Hospitality industry waits for improvement in conditions

Investment and expansion plans on hold for the time being

LAHORE: The struggling hospitality industry of Pakistan is waiting for the outcome of civil-military coordination aimed at improving the law and order situation as the current scenario is hindering new investments and expansion plans of some existing players.

This is one of the sectors that has been affected badly by terrorism in recent years. Pakistan Services Limited (PSL), a sister concern of the Hashoo Group, is one of the key market players and a direct victim of the terrorist attack on Marriot Islamabad in 2008.

Though it continues to work on expansion plans and has initiated some new projects, still the management is waiting for a perfect time, before pressing on with major room expansions for some of its properties, like Pearl Continental Lahore.

“Business comes on anticipation, we have high hopes from military operations, once Karachi becomes peaceful and India-Pakistan trade gains momentum, every player will get its share,” said Haseeb Gardezi, General Manager of PC Lahore.

Unlike Karachi and Islamabad, the ratio of room occupancy in Lahore is not consistent. Though the management has spent Rs100 million on the renovation of 193 rooms and Rs450 million to fix the parking problem in the past couple of years, still its major expansion plan for the construction of 250 rooms is on hold, simply because of the low occupancy rate.

At present, the Lahore hotel is being supported by intercity travellers, particularly the representatives of local companies, as the number of foreign delegates is not very encouraging.

“Our focus is on rooms as they provide a bigger profit than expenses. But the hotel currently is being led by restaurants and banquet halls. In the case of room occupancy, there is no consistency,” Gardezi said.

The room category of PSL, which includes Pearl Continental, Marriot and Hotel One, posted a revenue growth of 11% for the first nine months of fiscal year 2014-15. However, in the food and beverages segment, a slight decline in revenue was registered.

During the period, the company generated a revenue of Rs2,795 million against Rs2,804 million in the corresponding period of previous year.

Fiscal year 2014-15 was not a great year for PSL. In the first nine months, the company posted a profit of Rs604 million against Rs1.21 billion for the corresponding period of previous year, a dip of almost 100%.

“Overall, we observe no betterment; the yield is getting better, but not the volumes. We are not incurring loss, other segments of the hospitality industry are supporting us, however in Lahore, we are 15% below our anticipated budget,” said Gardezi.

“How you can expect this industry to flourish when we faced a prolonged sit-in and Karachi airport attack,” he asked.

The arrival of Sikh pilgrims from Indian Punjab has also declined due to the sad happenings this year as against the booking of 80 rooms, only 15 pilgrims stayed in hotel this year.

Published in The Express Tribune, August 15^th, 2015.

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