Research Analyst
Mar 21 - 27, 2011


Europe 378643 44.3
South Asia 178242 20.8
America 162451 19.0
Pacific & East Asia 88984 10.4
Middle east 27951 3.3
Africa 14659 1.7
Others 3975 0.5

The hotel industry is among the top three constituents of the world economy after oil and autos, and is growing faster than the petroleum and arms. It is larger than automobile industry in Japan, agriculture in the U.S.A. and banking in Switzerland. It is unfortunate to know that instead of growing with world trend, the tourism industry in Pakistan has rather taken a back seat in the revenue generated services. It is the only industry that earns the foreign exchange without exporting anything. The hotel industry with its charming and lively environment is apparently flourishing but the reality negates the fact and depicts the other side of the story.

The number of hotels in the country has increased from 845 in 1991 to 1150 in 1996, showing a growth of more than 26 per cent with the fastest growth in the number of hotels seen in 1993 which tapered off to 2.4 per cent in 1995 before picking up again in 1996. However, in August 2008, hotel occupancy rates fell. By the beginning of fourth quarter 2008, the Pakistan THL sector (Tourism, Hospitality and Leisure) was starting to see measurable fallout from the economic crisis in the form of negative indicators in the hotel industry, a slowdown in the gaming sector and increased trading down from casual dining restaurants to quick-serve restaurants.

Pakistan has emerged as an important investment destination for new hotel development. After a gap of almost five years, hotels in Pakistan are witnessing substantial increase in growth, both in terms of occupancy and average rate and this trend is expected to continue. Since Pakistan is on the rising curve of the trend cycle, hotels will show signs of better performance in yields through consistent occupancies and higher average rates.

The feasibility of new hotel development is determined by the relationship between replacement costs and existing values for hotels. Based on hotel value per room and the associated cost benefit ratio, the cities in Pakistan have been ranked. The hotel industry showed a growth of 9.7 per cent in hotels and 9.5 per cent in rooms over the year 2005-06. The average growth rate in hotel industry was five per cent in hotel establishments and 3.5 per cent in rooms during the last five years.

Sheraton Hotel and Avari Towers are regarded as the only five star hotels in Karachi.

International fast food restaurants like KFC, McDonalds and Pizza Hut are hotel's main competitors. These are creating problems for hotel industry.

Hotel business is declining because of growing terrorism and political instability etc.

People from all over the world usually come to meet their relatives; they do not contribute much to either the tourism industry or the hotel industry, because of increasing fear of bombings.

Most of the hotels and motels in Pakistan, particularly in the far-flung areas, hill stations and the tourists spots and even in the three major cities- Islamabad, Lahore and Karachi-are dependent on tourism, international business trips.

The major players are Pearl Continental, Sheraton, Marriott, and Holiday Inn chain and then there is a Serena Hotel chain located in tourist spots.

Growth in the hotel industry was seen in the late 80s and then some in early 90s but it was clear by this time that the industry had already entered in a recession. As far as the five and four-star hotels are concerned, there has been no growth as regard to fresh investment. Pakistani hotels are very much affected by the changes in technology. And, the most important is the government instability affecting the business. Every government has its own rules and regulations regarding the hotel industry.


2006 608 325 538
2007 1523 597 1479
2008 2155 654 3906
2009 2307 1011 8267
2010 1796 469 5170
2011 226 98 384

Uncontrolled bad law and order situation affects the overall country's image. Due to this Pakistan was disqualified from the group of co-hosting countries of cricket world cup 2011. Bangladesh, Sri Lanka, and India are enjoying the status of hosting nations for the world cup 2011. Unfortunately, the majority of the people in Pakistan think that it is completely double standards of the ICC because Sri Lanka and India have even worse conditions than Pakistan regarding the issue of security. The province Assam, Kashmir and others are continuously under bad law and order situations. Moreover, Bangladesh is also sharing a similar fate. Pakistan losing cricket world cup hosting is immensely felt by the masses in Pakistan.


Terrorist activities have greatly impacted the country's hotel industry and its image. The government should provide security to local and foreign tourists.