Hotel industry in hot waters

[LahoreEstate]

KARACHI, Jan 28: Hotel industry paints a gloomy business outlook for the current calendar in view of economic and political turmoil, worsening law and order in tribal areas and persistent threat of Indian aggression has knocked down the room occupancy to 30-35 per cent across the country.

Pakistan Hotels Association Chairman Mustansar Zakir said that many hotels had started offering discounts discretely on room charges and for holding of corporate and family functions.

“The hotel owners have also started downsizing of workforce especially the daily wage and contractual employees amid dull business environment,” he told Dawn on Wednesday. “However the hotel managements are trying hard to retain permanent staff,” he added.

In Karachi, he said the room occupancy surged to 90-100 per cent for few days when IDEAS 2008 was held a month back, but the hotel business had been facing low room occupancy since September 2008.

The rising lawlessness, mounting insurgency in

Swat and Waziristan and tensions with India after Mumbai incident had created anxiety among the visitors.

Besides, he added, the arrival of foreign buyers of local goods has also slowed down since the recession in developed economies particularly in the United States and Europe has depressed demand, he said.

He disclosed that that visiting executives from the US, Europe and Japanese companies, who earlier used to meet in the five star hotels, are now holding meetings with their local counterparts in their bungalows or offices due to security reasons.

Mr Mustansar said that many local and foreign based companies had also restricted holding of promotional campaigns of goods, seminars and business meetings in hotels. “The holding of corporate events has declined by at least 60-70 per cent in the last four months,” he added.

Family functions, which had already been slow after Muharram, has further become dull as many families are now preferring to hold marriage and valima receptions in big halls and lawns owing to security problems and check on car parking in the vicinity of leading hotels, he said.

“The year 2009 may remain highly depressed in terms of hotel business as the government is still not serious in tackling the economic and political issues,” he said.

When asked about discounts being offered on room charges, he said “this is a high time for our survival rather than making profits at these times.”

Muzaffar Baweja, the former PHA chairman, also confirmed to Dawn about downsizing of workers followed by holding back hiring of new workers in the last few months.

He was of the view that currently room occupancy ranged between 25-30 per cent in Karachi alone which was definitely not satisfactory. “Normal room occupancy is considered above 60 per cent,” he said, adding that price war among hotels has also started.

He said the hotel industry had been struggling hard to survive since the PPP-led coalition government came to power. “Neither the foreigners nor the cricketers of different countries are serious to visit Pakistan due to security concerns,” he added.

“I see 2009 as the worst period for hotel business in view of political and economic uncertainty coupled with tension in Swat and Waziristan,” he said.

http://www.dawn.com/2009/01/29/ebr3.htm