The document summarizes a case study about Avari Hotel in Lahore, Pakistan. It discusses the hotel's competitors, including Pearl Continental Hotel. It also reviews Avari Hotel's room rates and pricing policies, noting that their average room rate had decreased below Pearl Continental's rate, which was a concern. To address this problem, the team proposes adjusting Avari's room rates by decreasing the single bed rate by 1% and increasing the double bed rate by 10%, to better reflect demand and remain competitive with their main competitor, Pearl Continental Hotel.

1. Avari Hotel Case Study
Short review
20 2014
TEAM NAME: BRIGHT SPARKS
TEAM LEADER: ABDUL REHMAN SAFDAR
MEMBERS:
BAKHTAWAR MEHFOOZ
H.M.NASIR
OMAIR SHARAWAT
M.ALI ASGHAR
BRIGHT SPARKS | MBA 4th Morning

2. Short Review on the case:
Lahore is the capital of the Pakistani province of Punjab and the second largest and metropolitan
city in the country. Lahore has become a cosmopolitan city, where many races and nationality live
together peacefully along with Lahoris. Hotels in Lahore now also provide lots of variety. In the
last three to four years, new hotels have been built in Lahore for national & international visitors.
Avari hotels is no doubt 1 of the 5 star hotels of Lahore. Located in central Lahore at Mall road.
Avari hotel is a 5 star hotel perfect for business or leisure travelers. The Avari Lahore Hotel is the
winner of 4 consecutive, annual World Travel Awards for best hotel in Pakistan.
Competitors:
At that time their competitor was only “Pearl Continental” and according to Raza in 1988 PC
and Avari had Rs. 120 to Rs.130 average room rate differences.
In Chunnian 1992, it was expected that Sheraton and Holiday INN would be completed and both
hotels was an imminent threat to the existing five star hotels in Lahore.
Comparison:
Avari Lahore Ramada Renaissance hotel Pearl continental hotel
Background: In 1944 Mr Byram Avari,
owner of Avari Hotel, built beach front hotel
in Karachi. In 1978 he constructed a hotel in
Lahore and give its on premises contract to
Hilton chain for 20 years. In 1984 he built
another hotel in Karachi, Avari Tower under
franchise of hotel Ramada. In1987 he took
over management of hotel from Hilton chain
and renamed it Avari Lahore Ramada
Renaissance hotel.
Background: Owner Mr hashwani, first built
Holiday Inn in Karachi and Islamabad. He
built a chain of Four Pearl Continental hotel in
Karachi, Lahore Rawalpindi and Peshawar.
Location: Avari is situated on the mall road
facing Zoological garden lies between Al-
Hamra Art Council and WAPDA house.
Location: It is situated opposite to Governor
House, on the same mall, Near Jinnah garden.
Strengths:
Best services, Best value to the customers.
Strengths:
Extensive Lawns, spacious rooms

3. Rooms rates and pricing policy in Avari hotel:
Price was set on the basis of competition and demand and room rates were adjusted and revised
according to the inflation rate. Their policy was not turning away any guest so they have set
different types of rates such as:
Individual rates includes rack rate (for frequent individual travelers), commercial rate (for those
having no account but good reputed) and preferential rate (lowest rate). But ordinary guests were
not aware of this division of rates.
Contract rates includes Executive business class rate (30% below rack rate), volume executive
business class rate (40% below rack rate) and special rates (45% to 65% below rack rate) it had a
bad impact on the hotel contribution margin.
Garbage rates It includes Diplomats rate (50%discoubt of rack rate), net wholesale rate (below
than EBS but higher than VEBS), journalist rate (20%discount), airline rate (55% off) and IATA
rate (50% discount).
The rate structure of Pearl continental was same as Avari hotel but they priced less Rs 100 to Rs
200 than Avari hotel. Advertising and promotion was done through discount, summer package,
free bad tea and meals, good relationship with customers and customer relationship management.
Problem:
Now come towards the problem faced by management of Avari in December 1988 when Avari
average room rate (Rs 1000) was decreased than pearl continental (Rs 1065). This was a deep
thought for marketing manager as their performance was evaluated on the basis of target average
room rate and occupancy level which was 70% in Avari hotel and 80% in Pearl continental and
overall clientele was mix up .One of the reason of the success of pearl continental was a good
summer package as more clients visited due to spacious room size. So there was a need to review
the pricing policy at Avari hotel as in 1989 international flights from United States have to be
started in Lahore which could prove financially beneficial for the hotel.
Solution: (our understanding of the case)
We are reviewing rates of Avari Lahore according to the demand and competition in market. We
are adjusting prices by decreasing 1 % rack rate in single bed and increasing 10 % in double bed
rate. As demand is inelastic so occupancy rate will remain constant as previous but there is a chance
of increase the occupancy rate as higher price leads towards higher level of luxury services. The
current difference between single and double bed is very low that is causing low average prices
then competitor. So to meet the market’s current situation we must take this step rather than to
increase 10% on all rates as single bed is already paying maximum rates. EBS and VEBS depends
on rack rate that’s why those will be adjusted accordingly.