By Ayesha Saba ISLAMABAD, Nov 08 (INP-WealthPK): The hospitality industry in Pakistan is acting as a stimulant for the growth of its economy. In the long term, the sector is expected to flourish as Pakistan emerges as an important investment destination. The hotels in Pakistan are witnessing a substantial increase in growth, both in terms of occupancy and average rate, and this trend is expected to continue further in the upcoming months as the Covid-19-driven restrictions ease and both foreign and local travellers turn to picturesque hotspots. The Pakistan tourism and hotel market was valued nearly at $20 billion in 2020, which is also expected to witness a CAGR (compound annual growth rate) of 3% by 2026. The hospitality sector is the segment of the service industry that deals with guest accommodation or lodgings. Provision of the best hotel services has a direct impact on boosting the tourism industry. So, both sectors are interconnected and inter-dependent. The factors that influence one sector also affect the other. The hospitality sector is the one that can generate foreign exchange without any sort of exports. Pakistan, the most beautiful country in the world, has a lot of potential for developing the hospitality industry, as it has diverse culture, landscape, the oldest civilisations, many religious and historic places and world’s highest mountains. The fact that Pakistan is a fast-developing economy, many national and international corporate entities and personalities are making investments in different sectors of the economy, particularly hospitality, thus positively enhancing the country’s profile at the global level. Pakistan has witnessed a gradual establishment of small to medium-sized hotels and international hotel chains over the past years. The revenue of hotel sector depends on both local and foreign travel. While the revenue of upscale hotels is mostly generated from foreign tourists, midscale and small hotels are more dependent on local tourists. In the financial year 2020, the revenue was severely impacted due to the Covid-19 pandemic and the profit margins decreased significantly. However, the margins have improved in September of the current fiscal year. Growth in revenue from local customers is expected to increase further as the government has lately relaxed the Covid-19-driven restrictions. However, the revenue of upscale hotels is expected to remain under pressure as inbound international travel is expected to remain low for the time being.    Source PACRA internal Database   Before the Covid, the country witnessed a boom in both local and international tourists as it welcomed more and more tourists from across the globe, which directly benefited the hospitality industry. Pakistan being at the top of the several international traveller’s lists for being the best holiday destinations attracted more and more people to the country, especially to the northern areas, during this period. This was further accelerated by several high-level visits of very important personalities from around the world. The impact of the pandemic as a result of the lockdowns being imposed frequently was severe on the services sectors, especially the hotel industry. The sector struggled and suffered losses as many properties had to be shut down because people were unable to travel within country, or visit Pakistan due to lockdowns and international flight suspensions. All this led to a severe strangulation of the revenue. The incumbent Pakistan Tehreek-i-Insaf government has focused on promoting the country’s soft image as a travel destination, leading to more investment coming around in tourism-affiliated businesses and creating jobs. Visa restrictions on foreigners willing to travel to Pakistan have been ease with a view to promoting tourism. A special campaign launched by the government aimed at tourism development has also helped raise the country’s profile in the global market, and increasing investments are being made in roads, airports and other infrastructure. Several local and international chains have announced expansion and setting up new hotels in the country. However, the factors that cause decline in the growth of tourism and hotel industry are a lack of management skills and infrastructure. Additionally, the revenue of the hospitality industry is inversely proportional to some uncontrolled economic factors like rising inflation, which cause a decline in tourism activity.