Mr. Rolf R. Bauer, Director Operations, Hahsoo Group of Hotels
Please tell us about your professional background?
I am a German by nationality and started my career from my native country. Initially, I was a chef for 8 years and served 2 years in the German Army. After traveling to many countries, I went to Thailand where I became the General Manager (GM) of a hotel known as Siam Bayshore at the age of 29. I worked there for 3 years and then went to Pakistan and was appointed the General Manager (GM) of Holiday Inn in Karachi which today is known as the Marriott. I worked there from 1981 to 1985. After that I moved to Australia as the GM of different hotels at various locations for the period of 12 years. After that I went to Turkey for 3 years and managed a club by the name of Club Lykiaworld having 800 rooms. After that I left for Egypt to Sharm El Sheikh where I was responsible for 3 – 4 hotels owned by the same company for a decade. Currently, I am residing in Pakistan and managing the hotels of Hashoo group.
You have worked in many countries with numerous companies, how has your experience been with Hashoo group?
I have an excellent relationship with this company and have also worked here before during the 1980s. Hashoo group is a company which is very progressive, forward looking, and innovative. It is not standing still like other companies where I previously used to work. Hashoo group is always looking for opportunities and progress and is a people oriented company. It is not just the business but the people this company cares for.
What is the present situation of the hotel business in Pakistan?
The situation is depressing due to the security situation in the country but as a group, we are still doing well by having occupancies over 50%. However, comparing this occupancy rate to previous years, it is not very good as foreign delegations are not coming, corporate travel has reduced and there are almost no tourists in Pakistan.
Pakistan has beautiful mountains in northern areas and the beaches in Gawadar and Karachi. These are the tourist sites but they cannot be utilized fully at the moment because of the ongoing situation in Pakistan. There is no political or economical threat to this industry except for the security situation. People are turned off from the environment here; the barricades and security checks. All these things are for the security of the people but at the same time these are also off putting the people
How many hotels does Hashoo group own in Pakistan and who are your chief competitors?
We own 9 hotels in Pakistan and have 1992 guest rooms with 4347 employees serving the guests. Our direct competitors are Avari, Sheraton and Serena. Presently, the market itself is small and has not expanded from some time because of the situation. No one is willing to invest large amounts of money to build a new hotel.
Are there any untapped areas in Pakistan which have the potential for the hotel business?
Gawadar which is the pearl of Balochistan has a huge potential. This includes the entire area from Karachi to Gawadar. Bhurban is another such region which is a tourists’ paradise. The trekking community and mountaineers love to stay there.
From the perspective of profit making, how do you compare the different regions of Pakistan where Hashoo group is operating?
In terms of business generation and profitability, the most profitable cities are Karachi and Lahore. In Karachi, Marriott and PC are doing exceeding well because of the presence of airlines, the sea port and the multi nationals. Most of the population is primarily business community. Islamabad, on the other hand has diplomatic community and few corporate business residents.
Room occupancies depend on the business activities happening in the cities. On the other hand, food and beverage business of the hotel depends on the population of the city and also on weddings and other big events.
Hashoo group of companies is well known for food and beverage concepts and operations. In Islamabad, we have 8 restaurants and handle almost 85% of outdoor catering for parties. Hashoo also has 8 or 9 restaurants in Lahore.
The food business depends on the population. For instance, in Lahore, the food and beverage business of Hashoo group is doing exceptionally well as the people are outgoing.
What are the major factors that should be kept in mind before opening a hotel?
You should make a feasibility study professionally to asses and analyze the market. You need to find out that whether there is even a need for a hotel that you are going to open. Also calculate your financial situation that how much can you invest in this business. You also need to assess how much profit can you generate from a single room, what is the profitability of the business in the long run and how many employees are going to be required etc. What would be the return on the investment and how much time is it going to take to reach the breakeven point. Most importantly you need to look at all the economic and the demand and supply trends of the market.
Do you think this is the appropriate time to invest in hotel business?
Currently, it is not the best of times. There are so many unknown factors which make it wise to hold investment. In future, an entrepreneur can invest and earn profits but he should be smart enough to predict the right time for investment.
Do you think that there is opportunity for small hotels in Pakistan?
The large population provides an ample opportunity for all kinds of hotels. Small cities have huge potential for small hotels. There is a limited service concept or formula 1 concept specifically for businessmen. It offers all the facilities that a businessperson wants and is not as cost intensive as a 5 star hotel. The business community needs a comfortable room, good food and communication facilities. If all the mentioned facilities are provided in a small hotel, they will prefer to go there as it will be cost effective.
Ideally speaking, what is the average breakeven time of a hotel business?
A breakeven situation is the time when the revenues generated from a hotel meet the daily cost of the hotel. This also varies from hotel to hotel. Some hotels can meet their daily overheads by meeting the 50% occupancy of their rooms and some could reach this point at 30% or even at 70%. It depends on the operations of the hotel and the way it is being operated.
As far as the initial investment is concerned, hotels can get returns on investment depending upon the business they generate. There is no international benchmark that how much time a hotel takes to get its return on investment.
What steps are required by the government to improve the hotel industry of Pakistan?
The Government should provide an environment in which individuals can easily come and move to different locations for business and entertainment. Because of the security situation, corporate people and foreign delegations have stopped travelling which has affected the hotel business. Government should provide the proper security measures and improve the law and order situation which is affecting not only the hotel business but all of the economic activities.
The problem also lies with the international media which projects the wrong image of Pakistan. For instance, if there is a blast in Lahore or Peshawar, they do not break the news by saying that a blast occurred in Peshawar, they say it happened in Pakistan. If we only consider the crime rate of New York City, it is more than that of entire Pakistan but no international media portrays a negative image of New York.
Many diplomats and foreign media personal do not even know the distance between Islamabad and Lahore or between Karachi and Lahore. International media lacks the understanding regarding the situation in Pakistan. Some news is completely out of context which further creates a wrong perception overseas. Government of Pakistan should come forward and take actions to protect the image of Pakistan.
How do you compare the hotel industry of Pakistan with other countries?
In terms of hotel standards, Pakistan is in many ways better simply because it has inexpensive labor. We can do the same job in Pakistan as compared to foreign countries by hiring more labor at the same cost. Cheap labor is feasible for the hotel business as it can provide better service. The service we offer in Pakistan is far superior to Australia or Germany.
The international rating of Islamabad Marriott is above average in comparison with all other international hotels in terms of its services. There are 157 Marriott hotels around the world and the Islamabad Marriott is ranked 33. We have 33 hotels in the Asia Pacific region and we are ranked as number 6. This improved service is provided by the people of Pakistan and not by the General Manager or an Executive of the hotel. In many European hotels, you will not find valet parking, as it is too expensive. There are a number of things in Pakistani hotels which cannot be found in 5 star hotels of other countries. I am very happy to have a competent team working with me in Pakistan.
Where do you see the hotel industry of Pakistan in the coming years?
If tomorrow the security situation improves, this industry will shoot like a rocket. The market is present in Pakistan but we do not have enough hotels to meet the demand.
