Declining Hotel Industry in Pakistan

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CREDITS

This Research Project is a collaborative effort of

Iqra Khan Sidra Ghazanfar

Saad Zafar

Zoya Chaudhry

Kokab Khalid Mudassir Khalid

MB-08-12MB-08-06

MB-07-53

MB-08-06

MB-08-20MB-08-61


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INTRODUCTION

The Hotel industry is among the top three constituents ofthe world economy after oil and autos. It is larger thanautomobile industry in Japan, agriculture in the U.S.A. andbanking in Switzerland

In Pakistan this industry contributes a large proportion tothe countrys economy.

A large percentage of the countrys revenue come fromthis industry

It is unfortunate to know that instead of growing withworlds trend, this industry in Pakistan has rather taken aback seat in the revenue generating services.

Our hotel industry is declining rapidly.


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The major players of hotel industry in Pakistan are, of

course, the Pearl Continental, Sheraton, Marriott andHoliday Inn chains and then there is a Serine hotel chainwhich is at the more prominent tourist spots

The Holiday Inn was taken by the Marriott and the hotel

Taj mahal by Holiday inn crown plaza, though sourcesindicates the later has since broken its chain with theHoliday Inn on account of various reasons. (for e.g. poormanagement and small investment)

Moreover the recent attack on the Marriot hotel(Islamabad) and Taj Mahal (Mumbai) has seriouslydamaged this industry


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Marriott bombing in Islamabad

Taj hotels bombing in Mumbai


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OUR OBJECTIVE

Our main focus is to root out the real cause

of decline of hotel industry in Pakistan andto find which factor contributes more to

this decline


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LITERATURE REVIEW

we conducted a literature review to further explore andclarify the research on this topic. The literature reviewincludes ten peer reviewed research studies, journals,articles and other scholarly work.

1) Manav Thandani (2008) in his articleTerror Strikes:The Indian Hotel Industrys 9/11has discussed theimpact of Bombing on Taj Hotels Mumbai on the overallhospitality industry of India . The global economic crisis

of the past few years has been difficult enough for hotelsector and the bombing at Taj has compounded thesituation further.


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2) Ingram & Baum (1997) in their study namedChainAffiliation and The Failure of Manhattan Hotels

examine the set back of Manhattan Hotels due tochain affiliation.

3) Wind, Green, Shifflet & Scarbrough (1989) presentedtheir research study inCourtyard by Marriott:Designing a hotel facility with Consumer BasedMarketing Model.In this they have examined whythe segment of business travelers was not satisfied

with current hotel offerings. Reasons as identified werethat some hotels cost too much and offer features notvalued by the travelers while others that cost less offer

too few of the desirable features.


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4) Ann Goodman (2000) in his studyImplementingSustainability in Service Operations at ScandicHotelsexplored that the factors that caused the just

collapse of Scandic Hotels were the recession in Scotland

the Gulf War

unfocused strategy

No crisis awareness

rapid growth

Messed management

increasing awareness of people regardingsustainability practices.

5) 2009 Industry Outlook: Tourism hospitality andLeisurediscusses that U.S hospitality industry suffereda great set back due to Economic Crisis in 2008. Itresulted in decreased tourist activities that subsequently

caused falling hotel occupancy rates


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6) Ingram & Baum (1998) in their research studySurvival-enhancing learning in The ManhattanHotel Industry 1898-1980examine thatorganizations enjoy reduced failure with increasedsurvival-enhancing learning from population experiencebefore their founding the organization; but not after.Related organizations provide experience that lowers

failure, but it matters whether their experience is localor non-local

7) Robert Kiener in his articleCrisis in Pakistan

examines the critical situation of Pakistan concerninglaw & order, terrorism and government instability. Andhow these factors participate in damaging the economyof Pakistan particularly its hospitality industry.


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8) Smith Barney in his articleGlobal hotel industriesexplores the aftermath of 9/11 that further recessedhotels economy. It was the enormous lay offs and

lessened development of hotels human resource.

9) Wilder, Gates and Wolfe in their workHotelInvestment Activity in Canada Witnesses

Significant Declinediscusses that the global creditcrunch and the recession that followed have hit theCanadian hotel real estate sector, which experienced a77% decline in investment activity

10)Paul Slattery in his articleHospitality industrydefines the true services of any hospitality industry. Heargues that nowadays hotels are foregoing theseservices in the best interest of their hotels as a sourceof business to them.


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THE PROBLEM STATEMENTTO WHAT EXTENT DO TERRORISM, LACK

OF TOURISM, CHAIN AFFILIATION,GOVERNMENT INSTABILITY AND POORTECHNOLOGICAL CHANGES CAUSE THE

DECLINE OF HOTEL INDUSTRY INPAKISTAN?


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THEORETICAL FRAME WORKTechnological

changes

Lack of tourism

GovernmentInstability

Terrorism

Decline in HotelIndustry Pakistan

Dependent

VariableIndependent

Variables


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TYPE OF STUDY

This is an Exploratory studyin which we

tried to explore the various variableswhich are effecting the main variable i.e.

Decline in hotel industry in Pakistan


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UNIT OF ANALYSIS

The unit of analysis is Individual, since weare measuring responses of individuals forour research


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DATAMETHODOLOGY


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SAMPLE SIZEWe have a sample size of 100. The sample was

taken from Multan. It includes : Hotel Customers

Hotel Management

General Public

SOURCES OF VARIABLE

Our main source of variable is primary

source ( Interviews and Questionnaires) and thesecondary source of literature review.


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MEDIUM OF COMMUNICATION

Our medium of communication waspersonal interviews by which we get thequestionnaire filled


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DATA COLLECTION METHOD

The data was collected through questionnaires.We met the respondents personally and got thequestionnaires filled.

The only problem was the time constraint. The data was tabulated in the form of a

worksheet using SPSS software. Questionnumbers were taken vertically and thequestionnaire choice numbers were takenhorizontally on the table.


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METHODOLOGY

In this report we have used Descriptiveand Empirical statistics.


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DESCRIPTIVE STATISTICS

In descriptive statistics we have used

frequency distribution in which wecalculated mean, median, variance, andstandard deviation. Graphically we have

presented the data in the form of piecharts as follows :-

H t l D li i


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Declining ChainAffiliation

Law

&

Order

Lack

of

tourism

Lack

ofTechnology

Terrorism

Effect

N Valid

Missing100

0

100

0

100

0

100

0

100

0

100

0

Mean 2.92 2.27 2.30 1.77 1.27 1.76

Median 3.00 2.00 2.00 2.00 1.00 2.00Mode 2 2 2 2 1 1

S.D 1.12 5.664 .959 .723 .446 .986Variance 1.266 .442 .919 .522 .199 .972Min 1 1 1 1 1 1

Max 5 3 5 4 2 5

Hotel Declining


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FREQUENCY TABLES


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Decline of Hotel IndustryFrequency Percent Valid

PercentCumulativePercent

Valid Strongly

Agree8 8.0 8.0 8.0

Agree 35 35.0 35.0 43.0Dont

know22 22.0 22.0 65.0

Disagree 27 27.0 27.0 92.0

Strongly

Disagree

Total

8

100

8.0

100.0

8.0

100.0

100


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Chain Affiliation

Frequency PercentValidPercent

CumulativePercent

Valid

Very much12 12.0 12.0 12.0

Somewhat49 49.0 49.0 61.0

Dont

know 39 39.0 39.0 100

Total 100 100.0 100.0


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Law and OrderFrequency Percent Valid


Valid Strongly

Agree19 19.0 19.0 19.0

Agree 47 47.0 47.0 66.0Dont

know20 20.0 20.0 86.0

Disagree 13 13.0 13.0 99.0

Strongly

Disagree

Total

1

100

1.0

100.0

1.0

100.0

100


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Lack of TourismFrequency Percent Valid


Valid Strongly

Agree36 36.0 36.0 36.0

Agree 55 55.0 55.0 91.0Dont

know5 5.0 5.0 96.0

Disagree 4 4.0 4.0 100.0

Strongly

Disagree

Total

0

100

0.0

100.0

0.0

100.0

100

T i Eff t


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Terrorism EffectFrequency Percent Valid


Valid Strongly

Agree48 48.0 48.0 48.0

Agree 40 40.0 40.0 88.0

Dont

know3 3.0 3.0 91.0

Disagree 6 6.0 6.0 97.0

Strongly

Disagree

Total

3

100

3.0

100.0

3.0

100.0

100


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Frequency Percent ValidPercent

CumulativePercent

Valid Yes

No

73

27

73.0

27.0

73.0

27.0

73.0

100

Total100 100.0 100.0

Technological Changes


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PIE CHARTS


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Strongly Agree

Agree

Don't know

Disagree

StronglyDisagree

LAW & ORDER EFFECT


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Strongly Agree

Agree

Don't Know

Disagree

StronglyDisagree

LACK OF TOURISM EFFECT


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EMPIRICAL STATISTICS

In empirical statistics we have donehypothesis testing. The results of it will be

shown later


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ESTIMATION

&RESULTS


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REGRESSION ANALYSIS Firstly to Analyze our data by applying Regression on all

the independent Variables (Tech, Lack of Tourism, lawand order, Chain affiliation , Promotion, terrorism, Govt.instability) in our Questionnaire .Reducing number ofthese variables and applying regression on most relevantvariables we get best Fitted Estimated Regression

Equation

Y = 1.552 + 0.286x1+ 0.66x2+ 0.475x30.135x4Y = Hotel Industries Declining (D.V)

x1 = Technological Changes (I.V)x2 = Lack of Tourists (I.V)X3 = Government instability (law and order) (I.V)X4 = Terrorism (I.V)


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DATA & METHODOLOGY

* = 0.1

** = 0.05

*** = 0.01

*, **, *** Represent Significance at10%, 5% , 1% respectively

Y X1 X2 X3 X4

(Declining)*

0.286 (0.08)*

0.66 (0.06)**

0.475 (0.02)***

- 0.135 (0.002)


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Overall model result that we found with theANOVA Table

p - value = 0.031 **

It will be significant on 5%

R2(R-square) = 1.08 Higher

Standard Error (S.E) = 0.72 Least

So overall result shows the significant relationship betweendependent and independent variable


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RECOMMENDATIONS

&LIMITATION


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RECOMMENDATION

In the light of these findings we are able torecommend some suggestions to hotelmanagements and Government authorities.

Recommendations for Hotel Managements

The quality of food should be improved tofacilitate the hotel accommodators

The hotels should follow the new technological

trends of recent times There should be proper marketing and sales

promotion for their hotels.


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Hotels should be constructed at convenient andhealthy locations.

There should be proper security system to securethe hotel from terror attack.

They should raise their voices and negotiate withgovernment to chalk out sound policies for theimprovement in hotel and tourism industry.

Parking facility should be provided proper space.

Room services should be according to the needs of

customers. Attendants should be adequately trained, educated,

well behaved and efficient.


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Recommendations for Government Authority

The Government should reduce / rationalize thenumber of taxes and their rate for the bettermentof customers / guests, as well as, for the hotelmanagement. If the government lowers taxes the

hotels will be able to provide better facilities atlower rates having no strain on their margins

There should be effective marketing strategy forthe promotion of tourismand hotel industryinside the country, as well as, outside country forwhich tourism department must be mobilized.


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Airport facility should be provided to all big aswell as middle sized cities and availability of

regular flights from remote locations should bearranged.

Government should provide long term and short

term loans on reasonable mark up for thegrowth of industry .

Government should make efforts to attracttourists from all over the world and make suretheir security.


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LIMITATION

The personal interviews we conductedwith hotel management was the only

limitation we identified. It is because thehotel management dont communicate theunderlying weakness of their hotel truly.


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WE REALLY THANK

YOU FOR YOUR KINDPATIENCE

Declining Hotel Industry in Pakistan

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