Tourism development involves sustainably creating and managing destinations, products, and services that balance economic, social, and environmental factors while meeting visitor and local community expectations. The purpose of this study is to understand the local people’s perception of tourism development in Pokhara, Nepal. An explanatory research design is used to show the cause-and-effect relationship between variables. The research was conducted using Social Exchange Theory (SET). The data was examined using both descriptive and inferential statistics. The sample size was determined to be 403 using non-probability sampling. A structured questionnaire was designed to collect the data using the KOBO toolbox. Furthermore, the Structure Equation Model (SEM) was the analytical approach used to process the data. Results reveal a noteworthy relationship between independent variables (such as cultural impact, social impact, environmental impact, and economic impact) and dependent variables (support for tourism development). The major challenges in tourism development have been identified, including deficient infrastructure, suboptimal tourism strategies and implementation, and inadequate government oversight. Effective mitigation of these challenges necessitates the implementation of appropriate infrastructure and development initiatives, proficient governmental management, and a concerted effort to augment the quantity and quality of hotels and accommodations. The significance of cultural, social, environmental, and economic impact cannot be understated or overstated in the context of tourism development. Addressing major challenges, the study suggests focused efforts in enhancing infrastructure and development, adopting effective management practices, and augmenting the quantity and quality of hotels and accommodations.

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