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HOTEL INDUSTRY AN OVERVIEW

In any country, the hospitality industry is inextricably linked with its overall economic prosperity and resourcefulness. In other words the developmental level of the hospitality industry could well be considered the index of its all round growth. Trade and commerce too would be unable to thrive were there not adequate facilities and provisions for the overseas traders and business people. Hospitality industry is also directly proportionate to the inbound tourism to any particular country. The various countries of the world like Egypt, China, Mexico, Pakistan and Nepal etc., that were the seats of ancient civilizations, are till date the most favorite destinations of the tourists from all corners of the globe. Hence each of them has vast potentials for developing both tourism and hospitality industries. In this era of increasing globalization, hospitality industry or hotel management is assuming greater significance and fast evolving as a lucrative career option. The history of hotel industry is as rich as the history of civilization itself. From the moment that cities and towns began to spring up, the need for lodging for travelers was obvious.

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COMPANY & PRODUCT PROFILE

COMPANY PROFILE: AVARI HOTEL LAHORE - HISTORY TIMELINE In 1905 Two Italian gentlemen, Falettis and Nedous, start building a hotel in Lahore. Completed in 1908, named the Nedous, this hotel is not only in the heart of History itself, as it belongs to the daughter of Mr.Nedous, who marries Sheikh Abdullah, the late president of post partition Kashmir. In 1947, after the independence of Pakistan, Nedous was not run as hotel, but was turned into numerous small offices. In 1961, after Nedous was auctioned to the late Mr.Dinshaw Avari and after extensive renovations, Park Luxury Hotel came into existence in 1962 with 80 rooms,50 of which were suites, Park luxury boasted of 5 dining halls, a lobby, card-room, billiard rooms, garages and 150 rooms for servants. Each of the 50 suites, besides a huge bath offered attached dressing and sitting rooms and a parking garage! Vedera (rich landlord) and businessmen were the usual clients. Year 1970 saw the end of this grandeur as this building was demolished according to a contract with the government. The foundation stone for the present hotel was laid on September 23rd 1973 and was inaugurated on January 3rd 1978, in association with Hilton international for 10 year. Hilton International Lahore operated as on of the only two five-star Hotels in Lahore. On October 1st 1988, this contract came to an end the management of Hilton International Lahore reverted back to the owners, Avari Hotels limited. The Avari hotels in Lahore and Karachi now portray a new corporate logo with the name Avari Lahore and Avari Tower Karachi. (Annex 1) AVARI GROUP OF COMPANIES Avari Family own and manage following hotels Pakistan as well as in Dubai & Canada: Avari Lahore. Beach Luxury Karachi. Avari tower (Karachi). Islamabad (Under construction).

____________________________________________________________________ 3 Avari Dubai (UAE) Ramada Toronto ( Canada)

Moreover Avari Family also owns following companies operating in various sectors in Pakistan: Spencer & company (Pakistan) limited Beach Brewery (Pvt.) Limited Avari Travel Agencies (Pvt.) Limited

PRODUCT PROFILE The complete Product/Service range of Avari is described bellow: 1. Rooms There are 186 Deluxe guest rooms, including 12 Executive suites, 3 Large Deluxe suites, 6 Jacuzzi rooms, and a no-smoking wing. The services provided in rooms are: Individually controlled air conditioning. 24 hour room service. Two phones and a large business writing desk. 20 satellite channels on remote control TV sets. Fully equipped business center Modern amenities. Complimentary morning tea/coffee service.

2. The Avari Club Exclusive rooms at the club floor with express check-in, check-out with an added measure of privacy and attentive guest service.

____________________________________________________________________ 4 3. Restaurants Avari is providing different kind of restaurants which are specialized in providing high quality of food and variety according to the different tastes of the customers. Kims Fort Grill Fujiyama Dynasty The Tolington La patisserie Samovar Local and continental cuisine Local and continental cuisine Authentic Japanese specialties Chinese cuisines (Sichuan) Pakistani BBQ specialties Fast food and bakery Snacks/Traditional afternoon tea 130 seats 110 seats 126 seats 120 seats 200 seats 20 seats 40 seats

4. Recreational Facilities Avari Lahore is providing recreational facilities like temperature controlled swimming pool, health club with gymnasium, massage and steam bath. Moreover; jogging track, badminton court, Volley ball, Golf practice net, three championship golf courses, Horse riding and Polo ground nearby are also provided to its valued guests.

____________________________________________________________________ 5 5. Guest Services Following are the services provided to the guest that stay in Avari Lahore. Non Smoking Rooms Hair & Beauty Saloon Suites Major accepted 1 IDD Phones in each room Car Rental In-Room Fax in Penthouse Suites Baby Cot / Baby Sitting Voice Mail Facility Currency Exchange Satellite TV Internet & Email Services 24 Hours Room Service Gift Shops In-room complimentary Tea/Coffee Laundry & Dry Cleaning 6. Conference, Banquet & Meeting facilities. In order to meet the need of business, educational and ceremonial requirements , Avari Lahore has provided state of the art Audio and Visual equipments in its halls. A professional team is also available to handle details during official/non official meetings, international conferences or corporate board meetings. Credit Cards Valet Parking Complimentary Shuttle Private Meeting Rooms Business Centre Sight Arrangements Contemporary Amenities Outdoor Swimming Pool Airlines Sales Office Health Club / Gymnasium / Massage Jacuzzi / Sauna / Steam Bath Doctor on Call Tennis & Golf Courts / Scuba Diving Nearby E-Rooms printer connection) Car Parking (Computer, & DSL Seeing Airport

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THE STRUCTURE OF EXTERNAL ENVIRONMENT

Macro Environment Economic environment In any country, the hospitality industry is inextricably linked with its overall economic prosperity and resourcefulness. In other words the developmental level of the hospitality industry could well be considered the index of its all round growth. Pakistans economy has changed a lot during few years and it has affected Avaris business as well. Our economy is growing but due to inflation rate, peoples purchasing power has decreased and it has decreased the Avaris sales as well. People are becoming uncertain about the future and are spending less which in result has made the profits to decline. Political Environment As the changing political situations in Pakistan have affected the entire industry it also has decreased the business for Avari. Because of this political instability people from abroad are avoiding from coming Pakistan. Terrorism and suicide attacks are a major cause of less business as well as destroying the image of our country. Investors dont consider Pakistan a safe place for their investment, no foreign delegations as well as tourism have also decreased in nut shall Avari is faced with decreased business. Legal environment Avari is operating according to the rules and regulations of government. A tax rate of 24.2% is paid. Avari also have Permit room which controls the sale of liquor to the non Muslim holding liquor permit .But it also operates in accordance to the legal rules. Social environment: Social and cultural factors are one of the significant factors affecting a business of Avari. It changes its strategies in accordance to the change in social environment. Basant festival was one of the famous occasions celebrated in Lahore but because of the legal restrictions this time it was not celebrated which resulted in reduced profit. But taking it a social responsibility Avari made its policies accordingly. Talking about culture Avari has a Lobby that portrays the old Mughals paintings which gives a snapshot of the splendid past.

____________________________________________________________________ 7 Micro Environment Customer: Avari Hotel has segmented its customer in three categories Foreigners Corporate Sector Walking customers/Companies 50% 30% 20%

Avari hotel has a competitive advantage that it has contracts with British and US conciliates and there representatives stay at Avari during there visit in Pakistan. They are a major portion of Avaris customers that is fifty percent. Avari facilitates them by providing pick and drop facility from the airport. During there stay they are served with the international standers of facilities and comfort. Corporate sector and business personals is the second bigger share of Avaris customers. It includes those personals that come to Lahore for their business purposes, meetings, seminars etc. Twenty percent of the customers are named as walking customers. This percentage of people come to Avari for food or for attending functions like weddings, birthday parties etc. Competitors Avari has a direct competition with Perl Continental Lahore .Avari is market challenger to PC. As a challenger Avari uses the Frontal attack strategy in which it targets to mach the competitors marketing efforts. Avari and PC share a sales comparison sheet including the revenue and sales on the daily basis, which helps them to improve there strategies and functions. But in some fields Avari is using Bypass attacks strategy as well. The competitive situation prevailing in the market for Avari is Oligopoly because a few hotels control the market almost entirely and the market share left by these giants cant be attractive for the new entrants. Avari is expecting to have its direct competitors; Grand Hayyat which is going to come in operation in the next 4 years till then there is no direct threat to Avari.

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Technological environment As technology is considered to be one of the sources for creating competitive advantage Avari is paying more emphasis to it. WiFi is being used inside the building and a new up to date Software Micro Fidelio is installed for data entry. Business center is providing the facility of computer and internet to the consumers for the purpose of checking mails, international dialing and tele-fax.

MARKETING MIX (7 PS)

Avari develops a complete marketing program to reach its consumers by using a combination of seven tools; known as seven Ps which are as follows Product Price Place Promotion People Process Physical Evidence

1.

PRODUCT/ SERVICES Now a days hotel industry is very much different from the one which existed in the past. Previously hotels were providing a limited range of services like stay and food, but now the needs have changed as well as have the services. The same change has affected Avari and its offering more then the basics. Its offering a wide range of services to its customers like:

____________________________________________________________________ 9 There are 186 deluxe guest rooms, including 12 executive suites, 3 large deluxe suites, 6 Jacuzzi rooms, and a no smoking wing. Individually controlled air conditioning. 24 hour room service. Two phones and a large business writing desk. 20 satellite channels on remote control TV sets. Fully equipped business center Modern amenities. Exclusive rooms at the club floor with express check-in, check-out with an added measure of privacy and attentive guest service Temperature controlled swimming pool, health club with gymnasium, massage and steam bath, also available, jogging track, badminton court, Volley ball and Golf practice net, three championship golf courses, Horse riding and Polo ground nearby. 2. PRICE Avari uses different prices for its different target markets. Price is a major component in customer judgment of both product and company as Avaris target market is focusing on upper class so prices are high according to its competitors prices. Conference, Banquet & Meeting facilities. Restaurants

Banquets This section works closely with guest in making arrangement for wedding, social events, private and meetings. The banquet rooms are also equipped to handle individual trade groups, conventions, and seminars. The main banquet halls and their seating capacities are: -

____________________________________________________________________ 10 Khorshed mahal The Khorshed Mahal is the main banquet hall of the Avari hotel has a capacity of 900 persons. From 9:00am 11:00pm From 9:00am 01:00pm From 9:00am 05:00pm From 7:00am 11:00pm Dinshaw mahal Dinshaw Mahal is the second larger hall of Avari hotel and has capacity of 750 persons. From 9:00am 11:00pm From 9:00am 01:00pm From 9:00am 05:00pm From 7:00am 11:00pm Sutlej hall Sutlej hall has the capacity to accommodate 750 persons. From 9:00am 11:00pm From 9:00am 01:00pm From 9:00am 05:00pm From 7:00am 11:00pm Function rooms From 9:00am 11:00pm From 9:00am 01:00pm From 9:00am 05:00pm From 7:00am 11:00pm Rs. 90,000/+Tax Rs. 50,000/+Tax Rs. 55,000/+Tax Rs. 55,000/+Tax Rs. 80,000/+Tax Rs. 45,000/+Tax Rs. 50,000/+Tax Rs. 50,000/+Tax Rs. 100,000/+Tax Rs. 60,000/+Tax Rs. 85,000/+Tax Rs. 85,000/+Tax Rs.135, 000/+Tax Rs. 80,000/+Tax Rs. 90,000/+Tax Rs. 90,000/+Tax

____________________________________________________________________ 11 Moghul / Hunza room From 9:00am 09:00pm From 9:00am 01:00pm From 9:00am 05:00pm Board room: From 9:00am 09:00pm From 9:00am 01:00pm From 9:00am 05:00pm Avari lawns From 9:00am 11:00pm Rooms Executive Club Rooms: Single Rs. 34,000/- Double Rs. 41,500/Business Club Rooms: Single Rs. 25,000/- Double Rs. 39,500/Deluxe Rooms: Single Rs. 25,000/- Double Rs. 37,500/Junior Suite Rs. 35,000/Shalimar Suite Rs. 40,000/Shahi Suite Rs. 43,000/Residential Suite Rs. 45,000/Presidential suite Rs. 55,000/(Rates are subject to government taxes at the current rate of 24.2%) Rs. 200,000/+Tax Rs. 20,000/+Tax Rs. 8,000/+Tax Rs. 10,000/+Tax Rs. 20,000/+Tax Rs. 10,000/+Tax Rs. 20,000/+Tax

____________________________________________________________________ 12 3. PLACE Avari is located in the heart of Lahore. Major cultural, commercial and tourist attractions, bazaars with wonderful shopping opportunities enhance the importance of its location. Its just 20 minutes drive from Lahore international Airport along the famous Mall a tree lined avenue surrounded by parks and gardens. 4. PROMOTION Avari is performing many functions in order to achieve its promotional targets .It has a separate marketing department that takes the responsibility of making the customers aware of the new and existing services. Avari emphasizes more on personal selling but other tools like billboard, brochure are also used. 5. PEOPLE The people who work in an organization are central to its success, because business can only be conducted between human beings. Avari considers its employees as assets which are the basic reason for its outstanding performance and growing business. In order to enhance their efficiency training programs are conducted and employees are empowered, which makes them capable of performing their duties in better way. Avari has a formal organization hierarchy which helps to understand the entire organization. 6. PROCESS Process includes all the functions perform by Avari Lahore and process is well defined with the help of this blue print diagram. 7. PHYSICAL EVIDENCE Physical evidence can be a perfect way of creating competitive advantage. It includes all the things that can be touched. In case of Avari its physical evidence include its building, decor, facilities on demand, Swimming-pool, towels, pens, notepads, sleepers, shopping bags, laundry, car facility, brochures etc the quality of all these things matter a lot and portray the brand of Avari Lahore.

____________________________________________________________________ 13 Avari hotel uses its physical evidences in order to enhance its brand image. Recently it has renovated its lobby in the theme of Great Mughals, which has helped it to differentiate itself from the other hotels.

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BCG MATRIX

It is used in order to get a snapshot of the business.

High

Market Share

Low

As Avari is growing and has a dominant market share .It falls in the category of stars. Hotel industry in Pakistan is growing as well as the trend of hanging out. People are more attracted in trying international foods (chines) of different flavors. Avari is capturing this market share by offering different range of international foods like Japanese restaurant in Avari is one of its kind in Lahore offering unique Japanese dishes along with this Avari has Chines food as well.

Lo w Ma rket Gro wth Hig h

STARS AVARI

QUESTION MARK

CASH COW

DOGS

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Market coverage strategies Avari pays very much attention in choosing the right market because if its not performed well it will result in lost opportunities and waste of resources. The market coverage strategies followed by Avari are:

Product market concentration

Here Avari Lahore is concentrating in its major segment that is foreigners, because most of Avari Lahore revenue comes under this segment. Avari Lahore is capable of providing all the necessities that are required by its target market, whether they are foreigners, corporate customers or walk in customers. Each segment has been provided all the facilities required by them. Avari Lahore is providing a wide range of products and services to its target customers, and the detail of the products and services offers by Avari Lahore has been explained earlier.

Market Specialization

Product specialization

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7. CREATING VISION,

COMPETITIVE

ADVANTAGE:

MISSION,

OBJECTIVES,

SEGMENTATION,

TARGETING,

POSITIONING & COMPETITIVE STRATEGIC DECISIONS

MISSION STATEMENT We Aim To Provide All Our Guests Outstanding Quality and Comfort with Genuine Friendliness and Professional Warmth STANDARDS TO ACHIEVE MISSION BY Unconditional Teamwork and communication. Being fair with our Guests and with our colleagues. Personal responsibility: o For oneself. o For Property. Protecting assets Identifying defects For knowing the product For making Guest complaints your own and recording. OBJECTIVES OF AVARI To provide high quality services at competitive market rates. To achieve hospitality excellence. To ensure the comfort of the wellbeing of the guests. To provide a differentiated product

____________________________________________________________________ 17 SEGMENTATION Avari Lahore has segmented its customers in to three categories that are Foreigners Corporate Sector Walk in customers

Almost the entire revenue of Avari is coming through these sectors. Most of the profits come from the first two segments and Avari is making it possible to provide all the services of international level which their customer needs. As far as foreigners are concern there are some services which are not provided to them such as international level bar and casino as these two aspects are not legally allowed in the surroundings of Pakistan but still Avari is trying to provide all the necessary services to its foreign customers.

TARGETING Avari Lahore is targeting on the first two categories of its customers that are foreigners and corporate sectors and providing them the international level of facilities. Targeting decisions Segment size Large 50% foreigners Large Large Sector Large Small 20% walk in Large food Pearl continental & Holiday inn 30% Corporate Small events Pearl continental & Holiday inn profit/unit sold Large Hotel Number of competitors Large Pearl continental & Holiday inn

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POSITIONING Perceptual map of Avari hotel

Good Quality
1.0 0.8 Peal

Avari

Holyday inn
Low price
-1.6 -1.4 -1.2 -1.0 -0.8 -0.6 -0.4 -0.2 -0.2 -0.4 -0.6 -0.8

0.6 0.4 0.2

continental

High price
0.6 0.8 1.0 1.2

0.2 0.4 1.4 1.6

Poor Quality

Perceptual map shows that Avari hotel providing good quality and high prices as compare with Pearl continental hotel. There are few other names in hotel industry in the market which are doing well for customer care, while Avari hotel giving good quality along with healthy environment. Avari Lahore is challenging to pearl continental hotel.

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CORE COMPETENCIES Avaris core competencies include:

Lady Avari It is aimed to facilitate single lady traveler providing with comfort privacy and security. Rooms are looked after by lady staff. Best Japanese food restaurants Fujiyama the Japanese restaurant located on the second floor the only Japanese restaurant in the city, now even more attractive and enjoyable with Chef Takas special menu including imported seafood and authentic Japanese dishes. The chefs prepare dishes right in front of the customer which indicates the best quality and hygienic food. 3 time winner of safest hotel Avari has the credit of winning the safest hotel award since three years. it is a clear indication of Avaris excellent performance and service toward its customers. Diplomat of US and UK embassy Avari has been a diplomat with the US and UK embassies which consist of the biggest segments of its customers. Own garden (providing vegetables) Avari owns a beautiful garden which not only provides a beautiful view but it as well provides the seasonal vegetables to the kitchen.

____________________________________________________________________ 20 SWOT ANALYSIS OF AVARI Strength Quality of services. Lady Avari, lounge only for business lady. Quality of food. Best japans food restaurants. Security system. Swimming pool. Brand name. Courteous and friendly staff. Homely environment. Way of handling customer complaints. Big Lawns. Avari hotels chains. Limited number of rooms. Limited car parking. Parking at your own risk write down which create a bad impression to customer. No music function. Old building. Fail to establish a long term relation with external customers. Lack of mass marketing. Regular cocktail parties. Unusable roof. Lack of automation. Too much paper work. No setting arrangement for the candidates. Poorly designed and furniture in all departments expect GM offices. High turnover rate last four year.

Weakness

____________________________________________________________________ 21 Unhygienic food provided in employee cafeteria. Low wages rates as compare to the other hotels. Limited bulge in entrance lounge customer feel difficulties when using their laptop or charging their mobiles set. Opportunity Threat Pearl continental Hotel brand image and its coverage in Pakistan. Pearl continental Hotel extensions. Low rate Hotel and Guest houses. New competition diver. Political instability. Poor country image due to terrorism. Regular training of sale staff of competitor. Large number of sale teams of competitors. Low customer Loyalty. City image as an expensive one. Back lawns. New property at Islamabad. New food outlet. Future renovations and extensions plan. Implementation of new sales process. Improved communication. International Trade fair. Loyalty Program. Construct Avari hotel in GAWADER.

____________________________________________________________________ 22 RECOMMENDATION FOR A SUTIABLE COURSE OF ACTION

Limited car parking Avari has very limited amount of space available for the car parking. Customer face problems when they have to park the cars especially when there are functions or other occasions happening. There is a board saying Parking at your own risk which creates a bad impression on the customer as the security of the vehicles is the responsibility of the hotel. They must have a basement for car parking purpose. Hertz (rent-a-Car) can shift half of there cars to the air port and the hotel should do certain arrangements in order to facilitate the increasing number of vehicles. Old building Hotel develops in 1978 but no improvement in physical structure till now. It is management responsibility to change the physical location & bring some remarkable changes like use a crystal elevator, build a shopping mall. Department conditions During my internship period I observe people feel very bad to see the condition of Human resource department and they compare with the pearl continental hotel Human resources department which creates a bad impression to general public. Unusable roof Avari Hotel Lahore has a big un-useful roof they can utilize and develop a new human resources department with a proper setting arrangement and separate store room for the data storage and have an orientation room and training room all these offices at one place. Discriminations between contract and Avari employees This is responsibility of the government to remove the concept of Contract employees it create discrimination between employees and create a difference in benefits like Avari employee get two bounce in a year as compare to CT employees get one bounce in a year & twenty-eight annual leave for Avari employees and fourteen leave for Contractual employees.

____________________________________________________________________ 23 Low wages Low wages as compare to other hotels. That is the main reasons Avari turnover rates are very high last four years. Government of Pakistan passes a law of minimum wages must be four thousand per moth. It helps to reduce a turnover rates. Vision statement Vision determines the direction of change in an organization and in the individual. there is no more powerful engine driving an organization toward excellence and long range success than an attractive, worthwhile, and achievable vision of the future, widely shared. Vision clearly distinguishes leadership from management. As the citation from Proverbs indicates, having a vision is essential to the welfare, even the life, of the people. Unhygienic food Avari provide breakfast, lunch, and dinner facility to their employees with out any fee. The quality of food provides in employees Cafeteria is very unhygienic because employees are not happy with the menu and repetition is very often. Avari itself is services provided and it is his responsibility to provide a quality of food to their employees. Lack of Automation Half of their work are automated and rest of this are manually. They must have an automat data entry but they mostly relay on papers work because they think they must have a white and blacks written documents for the proof. Employees check-in and employees check-out they use a card system some time it takes a time for check-in and out. They must have a thump scanning system for check-in and out purpose.

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CONCULSION In nutshell it can be said that although Avari is operating on small scale but due to its core competencies and brand image it is growing more rapidly as compared to the rest of the industry. If Avari follows its expansion and growth it will be able to gain higher revenues. Its departments are contributing to its profitability. If Avari ads more facilities and services it can catch more market share.

____________________________________________________________________ 25 REFERENCES Pictures [online], available, www.avari.com, 15.05,2008 Mr. Raheel Siddique Sales Manager Avari Miss. Aysha Malik Brand Manager Avari