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Occupancy rates rise, but hotels differ on CPEC-related business

Occupancy rates rise, but hotels differ on CPEC-related business

KARACHI: Hotel occupancy rates are rising in Pakistan due to better law and order and increase in economic activity, especially related to China-Pakistan Economic Corridor (CPEC). However, hotels in different cities offer divergent views on business generated by CPEC-related activity.

Hotels in Karachi are witnessing comparatively higher number of Chinese visitors, whereas hotel operators in Lahore, Islamabad and Rawalpindi say the role of CPEC was not significant in a rise in occupancy.

In Karachi, budget hotels have been the main beneficiary of CPEC as their occupancy rates have risen by 15pc to 35pc compared to 2pc to 3pc hike in regular ones.

The share of Chinese people in the overall room occupancy in hotels of Karachi was 3pc to 6pc during the current year, about 1pc higher than the last year.

An official of Pearl Continental Peshawar said room occupancy and banquets have increased by 22 per cent and 15pc, respectively, as compared to the last year. He said occupancy has been on the rise since January due to improvement in governance and law and order in Khyber Pakhtunkhwa. Businessmen belonging to textile and pharmaceutical industries were frequent visitors, he said.

Sajid Jawed, director finance of Marriot Hotel Islamabad, said business activities relating to room occupancy and other events have been the same as of last year. He said the impact of CPEC was not significant. The number of banquets went down due a law restricting more than one dish, he said, adding that the impact of CPEC-related activities was more visible in Gwadar.

An official of Pearl Continental Rawalpindi said occupancy rates were unchanged. “I haven’t seen any impact of CPEC on my hotel business so far,” he added.

An official of Pearl Continental Lahore said the hotels of Karachi were now in a better position as many businessmen who had shifted to Lahore were now going back to Karachi due to better law and order. Hotel operators in Karachi offered mixed views regarding the impact of CPEC on the hospitality industry. They said that the hotel industry did witness a rapid growth due to increase in foreign investment inflows but the situation would become clear in a year.

A number of events involving Chinese companies have been held at these hotels, mostly through their government or business partners. Hotels are also generating Chinese business through online channels, they said.

The number of Pakistani businessmen holding meetings at hotels has also jumped, and there has been an increase in corporate guests in the last six months.

As the announcement of budget for the next fiscal year is round the corner, the Pakistan Hotels Association (PHA) has urged the government to cut taxes of the industry to promote construction of new hotels by providing incentives.

The PHA has sought revival of concessionary rates of Customs duty for the import of machinery, equipment and other items required for setting up new hotels, renovation and expansion of existing hotels (three stars and above).

“It is the need of hour to upgrade, renovate and expand the hotel industry to meet the boarding/ lodging needs of foreign delegates to their entire satisfaction and in accordance with the international standards of the hotel industry,” the PHA said.

The association said that the FBR should simplify the process, and the taxes paid by hotel industry should be grouped under a one-window operation, it said.

The PHA said there was a need to reverse the 5pc advance tax on banquets and meetings.

Published in Dawn, May 21st, 2017

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