Hotel industry in pakistan


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A detailed look into the history, decline, current scenario and future outlook of the hotel industry in Pakistan, accompanied by research via statistical tools on public perception about the reasons of the decline

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Hotel industry in pakistan

  1. 1. CONTENT INDEX1. Hotel Industry in Pakistan  An overview  Development constraints and competition2. Rise and fall of Hotel industry in Pakistan  The decline3. Relationship between the Hotel industry and Tourism industry  Global regions  Tourism in Pakistan  Pak Tribune article on current scenario4. Factors affecting Tourism and Hotel industry in Pakistan  Unfavorable and unstable political conditions  Lack of proper infrastructure  Inability to reinstate the Natural Disasters  Terrorism  Rise in Inflation  Can the situation be reversed?5. The current scenario  Chefs and the Hotel industry  Pakistan’s image and the Tourism and Hotel industry6. Current issues of Hotel industry  Pearl Continental Hotel  Marriot Hotel  Sheraton Hotel7. Research on Hotel industry  Statistics on industry decline and its reasonsAppendix A (Sources and References)Appendix B (Sample Questionnaire) 1| P a g e
  2. 2. HOTEL INDUSTRY IN PAKISTANOverviewThe hotel business has been present in Pakistan since its independence in 1947. InPakistan this industry contributes a large proportion to the country’s economy. Thehotel industry contributes to a large percentage of the country’s revenue. At first therewere not many hotels to begin with but as time passes, the country saw the gradualestablishment of local and international hotels. The Hotel Mehran is an example of anearly local hotel. The Avari Towers rose as a prominent hotel chain present in Karachi,Lahore, Islamabad and Dubai.At the moment, there are four major five star hotels operating in the country: PearlContinental, Marriott, Avari Towers, and Sheraton Hotel. Up and coming hotels includeSerena Hotel and Carlton Hotel, which are relatively new compared to the previous four.The greatest growth in the hotel industry was seen in the late 80s and then some inearly 90s. The number of hotels in the country increased from 845 in 1991 to 1150 in1996, showing a growth of more than 26% with the fastest growth in the number ofhotels seen in 1993 which tapered off to 2.4% in 1995 before picking up again in 1996.However, the industry began to experience a downfall with time, mostly due togovernment instability and terrorism. In August 2008, hotel occupancy rates fell, analarming sign given to Pakistani Hotels. By the beginning of fourth quarter 2008, thePakistan THL sector (Tourism, Hospitality and leisure) was starting to see majorconsequences of the economic crisis in the form of negative indicators in the hotelindustry, a slowdown in the gaming sector and increased preference to quick servicerestaurants as opposed to dining ones. 2| P a g e
  3. 3. Development Constraints and CompetitionThe four major hotels have not changed much in terms of new ventures since theirestablishment. The only major highlight in this regard was the takeover of Holiday Inn byMarriott. Another constraint with regards to hotel development are the terrorist attacksthat have plagues the country for some time now. This has led to a huge drop in foreignvisitors to the country. Changes in government have also created problems as each hasits own rules and priorities. Economic downfall also means that citizens are in not aposition to use these hotels.Fast food chains like Mc Donald’s, KFC and Hardees are providing significant competitionto these hotels, which have comparatively higher prices than the fast food chains. Therestrictions on dinner menus of weddings are also an important problem. Visitors toPakistan prefer staying with family and friends due to the constant threat by suicidebombers.Through this report, we have attempted to identify the root cause of this disastrousdecline of the hotel industry. This is the only industry that generates foreign exchangewithout exporting anything and therefore should be cultivated rather than left to facedecline. 3| P a g e
  4. 4. Rise and Fall of the Hotel Industry in PakistanAs mentioned before, the hotel industry in Pakistan has seen a sustained decline in itsperformance over the years. However, this was not always so. Pakistan, which is a vastcountry and a land of serenity and serendipity, attracts infinite number of tourists eachyear. It has many tourist destinations with well furnished city and airport hotels.Industry in Pakistan had witnessed tremendous boom before 2008, which is when thingsstarted getting worse. In better times, the growth of the hotel industry in Pakistan wasfueled by the Pakistani tourism industry. Increasing business opportunities and growingeconomy in Pakistan is acting as a stimulant for the hotel industry in Pakistan.Pakistan does not just have international hotel chains like Sheraton and Marriott. Thereare a lot of motels and low budget hotels; each hotel has its own set of facilities andservices. When the country’s economy was in boom during the 1980’s to late 2000’speriod, personal enterprise was also on the rise and led to the establishment of a varietyof small motels.The DeclineThe hotel industry of the country starting facing problems due to factors that are facedin the economy which include economy, terrorism, political conditions and other macrofactors. The industry faced a major setback in the late 2010 when Marriot Islamabadwas under the attack by terrorist bombing that took the life of 50 people and injuredseverely 250 people, this incident brought the decline in the hotel industry as manyforeigners and national customers feel uncomfortable in staying in any hotel in Pakistanand visiting Pakistan for their business meeting and other corporate events andseminars. Here the factor of Terrorism played the important part as many print andelectronic media highlighted the feared faced by the people in Pakistan and the act ofterrorism that was being increased created the impact of bringing down the visitingforeigners in the country, many international operating company reduces and restrictedtheir visits to Pakistan hence reducing the occupancy rate in the Hotel from 60-70%. In 4| P a g e
  5. 5. order to survive in those circumstances the Hotel industry reduces their rates to 10-20% to gain the target market.In the year 2011 the increase and stability of economy of Pakistan brought a change inthe industry of Hotel and tourism it was observed sudden increase in number of foreignvisitors and meetings were scheduled in Pakistan mainly in the city of Karachi, throughwhich the occupancy rate of the hotels increase from 60% compared to the last yearoccupancy rate. This increase of occupancy rate create the effect on the demand of thehotels , as the demand increase so does the prices and as it was as the prices of theroom of hotel were increase from average Rs. 9000-Rs. 10000 to Rs 11,000 –Rs 12,0000per night .Due to the impact created by the fast developing economy of Pakistan particularly inKarachi, which is the industrial hub of Pakistan, many national and internationalorganizations are engaged in setting their meetings and conferences in the hotels, manyforeign corporate people are also visiting Karachi for their seminars and organizationconferences, hotel business in Karachi therefore is in the business. Many internationaland national hotels are operating in Karachi for instance Marriot, Pear Continental,Regent, Carton, Sheraton, Avari and Ramada Plaza etc hence every category of Hotelwhich range from 2 star to 5 star hotels are operating in the country. many foreigninvestments are also been observed in this sector , as per news France based Accorhotel is being opened in Karachi this year. 5| P a g e
  6. 6. Relationship between the Hotel Industry and Tourism IndustryThe hotel and tourism industry have for long been interrelated due to theirinterdependent nature. A country’s hotel industry is a symbol of its hospitality forforeigners and how it makes them feel at home in an environment that is new to them.Tourism is a source of income to the country and also promotes a country’s image on aglobal level. Malaysia is known for its beautiful honeymoon resorts and Egypt is knownfor its historical locations, notably the Pyramids of Giza. Tourists arriving in a countryinvariably need a place to stay if they do not have family or friends in that particularcountry and that is where the hotel industry comes in. therefore, both are dependenton each other.Spending on trips, however, is largely affected by the current economic situation of acountry. In times of low economic activity people refrain from spending too much ontravel and subsequently, costs associated with it. The United Nations World TourismOrganization (WTO) says that international tourist arrivals for business, leisure, andother purposes are estimated to have declined worldwide by 4% in 2009 to 880 million.There were certainly sharp differences in the performance of the various global regionsin 2009: Europe ended 2009 down 6% after a very poor first half (−10%). Destinations in Central, Eastern, and Northern Europe were particularly badly hit, while results in Western, Southern, and Mediterranean Europe were relatively better. Asia and the Pacific (−2%) showed an extraordinary rebound. While arrivals declined by 7% between January and June, the second half of 2009 saw 3% growth, reflecting improved regional economic results and prospects. In the Americas (−5%), the Caribbean returned to growth in the last four months of 2009. The performance was more sluggish in the other sub-regions, with the A(H1N1) influenza outbreak exacerbating the impact of the economic crisis. 6| P a g e
  7. 7. The Middle East (−6%), though still far from the growth levels of previous years, had a positive second half in 2009. Africa (+5%) was a robust performer, with sub-Saharan destinations doing particularly well.The first results from 2010 indicate that the improvement seen in the final quarter of2009 is continuing. For, according to the April 2010 Interim Update of the WTO WorldTourism Barometer, international tourist arrivals are estimated to have increased by 7%in the first two months of 2010. This follows the upturn already registered in the lastquarter of 2009, when arrivals grew by 2% after 14 consecutive months of negativeresults. Although data for March are still limited, countries with data already reportedconfirm that this positive trend is set to continue, said the WTO.Tourism in PakistanPakistan is one of the countries that offers many categories in tourism , which includehistory , adventure, desert , medical , wild life, natural and educational tourism whichattracts many tourist all over the world to visit the exotic land and explore the hiddentreasures of Mughal and Indian civilizations that been nourished in time. Today Pakistanhad become one of the major tourist countries but still it’s not generating as it should bewith this industry due to some factors that would be discussed further.Pakistan is rich with natural sites and tourism spots, Pakistan is one of the countries thathave all the natural tourist destinations from Mountain to plains to deserts and forestand sea. The country is well connected to these areas through road, rail and airtransportations. The tourist destination and the metropolitan area are filled with hotels,motels, resorts and guest houses which provide the better services as many of the hotelservices are owned by the private sector and multinational organizations operatinginternationally, the government owns PTDC Motels are the only hotel that operates inthe country through government. 7| P a g e
  8. 8. Tourism has been a developing industry in Pakistan. Since 1992 it has been acclaim as anindustry and currently it have the fastest developing industry. Pakistan government hasdone many approaches to enhance the tourism in Pakistan; year 2006 has beenacclaimed as the year of tourism in Pakistan.Tourism industry has been growing for the past 15 years; year 2006 has recorded themost revenue generated from the industry. Pakistan Tourism industry have beenacclaimed internationally and national wide.Pakistan’s Golden Age of tourism was in the 1970s when the most favorite visiting siteswere Khyber Pass, Peshawar, Karachi, Lahore, Swat and Rawalpindi. Currently Pakistanhas six major cultural sites that are categorized as UNESCO World Heritage Sites. Theseinclude: Archaeological Ruins at Moenjodaro of the Indus Valley Civilization. 1st Century Buddhist Ruins at Takht-i-Bahi and Neighboring City Remains at Sahr- i-Bahlol. The ruins of Taxila from the Gandhara Civilization The Lahore Fort and Shalimar Gardens in Lahore. Historic Monuments of the ancient city of Thatta. The ancient fort of RohtasProblems started in July 2010 floods that made around 22 million people homeless inPakistan also collapsed Tourism Industry in the country that was already becomingfragile due to bad law and order situation in the country. It is further declining due to asustained decline in GDP and tourism revenues but it is still considered to be a potentialmarket for growth.As discussed before, the hotel and travel industry are dependent on each other.Consequently, the hotel industry in Pakistan has also suffered primarily due to the 8| P a g e
  9. 9. terrorist attacks and following political and economic instability. An article by in the PakTribune sheds some light on the recent scenario of the hotel industry.The following is an article from the PakTribune, dated June 2010. PAKISTAN HOTEL INDUSTRY STRUGGLES AS TERRORISM KEEPS VISITORS AWAY KARACHI: Pakistan’s hotel industry remains in the red for the last two years because unabated incidents of terrorism and violence have not only slashed room-occupancy to less than 40 per cent, but also the number of daily customers, top industry officials said on Wednesday. The planned construction of at least five hotels, including Avari Islamabad and Sheraton Lahore, have been put on the hold, while completion of big projects such as Sofitel Hotel in Karachi are being delayed, they said. And those, which are operating, are finding it difficult to remain afloat, they added. With the top hotels being the prime target of terrorists, all of them have literally been converted into high security zones, with armed guards, barricades, walk-through scanners and dogs to sniff every vehicle entering their premises. “We as a family used to visit a hotel or a restaurant almost every week,” said Rushda Tariq, an exporter living in Islamabad. “Now we hardly visit these places because of the security threat.” And the concerns of citizens are understandable. Terrorists have targeted posh hotels and restaurants in every major city, including Karachi, Islamabad, Lahore and Peshawar. Then the overall security climate has also hit the hotel businesses as many foreign travelers have stopped coming to Pakistan. Pakistan Hotels Association Chairman Mustansir Zakir told Our Sources that many leading hotels were barely managing to stay afloat. “Business travellers, who use to fill rooms in the upscale hotels, are too scared to come, while added security measures have pushed up the cost even as revenues fall.” The Hotels Association of Pakistan, which represents more than 100 hotels across the country, says room occupancy dropped to 40 per cent on an average, much below the numbers needed even to breakeven. Several big hotels have reduced the number of operational rooms to save cost. Zakir, who is also a deputy director at Hashwani Hotels, which runs Marriott and Pearl Continental franchises, said that due to the security threat the number of guards had 9| P a g e to be increased by up to more than 400 per cent. “Where we required 30 guards, now we have to deploy at least 150,” he said. “Then there is a need to have at least 10 dogs trained to detect explosives. Each of these dogs cost around Rs1 million and we have to
  10. 10. “Business travelers, who use to fill rooms in the upscale hotels, are too scared to come, while added security measures have pushed up the cost even as revenues fall.” The Hotels Association of Pakistan, which represents more than 100 hotels across the country, says room occupancy dropped to 40 per cent on an average, much below the numbers needed even to breakeven. Several big hotels have reduced the number of operational rooms to save cost. Zakir, who is also a deputy director at Hashwani Hotels, which runs Marriott and Pearl Continental franchises, said that due to the security threat the number of guards had to be increased by up to more than 400 per cent. “Where we required 30 guards, now we have to deploy at least 150,” he said. “Then there is a need to have at least 10 dogs trained to detect explosives. Each of these dogs cost around Rs1 million and we have to spend a lot to maintain them,” he said. Enhanced security measures, including building a security wall such as in Marriot Islamabad, which witnessed two deadly attacks in recent years, also cost millions of rupees, industry officials say. Investors, who had put money in the hotels in early part of the decade when economy was growing, are now grumbling at decline in revenues and rising costs. “Thirty out of 180 rooms at Ramada have been closed,” said Anwar Qureshi, the financier of the hotel. “Every day I have to face 80 employees who have no work to do. I am not sure for how long the hotel can keep this additional staff.” “Just after attack in Lahore, a lot of our customers handed over the keys.” The absence of a viable domestic tourism industry is also working against the hotels, he said. “If it had not been for the business we get from airlines, the hotel would have been closed. Hotels are being seen as dangerous place. People coming from other cities prefer staying with their relatives or friends.” he said. Abdul Rehman Naqi, the managing partner in Sofitel Tower, said that he never expected the situation to be like this when the decision was taken to invest in the project. The 28-storey hotel is being built in Karachi at the cost of around seven billion rupees. The project has delayed and the work will now complete in 2012 instead of July 2010.It’s not just the fact that terrorists are targeting these hotels. Costs of security are risingin stark contrast to falling revenues and underutilization of room capacity indicates a 10| P a g e
  11. 11. loss in foreign visitors to the country. Terrorist attacks have bred political instability inthe country and even some particular locations in the Northern Areas have been ropedoff due to security reasons.Factors Affecting the Tourism and Hotel industry in Pakistan:As the hotel and Tourism industry are very much inter related as the factors thatinfluence the one industry also effects the other industry regarding the hotel andtourism industry. As Pakistan is the country with the rich variety of tourism destinationslike high mountains, rivers, oceans, forest, lakes, ancient monuments fertile plains andvalleys but its tourism industry is not growing as it should be, since the year 2006 whichhad the record revenue generation from the industry no such revenue is generated tillnow. The factors that cause this decline in the industry and which pretend the industryfrom growing are discussed below.Unfavorable and unstable Political Conditions:Pakistan political condition are unstable since the establishment of the country, till nowno political party has completed its five years tenure in the government, politicalcondition remains unstable as each political party keeps on generating blames and civilout bust moments against the ruling government, due to the instability the countrysituation are always in the instability, strikes, march and other political tools are used onthe daily basis which affects the economy and the industry. Due to this politicalcondition no such action have yet been taken for the development of the tourismindustry since the year 2006 when the year was acclaimed as the year of tourismindustry of Pakistan.Lack of Proper Infrastructure:Pakistan lacks in the industry due the improper infrastructure, roads are inadequatewhile the railway is near to destruction while the air ports are only located in the threemajor cities. Many tourists find it difficult to travel in the northern and eastern side ofthe country due to in appropriate infrastructure. 11| P a g e
  12. 12. Inability to reinstate the Natural Disasters:Since the earthquake and floods in the area of tourism like Bala kot and other northernareas still the government haven’t reinstate the condition of those infected area fromthe past 7 years. This is the inability of the government that could not cope with thenatural disasters and cannot reinstate the tourist destination to be available for thetourism.TerrorismOne of the major factors that affect the tourism industry is the terrorism in the country,Since Pakistan have taken part in the war against terrorism since 9/11, many terrorismactivities and incidents have been faced by the country which repels the tourist to visitthese destination. Swat valley which was considered as the jewel for tourism wasdestroyed during the operations against the terrorist who were operating through thatarea. Many other areas such as Gilgit, Abbotabad and other valleys are infected throughterrorism.Rising InflationThe rising prices and inflation in the country due to the economy of Pakistan had alsocreated an impact in the tourism industry. As the prices of transportation, food , hotelsstay and accommodation have been increased many national tourist now lost the charmin travelling to the northern and other tourist destinations.Can the situation be reversed?*In order to bring back the tourism and hotel industry back on track, certain measureshave to be taken:1. Government should concentrate on the means of transportation, communication andpower for the promotion of tourism industry in Pakistan. 12| P a g e
  13. 13. 2. To attract the foreign travelers who have stopped visiting the country due to securityissues, the said issues should be handled properly.3. Tax structure plays a vital role in industrialization process. The government shouldgive tax incentives to the air fares, hotels and other tourism related industries.4. Pakistan is a country with a rich culture and traditional festivals. These should beorganized to create attractions for tourists.5. Electronic and print media should focus on the highlights and attractions of touristsites in the country and so play an important role in enhancing the demand for tourismin Pakistan*Along with these suggestions, we have also included some measures that should be takenafter careful research we conducted for the purpose of this report. 13| P a g e
  14. 14. The Current ScenarioThe Pakistan Hotel Association (PHA) is the representative body of the hotel industry inPakistan. PHA Member Hotels account for about 90% of the total inventory of gazettedhotel rooms in the country.PHA plays an important role in the development and growth of the tourism andhospitality industries in Pakistan. In addition to promoting the business interests of itsmembership, the PHA lends strong support to the Ministry of Tourism, Government ofPakistan in ensuring continuing tourism growth through marketing and promotions,product development, manpower training, productivity improvements and qualityassurance.The PHA confirmed that public reaction has affected the hotel industry in the last two tothree weeks. A great number of confirmed reservations for Karachi hotels had beencancelled, resulting in a decline in room occupancy. Hotel industry leaders fear amassive decline in room occupancy to below 20 per cent and more strict traveladvisories by the foreign missions in the aftermath of a powerful bomb blast outside theMarriott Hotel in Islamabad on Saturday in which at least 60 people were killed.Consequently, leading hotels in the city are experiencing a phenomenal drop in roomoccupancy due to reduced travelling by foreigners and travel advisories issued by manyEuropean countries asking their nationals not to visit Pakistan.Many groups of foreigners and even Pakistanis working abroad have postponed theirvisit to Pakistan after the reaction that sparked anger among the Muslim world afterblasphemous sketches appeared in some European newspapers. As a result, the PHAfeels the fallout will be quite significant.At the moment, Marriott, Sheraton, Pearl Continental and Avari Towers are the mainplayers in the hotel industry. So far their room rates (charges) are not affected, but theyhave prepared budgeted forecast and spent high amounts on expansion of services,which are to be recovered over a certain period of time. In the prevailing situation, it 14| P a g e
  15. 15. will be difficult for hotels to get desired results. A decrease in booking is expected,which will subsequently have a strong impact on the rates of rooms as well asconference halls.The major concern to the hotels seems to be frequent change in policies, lack of follow upfor effective implementation of the good decisions, unfriendly attitude of governmentofficials, corruption, international political situation and above all the law and ordersituation. Foreigners will cancel or restrict travelling to Pakistan in upcomingThe hotel industry has been very sensitive to such incidents of terrorism and law andorder situation in which not only the foreigners restrict their visits to the country, but alsodomestic travelers exercise caution.Chefs and the Hotel IndustryIt is an old saying that chefs are the nucleus of hotels as they provide hygienic food tocustomers and are considered father in European countries. The received honour inWestern societies more than teachers but, conversely, in Pakistan only illiterate naais(barbers) were considered to be a good cook just before five years.But with the opening of news and entertainment TV channels, people could know thatchefs are such specialized and skilled persons who are properly taught regarding foodeducation.With regard to the hotel industry, chefs play a vital role. Circumstances are changingand hotel industry is growing with 5 to 10 per cent annually, according to the ChefsInstitute of Pakistan Executive, despite instances of political instability. Whether or notthis could be a harbor for the flailing hotel industry remains to be seen. 15| P a g e
  16. 16. Pakistan’s Image and the Tourism and Hotel IndustryThe hospitality sector in Pakistan needs to improve its image generally, and as anemployer specifically, by providing better options in terms of policies, benefits, careerplans, opportunities and remuneration keeping in mind gender roles.The conclusion was made in a baseline study conducted by the International LabourOrganisation (ILO) to establish gendered situation analyses of the hospitality sector. Theprimary objective of the study was to identify trends of the hospitality sector inPakistan; working conditions; extent of decent employment currently prevailing; existingand emerging opportunities; skills shortages and corresponding training needs andmapping of major stakeholders.The hospitality sector needs to work towards cultivating a decent work culture. Workingconditions within the sector are identified with low wages, poor or non-existent careerstructures, informal recruitment practices, unsocial and long working hours, anddifficulties in recruitment and retention resulting in high levels of labour turnover.The findings indicate that the sector is gender segregated both with respect to workingconditions and opportunities.As we have seen, this is the current situation of the hotel industry in Pakistan. If there isever to be a hop of rejuvenating this industry, much needs to be done, fromimplementing strict governmental control to rectifying working conditions for hotelemployees. 16| P a g e
  17. 17. Current Issues of the Hotel IndustryThe hotel industry has experienced a decline across Pakistan due to terrorist activity.The Marriott bombing in Islamabad on September 20, 2008 has damaged the industry.The hotel business has been facing low room occupancy since September 2008. Hotelsin the twin cities have seen a decline of customers from 40 to 60 percent after9/20/2008. The Marriott bombing is the worst terrorist attack on an international hotelsince the 9/11 attack. The suicide bomb attack against the hotel killed over 50 peopleand injured more than 250. This demonstrates the recurrent and growing threat to theinternational hospitality industry. All segments of the industry are bearing the burden,from five star hotels to small rental rooms.The holding of corporate events has declined. Visiting executives from other countriesopt to hold meetings in bungalows or offices for security purposes. Many foreign andlocal businesses have restricted seminars and campaigns of goods. Many internationalhotels which are frequented by Westerners have been targeted, which is a major causefor the tourism decline in Pakistan. Pearl Continental HotelSince 2001 there have been repeated threats and dismissals against workers in theKarachi hotel for trade union activities. In 2003 the International Labour Organizationclassified the practices of the management as union busting.On June 9, 2009, a bomb outside Pearl Continental Peshawar killed at least 20 andwounded over 70. The hotel is situated on Khyber Road, a five star hotel popular withVIPs and international tourists. 17| P a g e
  18. 18. Marriot HotelThe Islamabad Marriott Hotel bombing occurred during the night of 20 September2008, when a dump truck filled with explosives detonated in front of the Marriott Hotelin the Pakistani capital Islamabad, killing at least 54 people, injuring at least 266 andleaving a 60 ft (20 m) wide, 20 ft (6 m) deep crater outside the hotel. The majority of thecasualties were Pakistanis; although at least five foreign nationals were killed and fifteenothers reported injured. The attack occurred mere hours after President Asif Ali Zardarimade his first speech to the Pakistani parliament. The Marriott hotel was the mostprestigious hotel in the capital, located near government buildings, diplomatic missions,embassies and high commissions.A few months after its bombing, the Government of Pakistan had re-constructed thehotel and the Islamabad Marriott reopened officially on 28 December 2008. HESCO,bomb proof and shockproof double security wall), bomb proof and shockproof scanningroom. and pass-through gates will be placed at the Hotel entrance. Sheraton HotelAn ideal destination for foreign travelers visiting Pakistan, the Sheraton Karachi Hotelboasts an earthquake-proof building with shatterproof glass. Security is one of ourprime concerns and we have recently installed new security devices and adoptedenhanced security measures to ensure the safety of our guests.Increased costs due to security measures have been a huge constraint on theperformance of these hotels, especially with regard to the depleted level of roomoccupancy. In the current scenario, it is difficult to see how there can be any hope of athe industry rising again, unless strict measures of part of the government are taken. 18| P a g e
  19. 19. Research on Decline of the Hotel IndustryWhile making this report, we encountered several reasons as to what was the maincause of the decline in this industry. In order to identify the main reason, we conducteda research and made several discoveries as explained in the pages that follow. Hypothesis “Decline of Hotel Industry in Pakistan over the past five years has been primarily due to Economic Instability”Dependent Variable: Hotel IndustryIndependent Variable: Economic Instability 19| P a g e
  20. 20. Data and MethodologySampling Method: We collected the data from consumers through judgment sampling and from hotel representatives we collected through convenience samplingSample Size: The sample size of our research is 100 persons. The sample is taken from Karachi city which includes hotel representatives and hotel consumers.Data Collection Method: The data was collected via questionnaires. Our group met the respondents personally for completing this task. 20| P a g e
  21. 21. TALLY MARK SHEETQ# A B C D E F G H1          2     - - - -    3    - - - -     4     - - - -  5      - - -    6      - - -     7     - - - -     8      - - -     21| P a g e
  22. 22. FREQUENCY TABLEQ# A B C D E F G H1 11 28 9 3 19 15 12 32 16 53 27 4 - - - -3 36 32 32 - - - - -4 20 48 24 8 - - - -5 32 16 4 38 10 - - -6 13 19 51 13 4 - - -7 26 29 26 19 - - - -8 26 54 10 7 3 - - - 22| P a g e
  23. 23. Most Preferred Hotel Preferred Hotel 3% 11% 12% Marriot Pearl Continental Carlton 15% Regent Plaza 28% Sheraton Awari Towers Ramada 19% Hotel Mehran 9% 3% Interpretation: as Indicated by the pie chart it is clear that Pearl Continental is the most preferred choice of the customers followed by others 0% 0% Last Visit 4% 16% 27% a week ago a month ago a year ago 2-3 years ago 4-5 years ago More than 5 years ago 53%Interpretation: as Indicated by the pie chart it is clear that 53% of the consumers visit the hotels on monthly basis. 23| P a g e
  24. 24. Charges of Hotel Service OPTIONS CODE (x) Frequency (f) (fx) Very High -2 36 -72 High -1 32 -32 Average 0 32 0 Low 1 0 0 Very Low 2 0 0 ∑f=100 µ=∑fx/∑f µ= -104/100 µ= -1.04Interpretation: Since µ lies near -1 which is the code of high option so this means that the consumers believe that charges of hotel services are high. Quality of Hotel Service OPTIONS CODE (x) Frequency (f) (fx) Very High -2 20 -40 High -1 48 -48 Average 0 24 0 Low 1 8 8 Very Low 2 0 0 ∑f=100 µ=∑fx/∑f µ= -80/100 µ= -0.8Interpretation: Since µ lies at -0.8 which is in between high and average option meaning consumers believe that quality of hotel service is between high to average with more consumers leaning towards high. 24| P a g e
  25. 25. Reasons for Decline in Hotel Industry Reasons for Decline 10% 32% Terrorism Political Instability Corrpution 38% Economic Instability Communication Advancement 16% 4%Interpretation: as Indicated by the pie chart it is clear that 38% people believe that the decline in hotel industry is due to economic instability closely followed by terrorism at 32%. Security Risk Involved While Visiting Hotel OPTIONS CODE (x) Frequency (f) (fx) Very High -2 13 -26 High -1 19 -19 Average 0 51 0 Low 1 13 13 Very Low 2 4 8 ∑f=100 µ=∑fx/∑f µ= -24/100 µ= -0.24 Interpretation: Since µ lies at -0.24 which is in between average and high option meaningconsumers believe that security risk involved while visiting a hotel is between average to high with more consumers leaning towards average. 25| P a g e
  26. 26. Hotel Industry Promotes Hotel Industry Promotes 19% 26% Economy Tourism Investments Local attraction for citizens 26% 29% Interpretation: as Indicated by the pie chart it is clear that 29% people believe that hotel industry promotes tourism closely followed by investments and economy both at 26%. COOPERATION OF HOTEL REPRESENTATIVES OPTIONS CODE (x) Frequency (f) (fx) Very Cooperative -2 26 -52 Cooperative -1 54 -54 Average 0 10 0 Non-Cooperative 1 7 7Very Non-Cooperative 2 3 6 ∑f=100 µ=∑fx/∑f µ= -93/100 µ= -0.93 Interpretation: Since µ lies at -0.93 which is in between high and average option meaning consumers believe that the hotel representatives are between cooperative to average with more consumers leaning towards cooperative. 26| P a g e
  27. 27. ConclusionAfter careful study of the results, we found that our hypothesis has proven to be true.38% of the sample population regarded economic instability as the main reason for thedecline in the hotel industry. Terrorism closely followed up with 32%. Based on ourresearch, we have certain recommendations to correct the situation, and these are asfollows.RecommendationsThe Hotel Management should improve the quality because most consumers believethat the charges are high and the quality is less if you compare it with the charges.Government should stabilize the economic condition of Pakistan because it is causingthe hotel industry to decline.The Hotel Management should also take measures to improve security because mostconsumers do not feel fully secure they regard their security level as average while in ahotel.Government should take steps to stop the decline of hotel industry because it is hurtingour tourism industry as well as economy and investments.The Hotel Management should maintain or maybe improve the level of cooperation byhotel representatives with consumers.The Hotel Industry should raise their voice and negotiate with government to makesound policies for the improvement in hotel industry.LimitationsThe Research has a sample size of only 100 people and all the respondents belong toKarachi city.The Research is limited due to time constraints.It was very difficult to get the questionnaires filled from Hotel Management becausethey were busy in their own responsibilities that’s why there are limited number ofquestionnaires which were filled by the Hotel Management. 27| P a g e
  28. 28. Future OutlookAfter conducting our research, we have arrived at certain conclusions about the hotelindustry and its possible future.The economic and political situation of the county at the moment is not very hopefuland consequently the industries of the country will suffer. Tourism is the major industrywhich is that is seeing a sustained decline due to the political situation of the country atthe moment. Despite the fact that the major hotels are taking initiatives for strictsecurity measures, still the public and foreigners are hesitant to visit and stay at hotelsand occupancy levels are falling. Major hotels have put a hold on investment plans dueto changes in the government scenario. One positive factor is the number of chefs,which is increasing in the country which may or may not contribute to the hotel industryrising again.To conclude, the hotel industry seems to be heading down for the moment. Whether itwill see a rise in the future or not remains yet to be seen, largely dependent on thepolicies adopted by the current government. 28| P a g e
  29. 29. Appendix 29| P a g e
  30. 30. Appendix B SAMPLE QUESTIONNAIREDear Sir/Madam,We, the students of BS Commerce, Department of Commerce (4th Year), University of Karachi,are conducting a research on the decline of hotel industry in Pakistan. In this regard, we havedeveloped the following questions. You are requested to fill out this questionnaire. Anyinformation that you provide will be kept confidential and will be used for academic purposesonly. Thank you.Please tick the most appropriate answer.Q1. The hotel which you prefer most is A. Marriot B. Pearl Continental C. Carlton D. Regent Plaza E. Sheraton F. Avari Towers G. Ramada H. Hotel MehranQ2. Your last visit at a hotel was A. a week ago B. a month ago C. a year ago D. 2-3 Years ago E. 4-5 Years ago F. More than 5 years agoQ3. Charges of hotel services are A. Very High B. High C. Average D. Low E. Very Low 30| P a g e
  31. 31. Q4. Quality of hotel service is A. Very High B. High C. Average D. Low E. Very LowQ5. Decline in hotel industry has been due to A. Terrorism B. Political Instability C. Corruption D. Economic Instability E. Communication AdvancementQ6. Security risk while visiting a hotel is A. Very High B. High C. Average D. Low E. Very LowQ7. Hotel industry promotes A. Economy B. Tourism C. Investments D. Local attraction for citizensQ8. The hotel representatives are A. Highly Cooperative B. Cooperative C. Average D. Non-cooperative E. Highly Non-cooperative 31| P a g e