Purpose The main aim of the study is to assess the environmental and economic impacts of the lodging sector located in the Himalayan region of Nepal, from a life cycle perspective. The assessment should support decision making in technology and material selection for minimal environmental and economic burden in future construction projects.Methods The study consists of the life cycle assessment and life cycle costing of lodging in three building types: traditional, semi-modern and modern. The life cycle stages under analysis include raw material acquisition, manufacturing, construction, use, maintenance and material replacement. The study includes a sensitivity analysis focusing on the lifespan of buildings, occupancy rate and discount and inflation rates. The functional unit was formulated as the ‘Lodging of one additional guest per night’, and the time horizon is 50 years of building lifespan. Both primary and secondary data were used in the life cycle inventory.Results and discussion The modern building has the highest global warming potential (kg CO2-eq) as well as higher costs over 50 years of building lifespan. The results show that the use stage is responsible for the largest share of environmental impacts and costs, which are related to energy use for different household activities. The use of commercial materials in the modern building, which have to be transported mostly from the capital in the buildings, makes the higher GWP in the construction and replacement stages. Furthermore, a breakdown of the building components shows that the roof and wall of the building are the largest contributors to the production-related environmental impact.Conclusions The findings suggest that the main improvement opportunities in the lodging sector lie in the reduction of impacts on the use stage and in the choice of materials for wall and roof.