Hotel development in Pakistan to thrive on the back of CPEC

(Lahore in Pakistan)

The China Pakistan Economic Corridor (CPEC) is giving a shot to Pakistan's economy, which in turn is spurring hotel activity in the region.

The nearly 2,000-mile trade route links China's Xinjiang province with Gwadar in Pakistan's Balochistan province. All in, China is investing $46 billion in CPEC, with the hope it leads to easier trade with the Middle East and Africa.

"This investment will help to turn around not only Pakistan's economy but also it will enable Pakistan to become self-sufficient in energy and improve its infrastructure," Ahsan Iqbal, minister for planning and development of Pakistan, told Al Jazeera.

The dream of CPEC became a reality last week with the departure of the first trade cargo from Gwadar Port to international destinations. During a ceremony to commemorate the occasion, Pakistan Prime Minister Muhammad Nawaz Sharif is reported as saying that Pakistan is a "proud partner of China" and added that the Pakistani government "would leave no stone unturned to complete all development projects under the umbrella of CPEC on time."

Sharif added that "no area of the country would be deprived of the fruits of prosperity from various CPEC development projects."

It's certainly an ambitious project and one that will be a jolt to Pakistan's economy and infrastructure. The Pakistani media and government have gone so far as calling CPEC investments a "game and fate changer" for the region—the hope being that CPEC helps transform the country into a regional economic hub.

Back in April, Zhang Baozhong, chairman of China Overseas Port Holding Company, which runs Gwadar port, reportedly said that his company planned to spend $4.5 billion on roads, power, hotels and other infrastructure.

Hotel Additions

Whenever an area gets an influx of economic activity and investment, travel and hotel development soon follows—and that is exactly what is happening.

Hyatt Hotels Corp., for one, is wasting no time setting up shop. Last week, it reportedly signed an agreement with Bahria Town, Asia’s largest private real estate developer, to develop four Hyatt-branded properties across Pakistan at an investment of more than $600 million.

The agreement marks Hyatt’s entry into Pakistan, and the hotels will reportedly will be the Grand Hyatt Islamabad, Hyatt Regency Karachi, Hyatt Regency Lahore and Hyatt Regency Rawalpindi.

Regarding the deal, Malik Riaz, chairman of Bahria Town, said, “This is an extremely proud moment for Bahria Town. Our vision is to work with the best partners and play our positive role to usher in a new era of economic growth and development in Pakistan. This contract reiterates our and international partners confidence in Pakistan. We look forward to the opening of the hotels and together with Hyatt provides a new standard of service and hospitality to this region.”

“Following last year’s announcement for the China-Pakistan Economic Corridor (CPEC), we are optimistic about the growth of Hyatt’s brands in Pakistan," said Peter Norman, SVP, acquisitions and development – Europe, Africa, and Middle East (EAME) and Southwest Asia for Hyatt."

"We continue to invest only in Pakistan and the agreement for four major cities in Pakistan is a testament to our confidence in the growth of the country. Moreover through this, we hope to play our role in revitalizing hospitality sector in Pakistan and help boost tourism," said Ahmed Ali Riaz Malik, CEO of Bahria Town.

Increased economic activity spurred by CPEC is already resulting in an uptick in inbound travel.

Rehan Wahid, the director of business development for the Beach Luxury Hotel in Karachi, told Pakistan's Express Tribune that "The rate of hotel occupancy has surged to 80 percent [on an average] across the country compared to 35 percent before the current calendar year started. Hotels in Islamabad and Lahore are fully booked most of the days."

According to Wahid, CPEC-related developments have been a boost to tourism. “CPEC projects have convinced a large number of foreigners to resume visiting Pakistan; this will help business grow as well,” he said, adding that the ratio of foreign to local hotel occupants had changed over the past year from 30:70 last year to 50:50 currently.

As example of this influx, Wahid said that Karachi's EmbassyInn Hotel has been flush with Chinese visitors ever since CPEC projects were launched.

(Karachi is Pakistan's most populous city and the 7th largest city by population in the world.)

With government estimates of 125,000 trucks and long-haul vehicles and 25,000 passenger vehicles on the roads of Gwadar and Kashgar in China every day due to CPEC, the need for lodging has been made essential.

Gwadar Iqra Associates Chief Executive Mir Mazhar Ali Magsi was quoted as saying that due to development work and CPEC-related projects and economic zones in Gwadar there is a high demand of hotels. “Many of the travelers will be in need of hotels and motels on both sides of the roads network between the two countries,” Mazhar said.

Hyatt's development stab in Pakistan will unquestionably be followed by other hotel companies as CPEC evolves. Brands such as Marriott, Ramada, Mövenpick are present in Karachi, while Crown Plaza, Best Western and Hilton have inventory in Islamabad and Lahore. With opportunity knocking, expect more shovels in the ground in Pakistan's major cities sooner rather than later.