Hospitality industry hoping for a brighter dawn

Improved law and order situation necessary to reverse downward trend.

LAHORE: The hospitality industry in Pakistan has taken a hit due to multiple problems faced by the country. People associated with the industry, however, remain optimistic over future growth provided that business activities regain momentum.

It is well-known that tourism activity is minimal in Pakistan and there is no surprise that the law and order situation is the biggest reason. Thus, the hotel industry becomes largely dependent on the corporate sector and other business institutions.

The industry’s decline began with the global recession in 2008. It was further hit by terrorist activities across the country. The attack on Marriott Hotel in Islamabad had a devastating impact. Additionally, Pakistan being banned from hosting international sporting events took down what was left of the tourism industry.

In countries where tourism is a key component of the economy, the hotel industry contributes around 20% to GDP. In Pakistan, however, its contribution is at a meagre 3%, said an industry expert. Despite this stagnant growth, a few new structures appeared in different cities especially in Lahore where currently four new five-star hotels are under construction.

“The hotel industry showed gradual growth since 2012 and in the first quarter of 2014, the growth rate was 7%  — more than the corresponding period previous year, which is encouraging,” Pearl Continental hotel Lahore General Manager Haseeb Gardezi.

The growth was primarily due to increased business activity after the general elections, experts said. Foreign delegations along with local business activity increased hotel occupancy rates.

However, the recent attack at Karachi airport, political instability and the military operation in North Waziristan once again has slowed down the growth in hotel industry. The picture is hopefully set to get clearer by September this year and if things go right, then a 10% growth target will be set for next year.

Previously, when the law and order situation in the country was better, the textile sector was contributing a handsome share in hotels’ revenue. Foreign firms and their officials often visited Pakistan to finalise transaction deals.

Trade with India is another attraction for the hotel industry, especially for Lahore, but some players see this prospect with limited effect. “For growth, the Indian component will play a limited role. The industry will revolve around the corporate sector and other business activities”, said Ramzan Sheikh, an entrepreneur in the hospitality industry. “The local hospitality brands should strengthen themselves now because foreign brands might hesitate to invest in Pakistan for some years to come.”

Published in The Express Tribune, July 14^th, 2014.

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