produced by NATHM from the Fiscal Year 2029/30 to 2062/63 (1972-73 to 2005-2006 216 Appendix D: Organizations under Ministry of Culture, Tourism and Civil Aviation 217 Appendix E: List of People Participated for Interview in 2006, Kathmandu 218 Appendix F: Country of Visitors of First Survey 2006 219 Appendix G: Country of Visitors of Second Survey 2007 220 References 222 Doctoral Thesis Bista Raghu 8 List of Tables Table 1: Tourism Planning Purposes 22 Table 2: Number of Tourists from 1959 to 1961 33 Table 3: Foreign Exchange Earning from Tourism (1980/81-2003/04) 35 Table 4: Capital Investment in Hotels by Ecological Zones (up till 1980/81) 36 Table 5: Tourists Arrivals by Major Nationalities 37 Table 6: Share of Tourists from Different Regions 38 Table 7: Share of Top Five Countries in 2005 38 Table 8: Indian Tourists and Reasons for Visiting Nepal in 2001 and 2005 39 Table 9: Average Length of Stay and