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
1. CONTENT INDEX
1. Hotel Industry in Pakistan
An overview
Development constraints and competition
2. Rise and fall of Hotel industry in Pakistan
The decline
3. Relationship between the Hotel industry and Tourism industry
Global regions
Tourism in Pakistan
Pak Tribune article on current scenario
4. 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 industry
6. Current issues of Hotel industry
Pearl Continental Hotel
Marriot Hotel
Sheraton Hotel
7. Research on Hotel industry
Statistics on industry decline and its reasons
Appendix A (Sources and References)
Appendix B (Sample Questionnaire)
1| P a g e
2. HOTEL INDUSTRY IN PAKISTAN
Overview
The hotel business has been present in Pakistan since its independence in 1947. In
Pakistan this industry contributes a large proportion to the country’s economy. The
hotel industry contributes to a large percentage of the country’s revenue. At first there
were not many hotels to begin with but as time passes, the country saw the gradual
establishment of local and international hotels. The Hotel Mehran is an example of an
early 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: Pearl
Continental, Marriott, Avari Towers, and Sheraton Hotel. Up and coming hotels include
Serena 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 in
early 90s. The number of hotels in the country increased from 845 in 1991 to 1150 in
1996, showing a growth of more than 26% with the fastest growth in the number of
hotels 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 to
government instability and terrorism. In August 2008, hotel occupancy rates fell, an
alarming sign given to Pakistani Hotels. By the beginning of fourth quarter 2008, the
Pakistan THL sector (Tourism, Hospitality and leisure) was starting to see major
consequences of the economic crisis in the form of negative indicators in the hotel
industry, a slowdown in the gaming sector and increased preference to quick service
restaurants as opposed to dining ones.
2| P a g e
3. Development Constraints and Competition
The four major hotels have not changed much in terms of new ventures since their
establishment. The only major highlight in this regard was the takeover of Holiday Inn by
Marriott. Another constraint with regards to hotel development are the terrorist attacks
that have plagues the country for some time now. This has led to a huge drop in foreign
visitors to the country. Changes in government have also created problems as each has
its own rules and priorities. Economic downfall also means that citizens are in not a
position to use these hotels.
Fast food chains like Mc Donald’s, KFC and Hardees are providing significant competition
to these hotels, which have comparatively higher prices than the fast food chains. The
restrictions on dinner menus of weddings are also an important problem. Visitors to
Pakistan prefer staying with family and friends due to the constant threat by suicide
bombers.
Through this report, we have attempted to identify the root cause of this disastrous
decline of the hotel industry. This is the only industry that generates foreign exchange
without exporting anything and therefore should be cultivated rather than left to face
decline.
3| P a g e
4. Rise and Fall of the Hotel Industry in Pakistan
As mentioned before, the hotel industry in Pakistan has seen a sustained decline in its
performance over the years. However, this was not always so. Pakistan, which is a vast
country and a land of serenity and serendipity, attracts infinite number of tourists each
year. It has many tourist destinations with well furnished city and airport hotels.
Industry in Pakistan had witnessed tremendous boom before 2008, which is when things
started getting worse. In better times, the growth of the hotel industry in Pakistan was
fueled by the Pakistani tourism industry. Increasing business opportunities and growing
economy 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. There
are a lot of motels and low budget hotels; each hotel has its own set of facilities and
services. When the country’s economy was in boom during the 1980’s to late 2000’s
period, personal enterprise was also on the rise and led to the establishment of a variety
of small motels.
The Decline
The hotel industry of the country starting facing problems due to factors that are faced
in the economy which include economy, terrorism, political conditions and other macro
factors. The industry faced a major setback in the late 2010 when Marriot Islamabad
was under the attack by terrorist bombing that took the life of 50 people and injured
severely 250 people, this incident brought the decline in the hotel industry as many
foreigners and national customers feel uncomfortable in staying in any hotel in Pakistan
and visiting Pakistan for their business meeting and other corporate events and
seminars. Here the factor of Terrorism played the important part as many print and
electronic media highlighted the feared faced by the people in Pakistan and the act of
terrorism that was being increased created the impact of bringing down the visiting
foreigners in the country, many international operating company reduces and restricted
their visits to Pakistan hence reducing the occupancy rate in the Hotel from 60-70%. In
4| P a g e
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 in
the industry of Hotel and tourism it was observed sudden increase in number of foreign
visitors and meetings were scheduled in Pakistan mainly in the city of Karachi, through
which the occupancy rate of the hotels increase from 60% compared to the last year
occupancy rate. This increase of occupancy rate create the effect on the demand of the
hotels , as the demand increase so does the prices and as it was as the prices of the
room of hotel were increase from average Rs. 9000-Rs. 10000 to Rs 11,000 –Rs 12,0000
per night .
Due to the impact created by the fast developing economy of Pakistan particularly in
Karachi, which is the industrial hub of Pakistan, many national and international
organizations are engaged in setting their meetings and conferences in the hotels, many
foreign corporate people are also visiting Karachi for their seminars and organization
conferences, hotel business in Karachi therefore is in the business. Many international
and national hotels are operating in Karachi for instance Marriot, Pear Continental,
Regent, Carton, Sheraton, Avari and Ramada Plaza etc hence every category of Hotel
which range from 2 star to 5 star hotels are operating in the country. many foreign
investments are also been observed in this sector , as per news France based Accor
hotel is being opened in Karachi this year.
5| P a g e
6. Relationship between the Hotel Industry and Tourism Industry
The hotel and tourism industry have for long been interrelated due to their
interdependent nature. A country’s hotel industry is a symbol of its hospitality for
foreigners 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 a
global level. Malaysia is known for its beautiful honeymoon resorts and Egypt is known
for its historical locations, notably the Pyramids of Giza. Tourists arriving in a country
invariably need a place to stay if they do not have family or friends in that particular
country and that is where the hotel industry comes in. therefore, both are dependent
on each other.
Spending on trips, however, is largely affected by the current economic situation of a
country. In times of low economic activity people refrain from spending too much on
travel and subsequently, costs associated with it. The United Nations World Tourism
Organization (WTO) says that international tourist arrivals for business, leisure, and
other 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 regions
in 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. 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 of
2009 is continuing. For, according to the April 2010 Interim Update of the WTO World
Tourism 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 last
quarter of 2009, when arrivals grew by 2% after 14 consecutive months of negative
results. Although data for March are still limited, countries with data already reported
confirm that this positive trend is set to continue, said the WTO.
Tourism in Pakistan
Pakistan is one of the countries that offers many categories in tourism , which include
history , adventure, desert , medical , wild life, natural and educational tourism which
attracts many tourist all over the world to visit the exotic land and explore the hidden
treasures of Mughal and Indian civilizations that been nourished in time. Today Pakistan
had become one of the major tourist countries but still it’s not generating as it should be
with 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 that
have all the natural tourist destinations from Mountain to plains to deserts and forest
and sea. The country is well connected to these areas through road, rail and air
transportations. 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 hotel
services are owned by the private sector and multinational organizations operating
internationally, the government owns PTDC Motels are the only hotel that operates in
the country through government.
7| P a g e
8. Tourism has been a developing industry in Pakistan. Since 1992 it has been acclaim as an
industry and currently it have the fastest developing industry. Pakistan government has
done many approaches to enhance the tourism in Pakistan; year 2006 has been
acclaimed as the year of tourism in Pakistan.
Tourism industry has been growing for the past 15 years; year 2006 has recorded the
most revenue generated from the industry. Pakistan Tourism industry have been
acclaimed internationally and national wide.
Pakistan’s Golden Age of tourism was in the 1970s when the most favorite visiting sites
were Khyber Pass, Peshawar, Karachi, Lahore, Swat and Rawalpindi. Currently Pakistan
has six major cultural sites that are categorized as UNESCO World Heritage Sites. These
include:
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 Rohtas
Problems started in July 2010 floods that made around 22 million people homeless in
Pakistan also collapsed Tourism Industry in the country that was already becoming
fragile due to bad law and order situation in the country. It is further declining due to a
sustained decline in GDP and tourism revenues but it is still considered to be a potential
market 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. terrorist attacks and following political and economic instability. An article by in the Pak
Tribune 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. “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 rising
in stark contrast to falling revenues and underutilization of room capacity indicates a
10| P a g e
11. loss in foreign visitors to the country. Terrorist attacks have bred political instability in
the country and even some particular locations in the Northern Areas have been roped
off 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 that
influence the one industry also effects the other industry regarding the hotel and
tourism industry. As Pakistan is the country with the rich variety of tourism destinations
like high mountains, rivers, oceans, forest, lakes, ancient monuments fertile plains and
valleys but its tourism industry is not growing as it should be, since the year 2006 which
had the record revenue generation from the industry no such revenue is generated till
now. The factors that cause this decline in the industry and which pretend the industry
from growing are discussed below.
Unfavorable and unstable Political Conditions:
Pakistan political condition are unstable since the establishment of the country, till now
no political party has completed its five years tenure in the government, political
condition remains unstable as each political party keeps on generating blames and civil
out bust moments against the ruling government, due to the instability the country
situation are always in the instability, strikes, march and other political tools are used on
the daily basis which affects the economy and the industry. Due to this political
condition no such action have yet been taken for the development of the tourism
industry since the year 2006 when the year was acclaimed as the year of tourism
industry of Pakistan.
Lack of Proper Infrastructure:
Pakistan lacks in the industry due the improper infrastructure, roads are inadequate
while the railway is near to destruction while the air ports are only located in the three
major cities. Many tourists find it difficult to travel in the northern and eastern side of
the country due to in appropriate infrastructure.
11| P a g e
12. Inability to reinstate the Natural Disasters:
Since the earthquake and floods in the area of tourism like Bala kot and other northern
areas still the government haven’t reinstate the condition of those infected area from
the past 7 years. This is the inability of the government that could not cope with the
natural disasters and cannot reinstate the tourist destination to be available for the
tourism.
Terrorism
One 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 terrorism
activities and incidents have been faced by the country which repels the tourist to visit
these destination. Swat valley which was considered as the jewel for tourism was
destroyed during the operations against the terrorist who were operating through that
area. Many other areas such as Gilgit, Abbotabad and other valleys are infected through
terrorism.
Rising Inflation
The rising prices and inflation in the country due to the economy of Pakistan had also
created an impact in the tourism industry. As the prices of transportation, food , hotels
stay and accommodation have been increased many national tourist now lost the charm
in 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 measures
have to be taken:
1. Government should concentrate on the means of transportation, communication and
power for the promotion of tourism industry in Pakistan.
12| P a g e
13. 2. To attract the foreign travelers who have stopped visiting the country due to security
issues, the said issues should be handled properly.
3. Tax structure plays a vital role in industrialization process. The government should
give 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 be
organized to create attractions for tourists.
5. Electronic and print media should focus on the highlights and attractions of tourist
sites in the country and so play an important role in enhancing the demand for tourism
in Pakistan
*Along with these suggestions, we have also included some measures that should be taken
after careful research we conducted for the purpose of this report.
13| P a g e
14. The Current Scenario
The Pakistan Hotel Association (PHA) is the representative body of the hotel industry in
Pakistan. PHA Member Hotels account for about 90% of the total inventory of gazetted
hotel rooms in the country.
PHA plays an important role in the development and growth of the tourism and
hospitality industries in Pakistan. In addition to promoting the business interests of its
membership, the PHA lends strong support to the Ministry of Tourism, Government of
Pakistan in ensuring continuing tourism growth through marketing and promotions,
product development, manpower training, productivity improvements and quality
assurance.
The PHA confirmed that public reaction has affected the hotel industry in the last two to
three weeks. A great number of confirmed reservations for Karachi hotels had been
cancelled, resulting in a decline in room occupancy. Hotel industry leaders fear a
massive decline in room occupancy to below 20 per cent and more strict travel
advisories by the foreign missions in the aftermath of a powerful bomb blast outside the
Marriott 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 room
occupancy due to reduced travelling by foreigners and travel advisories issued by many
European countries asking their nationals not to visit Pakistan.
Many groups of foreigners and even Pakistanis working abroad have postponed their
visit to Pakistan after the reaction that sparked anger among the Muslim world after
blasphemous sketches appeared in some European newspapers. As a result, the PHA
feels the fallout will be quite significant.
At the moment, Marriott, Sheraton, Pearl Continental and Avari Towers are the main
players in the hotel industry. So far their room rates (charges) are not affected, but they
have 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. 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 as
conference halls.
The major concern to the hotels seems to be frequent change in policies, lack of follow up
for effective implementation of the good decisions, unfriendly attitude of government
officials, corruption, international political situation and above all the law and order
situation. Foreigners will cancel or restrict travelling to Pakistan in upcoming
The hotel industry has been very sensitive to such incidents of terrorism and law and
order situation in which not only the foreigners restrict their visits to the country, but also
domestic travelers exercise caution.
Chefs and the Hotel Industry
It is an old saying that chefs are the nucleus of hotels as they provide hygienic food to
customers and are considered 'father in European countries. The received honour in
Western 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 that
chefs are such specialized and skilled persons who are properly taught regarding food
education.
With regard to the hotel industry, chefs play a vital role. Circumstances are changing
and hotel industry is growing with 5 to 10 per cent annually, according to the Chefs
Institute of Pakistan Executive, despite instances of political instability. Whether or not
this could be a harbor for the flailing hotel industry remains to be seen.
15| P a g e
16. Pakistan’s Image and the Tourism and Hotel Industry
The hospitality sector in Pakistan needs to improve its image generally, and as an
employer specifically, by providing better options in terms of policies, benefits, career
plans, opportunities and remuneration keeping in mind gender roles.
The conclusion was made in a baseline study conducted by the International Labour
Organisation (ILO) to establish gendered situation analyses of the hospitality sector. The
primary objective of the study was to identify trends of the hospitality sector in
Pakistan; working conditions; extent of decent employment currently prevailing; existing
and emerging opportunities; skills shortages and corresponding training needs and
mapping of major stakeholders.
The hospitality sector needs to work towards cultivating a decent work culture. Working
conditions within the sector are identified with low wages, poor or non-existent career
structures, informal recruitment practices, unsocial and long working hours, and
difficulties in recruitment and retention resulting in high levels of labour turnover.
The findings indicate that the sector is gender segregated both with respect to working
conditions and opportunities.
As we have seen, this is the current situation of the hotel industry in Pakistan. If there is
ever to be a hop of rejuvenating this industry, much needs to be done, from
implementing strict governmental control to rectifying working conditions for hotel
employees.
16| P a g e
17. Current Issues of the Hotel Industry
The 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. Hotels
in the twin cities have seen a decline of customers from 40 to 60 percent after
9/20/2008. The Marriott bombing is the worst terrorist attack on an international hotel
since the 9/11 attack. The suicide bomb attack against the hotel killed over 50 people
and injured more than 250. This demonstrates the recurrent and growing threat to the
international 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 countries
opt to hold meetings in bungalows or offices for security purposes. Many foreign and
local businesses have restricted seminars and campaigns of goods. Many international
hotels which are frequented by Westerners have been targeted, which is a major cause
for the tourism decline in Pakistan.
Pearl Continental Hotel
Since 2001 there have been repeated threats and dismissals against workers in the
Karachi hotel for trade union activities. In 2003 the International Labour Organization
classified the practices of the management as union busting.
On June 9, 2009, a bomb outside Pearl Continental Peshawar killed at least 20 and
wounded over 70. The hotel is situated on Khyber Road, a five star hotel popular with
VIP's and international tourists.
17| P a g e
18. Marriot Hotel
The Islamabad Marriott Hotel bombing occurred during the night of 20 September
2008, when a dump truck filled with explosives detonated in front of the Marriott Hotel
in the Pakistani capital Islamabad, killing at least 54 people, injuring at least 266 and
leaving a 60 ft (20 m) wide, 20 ft (6 m) deep crater outside the hotel. The majority of the
casualties were Pakistanis; although at least five foreign nationals were killed and fifteen
others reported injured. The attack occurred mere hours after President Asif Ali Zardari
made his first speech to the Pakistani parliament. The Marriott hotel was the most
prestigious 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 the
hotel and the Islamabad Marriott reopened officially on 28 December 2008. HESCO,
bomb proof and shockproof double security wall), bomb proof and shockproof scanning
room. and pass-through gates will be placed at the Hotel entrance.
Sheraton Hotel
An ideal destination for foreign travelers visiting Pakistan, the Sheraton Karachi Hotel
boasts an earthquake-proof building with shatterproof glass. Security is one of our
prime concerns and we have recently installed new security devices and adopted
enhanced security measures to ensure the safety of our guests.
Increased costs due to security measures have been a huge constraint on the
performance of these hotels, especially with regard to the depleted level of room
occupancy. In the current scenario, it is difficult to see how there can be any hope of a
the industry rising again, unless strict measures of part of the government are taken.
18| P a g e
19. Research on Decline of the Hotel Industry
While making this report, we encountered several reasons as to what was the main
cause of the decline in this industry. In order to identify the main reason, we conducted
a 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 Industry
Independent Variable: Economic Instability
19| P a g e
20. Data and Methodology
Sampling Method:
We collected the data from consumers through judgment sampling and from hotel
representatives we collected through convenience sampling
Sample 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. TALLY MARK SHEET
Q# A B C D E F G H
1
2 - - - -
3 - - - -
4 - - - -
5 - - -
6 - - -
7 - - - -
8 - - -
21| P a g e
22. FREQUENCY TABLE
Q# A B C D E F G H
1 11 28 9 3 19 15 12 3
2 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. 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. 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= -1.04
Interpretation: 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= -0.8
Interpretation: 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. 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 meaning
consumers 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. 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 7
Very 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. Conclusion
After 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 the
decline in the hotel industry. Terrorism closely followed up with 32%. Based on our
research, we have certain recommendations to correct the situation, and these are as
follows.
Recommendations
The Hotel Management should improve the quality because most consumers believe
that 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 causing
the hotel industry to decline.
The Hotel Management should also take measures to improve security because most
consumers do not feel fully secure they regard their security level as average while in a
hotel.
Government should take steps to stop the decline of hotel industry because it is hurting
our tourism industry as well as economy and investments.
The Hotel Management should maintain or maybe improve the level of cooperation by
hotel representatives with consumers.
The Hotel Industry should raise their voice and negotiate with government to make
sound policies for the improvement in hotel industry.
Limitations
The Research has a sample size of only 100 people and all the respondents belong to
Karachi city.
The Research is limited due to time constraints.
It was very difficult to get the questionnaires filled from Hotel Management because
they were busy in their own responsibilities that’s why there are limited number of
questionnaires which were filled by the Hotel Management.
27| P a g e
28. Future Outlook
After conducting our research, we have arrived at certain conclusions about the hotel
industry and its possible future.
The economic and political situation of the county at the moment is not very hopeful
and consequently the industries of the country will suffer. Tourism is the major industry
which is that is seeing a sustained decline due to the political situation of the country at
the moment. Despite the fact that the major hotels are taking initiatives for strict
security measures, still the public and foreigners are hesitant to visit and stay at hotels
and occupancy levels are falling. Major hotels have put a hold on investment plans due
to 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 industry
rising again.
To conclude, the hotel industry seems to be heading down for the moment. Whether it
will see a rise in the future or not remains yet to be seen, largely dependent on the
policies adopted by the current government.
28| P a g e
30. Appendix B
SAMPLE QUESTIONNAIRE
Dear 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 have
developed the following questions. You are requested to fill out this questionnaire. Any
information that you provide will be kept confidential and will be used for academic purposes
only.
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 Mehran
Q2. 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 ago
Q3. Charges of hotel services are
A. Very High
B. High
C. Average
D. Low
E. Very Low
30| P a g e
31. Q4. Quality of hotel service is
A. Very High
B. High
C. Average
D. Low
E. Very Low
Q5. Decline in hotel industry has been due to
A. Terrorism
B. Political Instability
C. Corruption
D. Economic Instability
E. Communication Advancement
Q6. Security risk while visiting a hotel is
A. Very High
B. High
C. Average
D. Low
E. Very Low
Q7. Hotel industry promotes
A. Economy
B. Tourism
C. Investments
D. Local attraction for citizens
Q8. The hotel representatives are
A. Highly Cooperative
B. Cooperative
C. Average
D. Non-cooperative
E. Highly Non-cooperative
31| P a g e