The Centaurus

PROJECT REPORT Pakistan As The Destination For Investment

Submitted By : 1.Saadut Murtaza 2.Rehan Yousaf 3.Imran Ramzan 4.Naveed Nasir Submitted To : Mr. M.Saleem Siddiqi

Business Communication Submitted On : November 26, 2007

Department of Administrative 21065515.doc

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Sciences

Quaid-I-Azam University Islamabad

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ACKNOWLEDGEMENT By the gratuitous benevolence of Almighty Allah, we have completed this project report with all of our rigorous efforts. We hope that this project will eminently illuminate our decorous diligence made for the completion. We are very thankful to Mr. M. Saleem Siddiqi for guiding and helping us throughout in completion of this report. We hope that you will like our efforts and take advantage from findings of this report. We would like to take this opportunity to thank the staff of Centaurus for their support & participation made it possible to present this project.

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Executive Summary

This

report is on the investment opportunities in Pakistan. In this report we have explained why Pakistan is an investment paradise for foreign investors & what are the policies of the Government that persuade investment. We have selected the Services-cumManufacturing Sector. First of all we have described the Mission, Vision, Goals, & Objectives of the company. Secondly, we have explained that how the company is going to initiate the project & what are the measures taken for Budgeting, Construction, Purchasing, & Marketing activities. Moving ahead, we have developed marketing plan, financial plan, & operational plan for Centaurus. It is important to learn the practical implementation of the financial/investment systems in an organization along with the book knowledge. Furthermore we provided research findings by risk analysis & economic analysis. Then we developed feasibility report that helps investors to see what are the prospects of Centaurus in short term as well as long term. This project is comprised of research presentation by both academic and professional aspects of “Pakistan as the destination for investment”. It will help to learn the management techniques that improve the performance and professionalism of any finance manager. learning of this project will give the policy and procedural template to jump start the management system development. Going through the practical knowledge that could be achieved from this report can warn you of the management and technology pitfall bundled with financial investment usage.

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Table of Contents 1. Introduction of Company Mission Statement Goals & Objectives Brief History of Company 2. Reasons for Investment in Pakistan 3. Description of Investment Sector 4. Project Plan Work Breakdown Pert Diagram 5. Marketing Plan 6. Financial Plan Financial Feasibility Budgeting Plan 7. Economic Analysis 8. Risk Assessment 9. Operational/ Technical Plan Technical Resources Physical Layout Inventory Management 21065515.doc

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10. Services & Operations 11. Conclusion

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Introduction of Company PakGulf Construction Private Limited (PGCL): Mission Statement “The company believes in passing on bulk of the price and regulatory advantages to its customers because it believes that businesses can grow only by increasing prosperity at the widest possible scale, which is the sole justification for the existence of businesses. In spite of the odds that are likely to become tougher, the company will continue to do well by sharing these benefits with its valued customers”. Goals & Objectives: 1. Aim to gain the confidence of all its stakeholders by earning a credible reputation for being an innovative enterprise that is prepared to change in the best interests of its stakeholders. 2. Continually monitor structural changes in the various sectors of the economy, and accordingly alter the Company's business strategy to benefit from the emerging opportunities. 3. Focus on changing customer needs and strive to improve tangible and intangible returns to its customers by providing service and satisfaction at par with the best in the industry, which would be reflected in prompt risk evaluation and facility disbursement procedures and practices. 4. Consciously share, and remain part of all initiatives by the leasing industry to play a positive role in the evolution of small and medium-size enterprises to expand the country's industrial base and support economic growth, higher employment, and a better future for all.

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Brief History of Company PakGulf Construction Limited (PGCL) is a prominent real estate firm based in Islamabad, Pakistan. With a vision to take Pakistan into the next century, our philosophy is to create groundbreaking structures with modern methods & cutting edge technology. We believe in providing world class luxury lifestyle of our valued clients. The Company commenced operation in September 1996. During the past ten years, following the above policy, it has built a strong customer base and a reputation for being the provider of both high quality and competitive service to is expanding client base. Today, 85% of its net investment in leases is accounted for facilities extended to industrial and investment enterprises, and the balance to individual consumers. Our Team of experts manages all projects from inception to conclusion. This includes land purchase, appointing world renowned architects, executing & monitoring the progress of the projects with all liaisons & contractors & follow up with the final handover. PGCL brings a dynamic real estate project of epic proportions, The Centaurus. Located in the heart of Islamabad, set against the stunning backdrop of the Margalla Hills, The Centaurus covers 3 million square feet. This state-of-the-art project will include an indoor mega, lavish apartments, a premium corporate center & a 7-star deluxe hotel. PGCL has recruited the internationally acclaimed design firm, Atkins of UK. Atkins is a multidisciplinary firm, which their services spanning from concept to detailed design in architecture, interior & landscape. Their recently completed masterpiece is the Burj-alArab Dubai. This venture is progressing from concept to reality at an incredible pace. We are confident that The Centaurus will be the next icon of the Pakistan. Therefore, PGCL is a name that adds value to your assets successfully. Though time, many progressive thinkers across the globe created marvelous structures that eventually became the identities of their respective countries. Whether it was Gustav Eiffel’s entrance to a fair in the shape of the Eiffel Tower or the Pharoahs’ final resting place in the pyramids of Giza, Shah Jehan’s gift of love to Mumtaz as the Taj Mahal, or the Ming Dynasty’s first line of defense as the Great Wall of China, all these architectural wonders represent their countries today. At the time of their creation, they were all meant for different purposes.

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PGCL's Credit Rating: Effective January, 2007, the company's Credit Rating reaffirmed as follows by JCR-VIS, its credit rating agency: A-2 For short-term BBB+ For medium to long-term

PGCL's Compliance Status: The company is regulated primarily by SECP, and on certain matters by State Bank of Pakistan. Currently, the company meets all SECP regulatory requirements and, as such, meets all regulatory standards for this sector. In addition to being compliant with all regulatory requirements, PGL maintains good working relationship with SECP, and has a reputation of being a professionally managed company.

Organizational Structure Top Management Mr. Sohail Inam Ellahi Chairman Mr. Fawad S. Malik Vice Chairman Mr. Akbar M. Bilgrami Chief Executive Officer

Board of Directors

Senior Management

Mr. Pervez Inam Director

Mian Mohammad Shoaib, ACA CFO & Company Secretary,

Mr. Shaheed H. Gaylani Director Mr. Shaikh Aftab Ahmed Director Mr. Sheikh Mohammad Jawed Director Mr. Yousuf Jan Mohammad Director Syed Masood Hatif (Retd. Air Marshal) Director

Mr. Saleem Ahmad Zafar Chief Operating Officer Mr. Aamir Imtiaz Manager Lease Operations Mr. Abdul Sattar Dakhan Manager Administration, Legal Affairs Ms. Gulrukh

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Internal Auditor

Foreign Investment Mode Joint Venture

PGCL is joint venture of Al Tamimi Group (Saudi Arabia) and Sardar Builders (Pakistan).

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Background of Investment Code The government is open to foreign investment and offers a package of incentives to attract foreign investors. As part of an integrated investment promotion strategy, the government undertook a comprehensive program of social & economic reforms including liberalization, privatization & deregulation to bring the economy into a fully marketoriented system. This was aimed at capturing the potential of the private sector in all areas of the economic activity. Foreign investment is generally subject to the same rules as domestic investment, with the expectation of certain sensitive areas such as defense, production, & broadcasting. The new investment policy provides equal investment opportunities for both domestic and foreign investors. In new policy (April 1999) foreign investment on repatriable basis has now been allowed in power generation, telecommunication, highway, construction, port development, the oil & gas, services, infrastructure, manufacturing, hotel/tourism, agriculture, & social sectors. Government policies strongly favor investment proposals in the engineering/capital goods manufacturing sector that have large export or the value addition and local content components. The government’s investment policy provides all incentives, concessions, & facilities that are provided to domestic investors are also available to foreign investors without discrimination. A number of concession, such as exemptions from custom duties, sales tax concessions & a tax exemption on investment, as well as guaranteed repatriation facilities, have been introduced to accelerate industrial development in the country. A composite scheme of national industrial zones engulfing industrial estates, free industrial zones, free trade zones & export oriented units(EOU) and estates for small & medium industries within areas of its boundary has been launched to promote exports. According to ns investment policy, the incentives for free industrial zones, free trade zones & export oriented units with be as follows: The government also established an export processing zone(EPZ) in Karachi and two new EPZs- in Sialkot & Rawalpindi. The incentives are as follows: Complete exemption for all federal, provincial & municipal taxes, any foreign exchange control & insurance regulations as applicable in Pakistan upto year 2000; income accruing outside Pakistan exempted from tax; the loses, if any, on a industrial unit set up in the zone may be carried forward indefinitely; import of equipment, machinery & materials(including components, spare parts & packaging; material) for the enterprises

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setup in the zone is exempted from all federal & provincial taxes & duties including customs, excise, sales tax, & municipal taxes; “one window” service and simplified procedures- import permits and& export authorizations are issued by the export processing zone authority(EPZA); 10% ownership rights; 100% repatriation of capital; 100% repatriation of profits; no minimum or maximum operating in export processing zones are allows to undertake sub-contracting for units of tariff areas subject to payment of duties & taxes on value addition only; and units operating in export processing zones are allows to supply goods to customer manufacturing bonds. The United States is the top ranking direct foreign Investor in Pakistan. According to the government ministry of finance, cumulative direct foreign investment from US now totals $1,248.6 million.

Reasons to Invest In Pakistan Reason-1: Geo-strategic Location: Located in the heart of Asia, Pakistan is the gateway to the energy rich central Asian States, the financially liquid Gulf States & the economically advanced far Eastern tigers. This strategic advantage alone makes Pakistan a marketplace teeming with possibilities.

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Reason-2: Trained Workforce: Here the people are mostly English proficient, hardworking & intelligent. They have…… Lesser cost. Reason-3: Economic Outlook: Pakistan is one of the fastest growing economies of the world having touched a GDP growth rate of 8.4 % in 2005 & in 2007-----. Today Pakistan has 160 million consumers with an ever growing middle class. Foreign investment has risen sharply from at average of $400 million in the 1990 to over 3.5 billion in 2005-06. Fiscal deficit has declined from an average 7% of GDP in the 1990 to around 3% in recent years. And FOREX reserves have increased from $3.22 billion in 2000-01 to $13.14 billion in 2005-06. Reason-4: Investment Policies: Current investment policies have been tailor made to suit investor needs. Pakistan’s policy trends have been consistent, with liberalization, de-regulation, privatization, & facilitation being its foremost cornerstones.

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Reason-5: Financial Markets: The capital markets are paying modernized, & reforms have resulted in development of infrastructure in the Stock Exchanges of the country. The Securities & Exchange Commission has improved the regulatory environment of the stock exchanges, corporate bond market & the leasing sector. Whilst the Central Board of Revenue has facilitated structural reform in tax in tariffs & the State Bank of Pakistan has invigorated the banking sector into high returns on investment.

Foreign Private Investment (Promotion & Protection) Act 1976: An Act to provide for the promotion & protection of foreign private investment in Pakistan. Whereas it is expedient to provide for the promotion & protection of foreign private investment Pakistan, & for matters ancillary thereto.

Selection of Highly Profitable Sector

There is a lot of tourist potential towards Pakistan due to its ecological, cultural, & climatic diversity. So it is would be beneficial to invest in such a tourist concerned country to not only give them a feeling of being facilitated but also provide them whatever they are having in their hometowns in order to attract more potential tourists from all over the world. The major contribution of revenue generation in tourism for Pakistan from different countries is shown in a pie graph along with the revenue generation by Pakistan in this sector chorologically.

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Norway 13.5

japan 14.1 Canada23

Netherlands 10.7

Germany 24.7

U.K. 248.6

China29.6 India59.6 Afghanistan 77.7

U.S.A. 121.6

U.K. U.S.A. Afghanistan India China Germany Canada J apan Norway Netherlands

Top Ten Tourist Generating Countries to Pakistan-2005

Arrivals(000 Nos)

04 20

02 20

00 20

98

Reciepts(Us $ Million)

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96

900 800 700 600 500 400 300 200 100 0

Foreign Tourists Arrival & Receipts During the Period 1996-2005

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The Centaurus: PGCL is introducing a dynamic real estate project of epic proportions, The Centaurus, which is progressing from concept to reality at an incredible pace. We are confident that The Centaurus will be the next icon of Pakistan. Therefore, PGCL is a name that adds value to your assets successfully.

Structure: The Centaurus consists of 6.59 acres of architectural brilliance in the heart of Islamabad Pakistan. It is under construction on the most expensive plot in the history of Pakistan and designed by ATKINS, which has a solid reputation in the creation of stunning buildings like the awe inspiring Burj-ul-Arab, Jumeirah Beach Hotel, Twisting Tower, 21st Century Tower etc. 21065515.doc

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The Centaurus consists of 7 Star Hotel, Corporate Complex, Two Residential Towers and International Standard Shopping Mall. It can bear up to 9.5 Magnitude Earth Quake and will be completed by 2010. Centaurus is the brightest constellation in the southern sky, a collection of the most brilliant stars. We wanted to create a mirror image of that on this planet by bringing together people who outshine everyone else. People like you, the brightest stars in their fields. Yes, The Centaurus is expensive, but then it is not just a building. It is philosophy it is a tribute to your ability to be ahead of everyone. You deserve something extra. Something more than today’s VIP or First Class. The Centaurus is the identity of that new class we are creating. A class that is the most exclusive in the country, made up of people who can truly represent Pakistan in the world. Because, there are people who are miles ahead of competition, and then …. There are those who are light years ahead.

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Site Location: Welcome to Islamabad, the Capital of Pakistan, a stunning metropolis snuggling in the backdrop of the Margalla Hills. A progressive city that offers a nourishing climate, pollution-free environment and an abundant spread of greenery. A city that is carefully planned and impressively sprinkled with elegant architecture, shopping centers and parks. Islamabad epitomizes the ambitions of a young and dynamic nation that has set its eyes on a magnificent future. A city that embraces modernity yet appreciates the time-honored morals of an era gone by. Nestled in the commercial heart of the Capital on the confluence of the main Faisal & Jinnah Avenues in sector F-8 lies the prime corner site of The Centaurus.

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Composition of the Project The Centaurus Hotel

Unmatched comfort in the harmony of sophisticated style. Laze around in any of the 350 rooms including 96 suites adorned with luxury. Spoil yourselves in the spas, waltz in the grand ballroom or eat to your hearts delight at the wonderful restaurants. Experience the warmth of world-class hospitality.

The Centaurus Residencia Welcome to The Centaurus Residencia. Inspired living for the entire family. Be ready be pamperedMall by stunning views and The to Centaurus unsurpassed leisure and lifestyle facilities. Whether your The Mega Mall at The Centaurus offers you 300,000 sq.ft of residential requirements range fromin 1, 2, air-conditioned 3 or 4 luxury floors of absolute excitement. Find yourself five apartments to a plush penthouse with a private shopping pleasure with prestigious national and pool. international

brands, world –class leisure amenities, a twin screen cinema, food court with cuisines from all over the world and ample parking facilities in the basement

The Centaurus Corporate

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Destined to become a new business hub, The Centaurus Corporate complex will provide the ideal environment and infrastructure for businesses from around the world. These modern office spaces spread over 22 floors in a highly desirable location. Special attention to on-site

Take Your Business to New Heights Destined to become a new business hub, The Centaurus Corporate complex will provide the ideal environment and infrastructure for businesses from around the world. These modern office spaces spread over 22 floors in a highly desirable location. Special attention to on-site facilities includes raised flooring, central air conditioning and express lifts and exclusive car parking facilities. Quality and innovation come together to create a pleasant work environment- The Centaurus Corporate complex.

Fabulous Facts: Prime Corporate Address 22 Executive Floors Flexible Floor Plans Raised Flooring Most Modern Facilities Central Air Conditioning Basement & Ground Level Parking Integrated State of the Art Security & Fire Fighting System

Experience The Opulence: Unmatched comfort in the harmony of sophisticated style. Laze around in any of the 350 suites adorned with luxury, spoil yourselves in the spas, waltz in the grand ballroom or eat to your hearts delight at the wonderful restaurants. Experience the warmth of worldclass hospitality.

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Inauguration Ceremony The Centaurus Inauguration Ceremony by the President of Pakistan General Pervez Musharaf.

President General Pervez Musharraf said it was “the right time to invest in Pakistan” because of the country’s positive economic policies of de-regulation, liberalisation and privatisation coupled with a liberal foreign exchange regimen. “We have opened all sectors of the economy for investment and the scourge of red-tapism and bureaucratic delays are being done away with,” said the president at the foundationlaying ceremony of The Centaurus. Musharraf said that greater investment was also helping the country fight extremism and terrorism as both evils stemmed from poverty, illiteracy and the lack of economic opportunities. He said that all the government’s policies were in the best interests of the nation. “Whether it is relations with a country, diplomatic ties or our attitude towards investment, it is being done in Pakistan’s national interest.”

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Interior Minister Aftab Ahmad Sherpao, President AJK Sardar Zulqarnain, Population and Welfare Minister Chaudhary Shahbaz Hussain and Chairman CDA Kamran Lashari attended the ceremony.

DG Board of Investment visits "The Centaurus": While congratulating the Pak Gulf Construction (Pvt) Ltd. for launching ‘The Centaurus’, a mega under construction project, Director General Board of Investment Riaz ul Haq has said that this project would play an important multiple role in attracting heavy investments both local and foreign and would trigger the economic activities in the country. He expressed these remarks during a visit to the site office of The Centaurus. Along with Riaz ul Haq, BOI Director Muhammad Ayub and Project Director Nadeem Riaz were also present on the occasion. On the occasion, he was given a detailed briefing about the project by Managing Director Syed Kokab Mohayyud Din, Deputy General Manager Sales & Marketing Zehra Valliani and Toba Raza, Manager Sales and Marketing of the PGCL. Later, the Director General Board of Investment and his delegation visited the site and impressed with the activity and pace of work. He appreciated administration of Pak Gulf Construction for using latest techniques and technologies during the construction work of the project. Riaz ul Haq said that Board of Investment is proud of this mega project and Board of Investment and Pak Gulf Construction (Pvt) Ltd. have a common objective to bring foreign direct investment in the country. He further said that the local construction sector has opened up to all investors both local and foreign due to the present government’s policy of openness which has started yielding positive results. The Centaurus, scheduled to be completed in 2010, comprises Pakistan’s first seven-star hotel, one state-of-the-art corporate tower, two luxurious residential towers and a fivestorey shopping mall.

ICCI Delegation takes Interest in The Centaurus: A 15-member delegation of the Islamabad Chamber of Commerce and Industry (ICCI) visited the marketing office of ‘The Centaurus’, a mega project being constructed by the Pak Gulf Construction (Pvt) Ltd. The visiting dignitaries held a detailed meeting with PGCL Managing Director Syed Kaukab Mohayyud Din, Deputy General Manager Sales 21065515.doc

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& Marketing Zehra Valliani, Senior Manager Sales & Marketing Abid Saeed and Manager Sales & Marketing Tooba Raza. The delegation took keen interest in the project and extended an invitation to the PGCL Marketing Team to deliver the presentation at the Chamber’s office across the board. On the occasion, Tooba Raza, Manager Sales and Marketing, gave a presentation to the ICCI delegation about ‘The Centaurus’ as it would provide a rich opportunity to the business community of the capital to have detailed information about the project. The lengthy question-answer session that ensued is an eloquent testimony to the Chamber’s interest in The Centaurus.

Lunch for Overseas Pakistani in Margalla Hills: ‘The Centaurus’ arranged a formal lunch and orientation session amidst the scenic splendor of the Margalla Hills at Daman-e-Koh for a visiting delegation of overseas Pakistanis. The invitees showed keen interest in the landmark of Pakistan and declared it the most iconic project in the country to date. Lunch was followed by a visit to the marketing suite.

Seminar on Taxation Laws & Real Estate Sector: Seminar on Taxation Laws & Real Estate Sector organized by PAKGULF and Mir Khalil Ur Rehman Memorial Society, in Marriot Islamabad.

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The Identity of Pakistan Today more than ever, Pakistan is progressing in many fields. This is the result of its people thinking ahead of their times. To set this vision in stone, we present The Centaurus, the icon of Pakistan. The Centaurus is much more than a building. It is a concrete towards what the future of this country will look like. It is a reflection of individuals like you, who will make that future a reality.

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Why Islamabad? Islamabad is a stunning metropolis in the cradle of Margalla hills. A modern city that offers a wholesome climate and lush greenery as far as the eye can see. This capital city is carefully planned and sprinkled with impressive architecture, wide roads and serene parks. Islamabad epitomizes the ambitions of a young and dynamic nation that has its eyes set on a magnificent future. Islamabad is a city that simultaneously embraces modernity and appreciates the time-honored values of an era gone by.

Services by Atkins for The Centaurus: Atkins is a design led company with a solid reputation in creation of stunning buildings. Atkins is now one of the largest design firms in the world. Their current portfolio includes clients & projects in over 80 countries & from all continents. Clients recognize Atkins multi-discipline design, added value and full range of expertise that can be provided by one company. For PakGulf, Atkins has provided Architecture, Interior Design, Civil and Structural engineering, Building Services and Public Health Engineering Highway Design, Landscape Architecture, Environmental Expertise and Cost Management. The Atkins designers work closely with their clients from the outset of the project. Their design approach endeavors to combine an innovative approach to stunning architecture with rationalism and practicality and to provide design solutions that are relevant, appropriate and justifiable with particular emphasis on build ability, budgets and ease of maintenance.

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The Services:

Atkins is providing the following services to PGCL for The Centaurus:

Concept

Architecture

Interior Design

Civil & Structural Engineering

Building Services & Public Health Engineering

Highways Design

Landscape Architecture

Environmental Expertise

Cost Management

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Agreement with China State Construction Engineering Corporation Pak Gulf Construction (Pvt.) Ltd signs an agreement with China State Construction Engineering Corporation (CSCEC) for the construction of "The Centaurus". Pak Gulf Construction (Pvt.) Ltd. is pleased to announce that we have signed an agreement with the China State Construction Engineering Corporation (CSCEC) for the construction of “The Centaurus” in Islamabad.

China State Construction Engineering Corporation: PakGulf Construction (Pvt) Ltd. Has signed an agreement with China State Construction Engineering Corporation (CSCEC) for the construction of “The Centaurus” in Islamabad. Worldwide interest was shown by 32 international companies to undertake the construction of the project and after in depth due diligence the contract was awarded to China State Construction Engineering Corporation (CSCEC) Established in 1982, CSCEC has completed over 3,000 mega projects in over 100 countries. Among this exceptional record are the World Trade Centre in Zhejiang ,the Global Finance Centre in Shanghai ,(101storys) and the Russian Federal Government Building ,in Moscow(93 storys) . CSCEC is a renowned company being among the top three construction companies in China and rated number twelve in the world rankings. CSCEC also has to its credit the record completion of the $230 million Beijing Shopping Mall in 33 months and the $120 million Sheraton Hotel in Algeria in only 18months.The company has an enviable profile in the design and construction of five star deluxe hotels, shopping malls, apartments and office blocks. The Centaurus will be constructed in accordance with the Atkins design and specifications. All international standards and safety recommendations will be strictly followed.

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Work Breakdown Structures 1. Initiation of the Project     

Selection of the land Selection of the location Contacting with the property dealer Purchasing land Application to Ministry of Tourism

 Fulfillment of requirement criteria 2. Budgeting  Loan from bank  Mode of mortgage  Payback period 3. Construction 

Preparation of map • Hiring a civil engineer • Approval by a government

Contracting Furnishing • Contracting to an interior decorator • Installing of apparatus & other hardware 4. Purchasing  

 Purchasing of furniture  Purchasing of computers &printers  Purchasing of televisions  Purchasing of LCDs from Sony 5. Marketing   

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Hiring a web developer Launching it on the ISP For online booking contract to the banks

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Marketing Plan I. Current Market Situation: Hotels in Islamabad (Concerned Market Players): •

Serena Hotel Islamabad

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Marriot Hotel Islamabad

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Hotel Crown Plaza Islamabad

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Best Western Hotel Islamabad

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Holiday Inn Islamabad

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Envoy Continental Hotel Islamabad

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Islamabad Regency Hotel

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Pak Palace Hotel Islamabad

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Dream Land Motel Islamabad

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Hotel Marina International Islamabad

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Hotel Ambassador Islamabad

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Royal Inn Hotel Islamabad

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Hotel De Papae (Inti) Islamabad

Hotels in Rawalpindi: •

Pearl Continental Hotel Rawalpindi Pakistan

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Shalimar Hotel Rawalpindi Pakistan

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Hotel Akbar International Rawalpindi

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Heaven Inn Model Rawalpindi

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Flashman’s Hotel Rawalpindi

Hotels in Peshawar: •

Pearl Continental Hotel Peshawar

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Hotel Grand Peshawar

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Grand Mercure Karachi Airport Hotel Peshawar

The Hotels in Lahore:

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Avari Towers Hotel Karachi

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Marriot Hotel Karachi

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Dream World Hotel &Resort Karachi

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Regent Plaza Hotel & Resort Karachi

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Avari Hotel Lahore

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Pearl Continental Hotel Lahore

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Carlton Hotel Karachi

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Leaders Inn Hotel Lahore

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Mehran Hotel Karachi

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Holiday Inn Lahor

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Grand Mercure Airport Hotel Karachi

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Hotel Sunfort Lahore

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Days Inn Hotel Karachi

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Lahore Country Club Hotel Lahore

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Beach Luxury Hotel Karachi

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Quick Continental Motel Lahore

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Metropole Hotel Karachi

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Hotel Ambassador Lahore

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Liberty Hotel Karachi

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Hotel Crowne Plazza Lahore

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Faran Hotel Karachi

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Amer Hotel Lahoe

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Bloom Luxury Hotel Karachi

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The Residency Hotel Lahore

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Best Westen Shalimar Hotel Lahore

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Regency Inn Hotel Lahore

Hotels in Karachi: • •

Pearl Continental Hotel Hotel Karachi Sheraton Karachi Hotel and Towers Karachi

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Hotels in Multan: •

Holiday Inn Multan

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Sindbad Hotel Multan

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Dubai Palace Hotel

Hotels in Hyderabad: •

Indus Hotel Hyderabad

Hotels in Sialkot: •

Hotel Taj Palace Hotel Sialkot

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RT Hotel Sialkot

Hotels in Northern Areas: •

Ayubia motel Muree

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Pearl Continental Hotel Bhurban Muree

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Shangrila Resort Hotel Muree

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Gilgit Motel Gilgit

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Hunza Motel Gilgit

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Gilgit Sareena Lodge

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Hunza Baltit Inn Sarena Gilgit

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Hunza Marcopolo Inn Hotel Hunza

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Chitral Motel

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Hindukush Heights Hotel

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Naran Model

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Balakot Motel Back to Top

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Swat Sarena Hotel

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RockCity Resort Swat

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Kalam Motel

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Malam Jabba Motel

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Miandam Motel

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Shangrila Pines Hotel Nathia Gali

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Khaplu Motel Baltism

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Shangrila Skardu Hotel & Resort

Hotels in Balochistan: •

Ziarat Motel

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Quetta Sarena Hotel Quetta

Hotels in Faisalabad: •

Faisalabad Serena Hotel Faisalabad

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Prime Hotel & Restaurant Faisalabad

Hotels in Gawader: •

Zaver Pearl Continental Hotel HotelS In Mirpur

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Mirpur Regency Hotel

SWOT Analysis

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Strengths

Weaknesses

 Abundant land & natural resources

 Failure risk involvement.

 Strong human resources

 Far away from industrial hub (Karachi).

 Large & growing domestic market

 Surge in fuel prices.

 Well established infrastructure system

 Unskilled labor.

 Strategic location as a regional hub

Opportunities

 Globalization effect increases customer

traffic.  Empty space in 7 star hoteling in Pakistan.  Technological reforms

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Threats

 Political un-stability.  Economic uncertainty.  Terrorism.  Natural disasters (e.g. earthquake.).

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II. Marketing Strategy

1.

Positioning:

As a hotelier, our guest is the ultimate boss & there is a famous adage “We are ladies & Gentlemen serving Ladies & Gentlemen”. 2.

Pricing Strategy:

Our target customers are mainly the middle high class flourishing in the country and national & foreign delegations. So The Centaurus will use skimming pricing strategy.

3. Marketing Communication Strategy Communication Channels:  Business news television.  Print media (e.g. Economist, The News, The Times, Dawn etc )  Electronic media (www.thecentaurus.com, online booking & payments.).

 E-broachers  Bill Boards.

III. Market Research Hospitality Industry Review: Pakistan is a country where stay at luxury hotels is not expensive as compared to other countries across the globe. The usual daily rate in luxury hotels ranges at least b/w $400 & $600 in many countries around the world. However, in Pakistan one could avail the same facility at as low price as $175. Apart from it, one could have the pleasure of staying at budget hotels as well, which is the preference of those who cannot afford ultra luxury. Here, it must be noticed that there is no possibility that budget hotels will be

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established in Pakistan to attract the tourists and the reason for this is skyrocketing prices of land in Pakistan. A businessman cannot afford to purchase extremely expensive land and begin the business for lower returns. This has given the boost to the establishment of luxury hotels & now we know that a good number of five star hotels is in pipeline. There is substantial growth momentum in the growth of mid-price or economy hotels in India whereas this situation does not prevail in our country where the focus is on five & seven star hotels. For the stakeholders, insecurity prevailing in the country is a concern. Suicide bombers have endeavored many times to inflict havoc however not much damage has been incurred by the five star hotels due to their extraordinary security measures. It is the onus of the incumbent government to make every possible effort to improve the situation which would benefit economy in the long run.

Due to the Tamil Tigers, hotels as a whole in Srilanka are now reporting only 30-40% occupancy. Analysts believe that hotel industry’s luxury sector needs to score at least 40% occupancy to cover the operating costs. It is wonderful to know that thought there are security problems to some extent, yet the occupancy in Pakistani hotels is over 70% which annually however the tourism growth in Pakistan would increase exponentially incase proper incentives offer for the betterment of the industry. Along with the progress of the hotel industry, one could notice excellent growth in the roadside restaurants in Pakistan. Let’s look at the restaurant sector of Karachi. Looking at the foreign front, we see that roadside restaurants are part & parcel of the western culture. People in the west prefer going for ease in terms of getting food. The trend was and is that since both husband & wife work, they prefer having food outside to avoid hassle of cooking. Well, well, well! What about our country. Since majority of the population lives in villages and is poverty- stricken, the question of eating out is LUXURY. Is it eating out a LUXURY? Yes it is, particularly for those who are not from big cities of our country. And it is all the way different in big cities like Karachi. Looking back in 1980s, one only remembers a few names such as Students Bariyani etc. change has taken place for two reasons: Family composition by and large us both working husband & wife. Restaurants have sprung up at all full throttle offering reasonable food prices for all strata of the city. Now one can find hundreds not scores of famous restaurants in every corner of Karachi. We can find the restaurants like. Marco polo, Al boustan, shangrilla, Carlton Grill, & Lal Qila where a family pays around Rs 400 per person to avail the luxury of having food. To spend comperatively less amount of money, a family prefers going to Salt n paper, Ali Baba, Lasania, Usmania, Handi Inn, Bar BQ Tonite, Bundu

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khan etc where charges per person range b/w 250 & 400. to spend even less, a family can choose the chain of restaurants at bating basin, khada market, defence, star roundabout etc. where charges per person may be as low as Rs 200. if one likes to have a feel of long drive, al contingent on affordability, and want to be away from hustle and bustle o the city from the short period of time, it is advisable to visit restaurants situated on super highway. Since eating out has beencoe increasingly common, the restaurants/food spots are to spring up to satisfy the ever escalating demand. There incurred a lot of change in previous recent five years. The population of the city at present is around 16 million and the rapid growth of the restaurants reveals that in future too many restaurants will be vying too few patrons. The prospects of luxury hotels & the restaurants are bright due to economic growth and the rising middle class which likes to spend money. One can aspect that he would be able to see a world hospitality industry in Pakistan in the days ahead.

The Hotel industry An Overview The hotel A& restaurant industry is very popular in Pakistan. Chains of hotels are not the only or even the primary source of food in most cities of Pakistan. Many regional & local chains have developed around the main cities of Pakistan to compete with international chains & provide services that appeal to the unique regional tastes & habit at comparatively low cost. Highlights:

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 The Pakistani hotel industry is metro dependent, as 75-80% of the revenues of top hotel chains come from the five metros. Sheraton & Pearl Continental are the most profitable hotel markets currently.  The hotel industry is heavily taxed. Expenditure tax, luxury tax & sales tax inflate the hotel bill by over 30%. The effective tax in Southeast Asian countries works out to only 4-5%. As these taxes are the domain of the state governments, the rates vary accordingly.  The average room rate (ARR) & occupancy are the two most critical factors that determine the profitability. ARR, in turn, depends on location, brand image, Star rating, Quality of facilities, & services offered & the seasonal factor.  In the long term, the hotel industry in Pakistan has a latent potential for growth. This is because Pakistan is an ideal destination for tourists as it is the only country with the most diverse topography. Pakistan attracts approximately 1.5 million tourists every year that is just 0.4% of the world tourist arrivals. Market Profile The industry can be classified into four segments:  Five star & Five Star Deluxe: the premium Five star segment alone accounts for 30% of the total rooms available in the country. These are mainly situated in the business districts of metro cities & cater to business travelers & foreign tourists. These are considered to be very expensive.  Heritage Hotels: These have come into lime light on account of their lesser capital expenditure and affordability. Heritage hotels include: o Running hotels in palaces o Castles o Forts o Havelis

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o Hunting lodges & o Houses That were built prior to 1950. The heritage hotel concept has been riveting attention of many tourists as well. Heritage hotels mirror the traditional way of life in the region, which has proved to be a major selling point for these hotels.  Budget Hotels Liberalization of the economy led do the emergence of a new breed of middle class with higher disposable income. This class is steadily rising &, thus, unleashing the potential of budget hotels. This burgeoning class no longer believes in saving their extra income. Budget hotels especially cater to domestic travelers who favor reasonably priced accommodations with limited luxury. Special seasonal offers, low nd good services are spare heads of this segment.  Unclassified: These are low priced motels spread throughout the country. A low pricing policy is there only selling point. However, these also came into prominence on account of increase ion the tourist traffic. Being a rather unorganized segment, it comprises of about 19% of the industry. Market Trends:  With the demand curve in the metros stagnating, smaller towns have emerged as potential growth areas.  Luxury, leisure and heritage hotels are concentrated in tourists circuits like Karachi, Lahore, Islamabad, & Murree.

Tourism Potential The tourism industry is the fastest growing industry of the world. It plays a significant role in the socioeconomic development of the nations. It is a source of foreign exchange earning and it offers monitory to the urban and rural communities. The tourism-products are the natural places of scene beauty, cultural and business festivals, sports, special events, desert related activities, art and crafts. The developing

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countries can project their distinct natural topography by developing modern infrastructure and offering more un-tradable and tradable tourist products to their target market. For developing countries where the natural resources and economic infrastructure are scarce, tourism has been considered as an ideal means for development for more than forty: Tourism is the ideal means of acquiring foreign currency, creating employment and controlling rural-urban migration. Luckily, we have many tourist attractions such as beautiful nature and remains of ancient cities, but they have not been used properly. Pakistan has a diverse topography with mild weather condition, beaches, high mountain ranges, lush green fertile plains, twisting and singing valleys, deserts, lakes, water falls, rivers etc. the heritage/culture, adventure, religious and nature-based tourism and hotel industry is a considerable source of employment in urban and rural areas. NWFP and the northern areas are playing a leading role in reducing poverty there as these regions offer nature-based and heritage-based tourism. The rest of the three provinces attract more tourists for cultural/heritage-based tourism. The historical places, museum and archeological sites are the center for cultural tourism. The Indus valley civilization evolved 5000 years ago and the archeological sites are spread over sindh, Punjab and North West frontier province and very few are in federal administration areas. The four leading mountain ranges the Hindukush, Pamir, Karakoram, and the great Himalaya project Pakistan as a famous tourist destination. The World Tourism Organization (WTO) has classified tourists in two categories; Foreign and domestic tourist. These terms are implied here because Pakistan is the member of WTO. The term ‘Foreign Tourist’ is used to describe a person irrespective of his/her nationality, race, age, sex, language or religion, etc. who visits Pakistan for any reason another than seeking gainful employment and whose duration of stay is for 24 hours but less than six months. Excursion and transit passengers whose stay is less than 24 hours are excluded. Domestic Tourist is a person in Pakistan regardless of his/her nationality, age, or sex who travels to a place within the country other than his/her usual place of residence for a period of at least 24 hours but less than six months for any reason other than following an occupation at the place visited. The motivation for such a visit could b pleasure/recreation/holiday, sports, business, family visit, mission, meeting, conference, health study, religion or social call etc. 21065515.doc

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Low revenue Tourist: the tourist visiting friends and relatives (VFR) in Pakistan [who] do not spend much in lodging and boarding. Most of the tourists coming from India, Bangladesh<, U.K. and Afghanistan are described as Low revenue Tourists. The tourism policy declares current year as ‘Visit Pakistan Year’. The tourist movement on global scale has been showing an increasing trend. “There would be one billion tourists movement worldwide by the year 2010. 3.8% of the global gross domestic product (GDP) comes from tourism” “The master plan 2000” for promoting tourism consists of the five major areas. 1. Legislation, Management, Organization and facilitation. 2. Investment, funding, Infrastructure, transport, tax and concessions. 3. Marketing, Promotion and product development. 4. Environment, Conservation and planning. 5. Human resource development and community development.

As far as legislation is concerned the United Nation’s agencies are very critical over legislative aspect related to tourism. It is believed that over-legislation is hampering tourist potential. The Marketing, Promotion and product Development is the weakest area in tourism sector. The tourists engaged in mountaineering expedition in Pakistan have given their feedback. A large number has expressed their dissatisfaction over marketing and publicity material available at different information centers. Some foreign tourists complain for the poor quality accommodation and some state that the entertainment facilities are far less than their needs. The tourism product offered is very limited. We over depend on cultural and adventure tourism. The model for desert related and beach related tourism is the Gulf States in general and Dubai in particular. Despite sizzling heat Dubai’s policy is very effective in getting considerable number of foreign tourist in desert related tourism. We have Cholistan & Thar deserts but the infrastructure including accommodation & road network are highly outdated as a consequence tourism sector is incapable to promote desert related activity. The

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beaches from Karachi to Gawadar have mild temperature in contrast to the beaches of Middle East but due to the outdated infrastructure including lesser number or no quality lodging & boarding facilities & unhygienic environment, we unsuccessful in proving beach-related tourist products.

5-STAR & 7-Star Industry Review

Hotel is a peculiar organization which is a hybrid of manufacturing & services. The manufacturing side in kitchen & banquet while the services side is restaurants, rooms laundry & valet and other services provided to guests. This is an organization which remains open 365 days a year on 24 hours basis. The employees however do enjoy holidays and week-ends. Three shifts are working (8 hrs per shift). 1. Rooms Division a. Front Office b. House Keeping

2. Food & Beverages Division

a. Restaurants(services) b. Kitchens c. Stewarding d. Banquets 3. Minor Operating Departments a. Telephone b. Laundry 21065515.doc

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c. Business centre 4. Sports & Recreation a. Gym/Spa b. Swimming pool 5. Shops & merchandizing 6. Sales Division 7. Repairs & Maintenance (Engineering Division) 8. Administration a. Finance Account

b. Human Resources c. Security. Hotels are one of the best barometers of tourism and trade activity in a country. Hotels serve as a host converse for the hospitality and care shown to the tourists, diplomats & guests staying in them. Moreover, the room’s occupancy and hotel business is very sensitive to overall economic conditions of the country as well as to the prevailing Law & Order Situation. In the last three years hotels in Pakistan in general and those in Islamabad/Rawalpindi in particular have done excellent business and the average occupancy has remained over 70%.

Financial Plan Financial sources: Two international companies are the major contributor for the project pertaining the financial aspect;  Al tamimi (Saudi arabia)  Sardar group of companies(Abu dhabi)  Domestic investors

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Budget Analysis: The total cost of the project is $350 – 400 Million, which is being appreciated in the in compliance with the need of finance in the particular aspect. Our cost Estimates will be as:

 Fixed Expenses Fixed Expense

Amount ($ million)

Land Purchase

140

Raw Material Purchase

60.3

Labor

45.75

Overheads

60

License fee

35.15

Architect fee

10

Computers & printers

0.8

Furniture & furnishing

20

Total

372.00

 Operating Expenses Operating Expenses

Amount($ million)

Administrative expenses

5

Marketing Expenses Sign Boards Website Newspapers

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36

Bill Boards & other Media

0.5

Marketing Expertise

1.25

Sub Total

4.00

Total

9.00

Forecasted Sales/Revenue Plan: The Centaurus Mall: Shop size

Amount Per shop ($ million)

Total Amount ($ Million)

Small (14x12)

0.2

50x0.2 =

10.0

Medium (20x32)

0.5

30x0.5 =

15.0

Large (30x50)

1.0

20x1.0 =

20.0

Total

45.0

The Centaurus Residencia: Apartment size

Amount Per apartment

Total Amount

($million)

($ million)

One Bed Apartments

0.25

30x0.25 = 7.5

Two Bed Apartments

0.35

30x0.35 = 10.5

Three Bed Apartments

0.40

20x0.40 = 8.0

Four Bed Apartments

0.5

20x0.50 = 1.0

Total

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37

The Centaurus Corporate: Office size

Amount Per Office ($ million)

Total Amount ($ million)

Small

0.5

120x0.5 = 60

Medium

0.8

80x 0.8 = 64

Large

2.0

50x2.0 = 100

Total

224

The Centaurus Hotel: A seven star hotel will be managed by Berner Clinton.

Economic Analysis

Economy is considered a a backbone of the country. Economic developments depend upon agriculture or industry. However, a large part is contributed by industrial sector but the need of how to utilize the natural resources as maximum as possible. Value of money in Pakistan is decreasing because of decreasing export and less foreign exchange. Using raw material and manufacturing goods should enhance export. Rate of foreign investment is is very discouraging; it must be improved by providing incentives to the foreign investors. On the whole, all factors in improving GDP growth rate must be taken in view and measures to improves these must be taken. Project will provide job opportunities to almost 10,000 individual in the different fields. This will help in decreasing unemployment at large and will also increase the income level of the people. when the supreme services will be provided residing in the peoples mind only it will provide them with the innovation of new world within themselves, so acting upon the motive

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object Light years ahead. When appreciation of the taxes will be executed in compliance with the government taxation levy policy, it will increase the revenue resources of the country. It is also a big project with respect to our financial approximations. The economic goal for this service is to be self-supporting the highest degree possible. Establishing investment plans and identifying external funding sources that can support the service, will accomplish the basic objective.

Economic Feasibility:  The project is feasible from every aspect because the country is in a bad need of the mega projects.  To provide a benchmark in the field of construction to the country.  To set a trend of innovative construction done globally & pioneering a construction of a new mega structure namely The Centaurus which has resulted to initiation of some other mega structures in the country like; Al Haya, Rejency etc.  Unfortunately hotels are paying various types of taxes for which the Pakistan hotels association (PHA) has been continuously knocking the doors of various government functionaries with no success. PHA has been demanding the withdrawal of bed tax which is a provincial tax. This tax is not only an irritant but also being questioned by the guests as the same is not levied in most other countries. In addition, couples of provinces have levied this tax on the capacity without considering the actual occupancy resulting in the payment of differentials by the hotels. Though the revenue under this head is negligible, the government is not keen to remove this irritant.

Economic Appraisal: Our mega project fits into its sector very well because the hotels & tourism needs improvement and people need better and luxurious services.

Profitability in the hotel industry is dependent on many factors; a few salient one are listed below:  Tourism: This is the primary factor for the hotel industry. Pakistan has great potential of becoming a major stop for tourists. However, lack of infrastructure has kept the foreign tourists at bay. The government has been actively participating in

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propagating Pakistan as an oasis for global travelers. Pakistan has always conjured up a fascinating image in the mind of foreign tourists. Pakistan has an advantage of having diverse culture, languages & religions, which makes it an exciting tourist destination for people all over the world.  Seasonality: Pakistan being a tropical nation, witnesses and inflow of leisure tourists, mainly during the winter months of October to March. Hence the hotel industry has a better second half. In the first half of the year, local tourists prefer April to May and October in the second half due to summer and Eid vacations respectively. Other months being off season periods, many hotels offer heavy discount on room tariff to ensure repeat customers such as corporate, airline crewmembers and tour groups.  Industry Bottle Necks: Progress of the industry is held hostage to various bottom necks existing within the industry like high variable costs. The hotel industry is reeling under high variable expense. A high wage bill, maintenance costs and overhead expenses marked the industry. Domestic hotel chain has a high man-room ratio as compared to their overseas counterpart.

 Differential Pricing Hotels in Pakistan typically offer discounts on published room tariffs to many clients. As a result, though occupancy rate of these hotels increases, the ARR does not increase proportionally. However, the magnitude of discounts varies depending on the nature of the client location and size of the hotel. Furthermore, in the dual tariff rate system, there is a domestic currency rate for local travelers and a dollar rate applying to foreign travelers. Hence there is need of a common yardstick for tariff rates. Globally, leisure and entertainment are seen to be growing industries. Stable sociopolitical and economic conditions, coupled with an improvement in infrastructure facilities (Like roads and Airports), will improve the sentiments of the tourists toward Pakistan. If the above conditions are met, tourists arrivals can increase

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substantially from the present levels. In such a situation, there will be a surge demand for rooms in tourist’s destinations.

Risk Assessment: Hotel Company’s profitability was near to what you have quoted for foreign companies operating in Pakistan. From the face of billing, one perceives that hotels are making huge profits but in reality, due to very high cost of operations in addition to maintenance and fixed costs, they operate on marginal profits. Also the return on investment is quite low compared to any other industry. This is one of the main reasons that in Pakistan we do not have many five hotels. The exorbitant cost of land in Pakistan makes the project cost phenomenally high with low return on investment. With the high cost of project, why one could be inclined towards building a mid-price hotel when thee project cost differential is marginal and the operating cost maintenance are high. In conclusion, Pakistan offers endless possibilities with its vast untapped resources. The country is set to grow at a rate of 7% per annum which should help to further raise its per capita income from $847 per annum to US $1557 by 2015. Demand is expected to get stronger as incomes rise further and assuming current population growth trends persist. Pakistan’s strategic geopolitical position, due to its proximity to India & china as well as to the oil rich middle east and untouched central Asia with vast natural resources, potentially carries opportunities which to date have not been properly exploited. Promising for private sector would b large infrastructure projects which would offer high return in long term, but would help enhance access & efficiency in movement of good within & outside Pakistan If one right, Pakistan can easily integrate itself into export value added chain of the region as there is adequate room for further growth; investment in these sectors is thus highly flexible.

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References: 1. Group visit to project location & have an Interview to Mr. Mansoor Zareen Sales Executive (Aroma Real Estate Pvt. Ltd). 2. Internet Sources:  Companies Websites 1. www.thecentaurus.com

2. www.atkinsglobal.com 3. www.cscec.com.cn  Search Engine Wikipedia & Google Map.

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3. News Papers: 1. Kamal Siddiqi “Boom time for Pakistan’s Hotel Industry” The News International,

Pakistan, February 17,2007/ 4. Magazine: Tetsu, K, (Autum2006), “Tourism Potential & Regional Development in Low Income Countries”, The Pakistan Development Review 45:3,417-424.

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