Avari (A) Mba

Avari Group: Organizational Values and Crisis Leadership Case A In 2010, Avari Group was approaching the end
d of six decades of successful operations. While reflecting on Avari Groups past successes, Byram D Avari, the Chairman of the Avari Group, was reflecting on groups future. On the one hand he was wondering how successful his sons - Dinshaw and Xerxes would be in bringing up another generation of leading entrepreneurs. And on other hand, he and his two sons were thinking about a dilemma being faced on their lifelong employment policy in Avari Group. Avari Group was established by Byram Avaris late father, Dinshaw Byramji Avari, who founded the organization on the core values of respect, honesty, life-long employment (no retirement) and equal opportunities for people from all religions and backgrounds to grow. In recent years, due to low business opportunities and low growth, most of the 5-star hotels in Pakistan were reducing headcounts in their organizations. But the Avari family was rethinking their lifelong employment policy on the one hand and on the other hand they were thinking about different growth alternatives to handle this business crisis. 1.0 Brief Introduction to the Avari Group The Avari group started its journey almost immediately after Pakistan came into being in 1947. Starting initially from a small hotel in Karachi, the group currently owns and operates one 3-star and two 5-star hotels in Pakistan. It also manages two 4-star hotels in Dubai. The group has also ventured into real estate. It owns and operates office complexes in Karachi and Lahore under the name, Avari Plaza. Currently, an international standard 5star, all-suite, 417 room hotel is being constructed in Islamabad, which is scheduled for 2013.
The author developed the case for class discussion rather than to illustrate either effective or ineffective handling of the situation. The case, instructors manual and synopsis were anonymously peer reviewed and accepted by the Case Research Centre (CRC) for its 1st AJMC International Case Conference 2011, at the Lahore University of Management Sciences (LUMS), May 24-26, 2011. All rights are reserved to the author and LUMS. 2011 by Nasir Afghan.
The group has also gained a lot of exposure to the air travel business. Avari Travel Agencies (ATA) are the general sales agents for American Airlines for the past two decades; and also remained the general sales agents for Canadian Airlines International for around 23 years. Like the hotel business, the group has gained a lot of respect in the air travel industry and ATA has won numerous sales achievement awards from both its clients. Spencer is another brand name that the Group carries. Spencer Pakistan has been operating since 1948 as a holding and real estate management company, owning a number of properties in Karachi. Since 1991, Spencer-Pharma is emphasizing on the production of generic medicines as well as getting tolling/outsource assignments from multinational companies. The Avari Group has also experimented in the fields of Power Generation and Communications. At the moment, the primary focus of the group is on managing/leasing 3star and 4-star hotels in Pakistan and on signing managing contracts for targeted hotels in the Middle East. 1.1 Hotel Industry Overview 1.1.1 Introduction The hotel industry in Pakistan caters well for the basic needs of any client. Both food and accommodation are of very good standard. Nevertheless, due to uncertain political conditions and unrest, tourists do not often prefer Pakistan when choosing a place for vacation. Business travel is expected to increase as economy grows with the passage of time. Overall though, due to lack of security for tourists and travelers, the hotel industry has suffered in the past. On average, the share of foreign guests in hotels has increased to roughly 35%. Worldwide, the hotel industry has a direct linkage with the tourism industry. The tourism industry at present is among the fastest growing industries in the world and is
also a major source of foreign exchange earnings. In general, this industry is a potent agent for economic development around the globe. The service sector in Pakistan is growing rapidly and tourism falls under services. In addition, as more and more people move up the class ladder, they have more leisure time and thus would have a positive influence on the industry. In Pakistan however, this industry is still in the growth stage and has not been accorded a lot of importance. This being stated, the country does have a lot of potential and with the present government policies, one can be quite optimistic provided the international scenario is favorable. 1.1.2 Geographical Distribution The need for internationally acclaimed chain hotels so as to bolster tourism and investment, and consequently the economy, was felt soon after the countrys independence. In subsequent years, several big hotel chains entered the market such as Avari (formerly Hilton and Ramada), Pearl Continental (formerly Inter-Continental), Sheraton, Marriott and Serena. However, most of these players have restricted their presence in the main cities of Pakistan namely; Karachi, Lahore and lately, Islamabad. The geographical distribution of these hotels, with the respective number of rooms, is enumerated below:
Table 1 Total Number of Rooms Available in all the 5-star Hotels in Pakistan
City Karachi Lahore Islamabad/ Rawalpindi Bhurban Quetta Peshawar Faisalabad
Avari 218 186 417*
Pearl 290 559 193
Marriott 219 150
Sheraton 407 -
Serena 392
Regent 413 -
Beach 80
190 52 -
140 144
*Avari Islamabad - new project Source: Avari Hotels official reports. The hotel business is an integral part of the tourism industry, which today ranks among the three fastest growing business sectors in the world. It is a major source of foreign exchange earnings and a powerful agent of economic development. The tourism industry and hotels in particular, are a major source of direct and indirect employment too. Contrary to popular belief, tourism is a capital-intensive industry. It demands investment in the construction of hotels, motels, lodging houses, chalets, camping grounds, rest houses and youth hostels. Similarly, restaurants, athletic and health clubs, amusement parks, playgrounds and last but not least, an efficient and comfortable transport system is also a necessary ingredient of a successful tourist destination. Strong growth was witnessed in the hotel industry between 2003-2006 especially in the city of Islamabad. There was significant excess demand during the peak seasons. That had
also rekindled investor interest in the industry. The reason for the industry re-bound is best understood in the context of the countrys economic recovery and improved international profile in that period. The above led to the following major developments for the hospitality industry in Pakistan: intra-country and international corporate travel increasing manifold; Pakistan in general and Islamabad in particular (then and now) are housing international community members involved in the on-going reconstruction in Afghanistan; US Aid and the World Food Program have increased their presence and activities in Pakistan; the Kerry Lugar Bill has seen an influx of US citizens to administer the program (with many more expected); earthquake relief activities generated an influx of NGOs and other foreigners; and improved political and trade relations with India between 2003-2006 yielded considerable incremental travel between the two countries then; even 2010 saw an increase in occupancy due to the devastating floods, which brought in international NGOs and others foreigners. 1.1.3 Average Occupancy Revenues in the hotel sector are almost 70% dependent on occupancy levels, which generate income not only from guestrooms but also other sources such as food, beverages, laundry and other service-related hotel departments. Hotel revenues are positively correlated with occupancy levels. The table below provides a basic comparison of the occupancy levels between Avari Hotels Limited and Pakistan Services Limited: Occupancy Level 2008-9 Average (Avari) Average (PC) 57.66% 49.55% 2009-10 57.86% 53.93%
Source: Avari Hotels official reports.
Figure 1 Client Mix The client mix of the hotel industry is made up of the following segments:
Source: Avari Hotels Ltd, 2009. Typically, corporate clientele have provided the bulk of hotel revenues in Pakistan. These payments accrue not only in the form of room and food & beverage revenues from corporate travelers, but also from conference/meeting rooms utilization, demand for which grows annually in line with the pace of economic activity in Pakistan. For instance, between 2003 and 2006, the demand grew at almost 15% per year. Yet another avenue of corporate revenues, quite significant in the case of Avari (the head office of both Unilever and Dubai Islamic Bank are based in their Karachi hotel), comprises of rents received in relation to office space permanently occupied by companies within hotel sites. With Pakistans support of the war on terror and generally improved international image, substantial foreign traffic has also begun flowing to the country. Indeed, scores of foreigners from the international donor community with responsibilities in Afghanistan are operating out of Islamabad. Foreigners for the earthquake rehabilitation in the northern areas of Pakistan are also operating out of Islamabad. The 2005 peace initiatives and then increased interaction with India had a positive impact for the industry. Unfortunately, due
to an increasing friction in ties, this inflow of Indian tourists, business people and, Sikh Yatris (given that Punjab is the home to many Sikh religious temples and shrines) has dried to a trickle. Other triggers for growth in the hotel industry are the international cricket team tours, the forthcoming World Cup in 2011 and the Basant Festival in Lahore - which used to be attended by leading Indian & Pakistani actors, artists, and tourists from overseas. Table 2 The client mix for Avari Hotels and Beach Luxury Hotel in 2009-2010
Nature Corporate/Conferences/ Meetings Airlines (layover) Government Diplomats Long Staying Guests 1% 5% 10% 5% 1% 5% 10% 5% 1% 10% NGOs 12% 5% Avari Towers 79% Avari Lahore 79% Beach Luxury 72%
Source: Avari Hotels official reports. 1.1.4 Competition in the Industry Avari Groups hotels have consistently competed successfully against peers over the decades and, as such, it is reasonable to assume that the trend shall continue in the years to come. The table below provides a basic comparison of occupancy levels between Avari Hotels Limited and Pakistan Services Limited:
Table 3 Comparison of occupancy levels of different hotels city-wise

2008-09 Avari Lahore Avari Towers Karachi Average (Avari) PC Lahore PC Karachi PC Rawalpindi PC Peshawar PC Bhurban Average (PC) 54.53% 60.80% 57.66% 53.00% 49.76% 52.00% 36.00% 57.00% 49.55% 2009-10 55.33% 60.40% 57.86% 47.34% 42.89% 61.20% --64.28% 53.93%
Source: Avari Hotels official reports. Table 4 below compares the profitability between Avari Hotel Limited and Pakistan Services Limited: Table 4 Profitability comparison
Performance for the Year Ended June 30, 2010 Avari Sales and Services Cost of Sales and Services Gross Profit Other Income Administrative Expenses & Selling 1,131,010 694.278 436.732 127,080 338,443 61.39 38.61 11.24 29.92 % of Sales PSL 4,238,232 2,698,003 1,540,229 339,339 1,092,180 63.66 36.34 8.01 25.77 % of Sales
Operating Profit Financial Charges Profit Before Taxation Taxation Profit After Taxation Total number of guestrooms
225,369 69,038 156,331 7,893 148,438 324*
19.93 6.10 13.82
766,310 161,173 605,137 177,205
18.08 3.80 14.28
13.12
427,932 1306
10.10
* Due to 98 rooms being closed at Avari Towers for renovations.
Source: Avari Hotels official reports.
Table 5 Year-wise income statement for Avari Hotels

2007 Total Revenues (sales and services) Cost of Sale & Services Gross Profit Administrative Expenses Operating Profit Financial Charges PBIT Tax Profit After Tax 1,057 635 422 294 179 68 111 5 106 Amount in PKR Million 2008 2009 948 600 348 294 112 46 65 5 61 1,025 678 347 321 150 75 76 5 71
Source: Avari Hotels official reports. With Avari Hotels having only 422 operational rooms (in actuality, 324, due to the shutting down of 98 rooms at Avari Towers for renovations) compared to the 1,306 room capacity
enjoyed by Pearl Continental Hotels, Pakistan Services Ltd benefits from the economies of scale, thereby reducing overall Operating Expenses. 1.2 Forthcoming Hotels in Islamabad In 2006, the following were optimistically promoted by sponsors and the Government alike: Quote: The hotel industry remains widely untapped in Pakistan. Given Pakistans continued economic performance improving ties with India, on-going reconstruction in Afghanistan and the earthquake affected areas, the hotel industry is expected to continue strong demand, especially in the capital city. Islamabad is the gateway to the northern area of Pakistan, Afghanistan and the Central Asian States; it has seen tremendous demand for hotels. Due to the lack of hotel facilities as per existing demand in Islamabad, the guest room business is flourishing. Moreover, adjacent cities, especially Lahore, share some of the burden of hotel requirements subject to availability of Islamabad - Lahore flights or in other cases easy accessibility through the motorway. Some of the forthcoming hotels in Islamabad are: 1.2.1 Centaurus Hotel Islamabad This will be the first of the 7-star 350 suites hotel in Islamabad, Pakistan, and is expected to break ground on the hotel portion after four years (2011). The project is located in Sector F-8 between Jinnah and Faysal Avenue. The project is a combination of a residential plaza, corporate offices and a shopping mall, thus, success of the project depends on cash flow from the sale of apartments, offices and shops. 1.2.2 Intercontinental Hotel The Intercontinental is also going to launch its 190 room hotel in the close proximity of the Marriott Hotel in Islamabad. This project was expected to be operational by JuneSeptember 2008.
1.2.3 Avari Islamabad The Avari Group has started to build a 5-star (417 rooms) hotel in Islamabad. This project is expected to be operational by 2011. 1.2.4 Other Expected Projects Serena is also expected to launch its 2nd phase five years from now which will be a 200 room (approximately) hotel. Serena is looking for a composition similar in combination as that of Centaurus that is a combination of apartments, a shopping mall and an office complex; however the hotel is not expected to begin commercial operations until 2011. Moreover, Bismillah Group of Faisalabad is also looking at the possibility of a 300 room hotel near convention center, which is also expected to break ground after four years. 2.0 History of the Avari Family
2.1 Dinshaw Byramji Avari Dinshaw Byramji Avari, born in 1902, was brought up and schooled in an orphanage - he would also teach younger children of the orphanage in the evening. Working his way through a number of ups and downs in his life, he went on to do his B.Com and joined the Sunlife Insurance Company of Canada as a clerk to the Chief Executive. His talents showed from the very beginning. After achieving the highest sales for a continuous eight months in Bombay, he was sent to Karachi in 1929 to open up the companys branch there . Soon he was made in-charge of the provinces of Punjab, Sindh, Baluchistan, NWFP and Afghanistan. He was also the first to get a Chartered Life Underwriter (CLU) certificate in Asia. Not being able to progress any higher, with an energy and passion to achieve more, he diverted his attention to other opportunities. He bought the Bristol Hotel from an English couple in 1948 by mortgaging his wifes jewellery, his own life insurance policy and
borrowing money from friends. In order to gain expertise in hotel management, he made it binding upon the previous owner in order to close the sales deal to train himself and his wife for a period of six months. Dinshaw worked very hard to make his infant business work. He would do all the chores, from room maintenance to purchasing food items from Empress Market at 4am. The knowledge he gained from his predecessors combined with his own business acumen, eventually paid off and Bristol Hotel became a business success. The success of Bristol made Dinshaw realize the potential for high class hotels in Karachi. Benefiting from the slump in property prices after the partition of the subcontinent, he was able to buy a cheap piece of land in Karachi to build the Beach Luxury Hotel. His selection of a relatively isolated area for building the new hotel made everyone skeptical of the new venture. However the new hotel was more successful than expected and the 35 room space became insufficient for the number of guests that kept showing up. Tents had to be erected outside the hotel to accommodate the surplus guests. Soon enough, the hotel had grown into a 150 room 5-star (for its time) property. Beach Luxury was home to many innovations and was the first in Pakistan to serve buffet style dinners to its guests and also the first to serve Chinese food in Pakistan. By 1962, Dinshaw had gained a lot of experience in the hospitality business. This was the time when he made one of the most critical business decisions of his career, i.e. the purchase of Nedous Hotel in Lahore through the highest bid ever made in the history of property auctions, i.e. Rs. 12.15 Million. The new project was named Park Luxury Hotel. In 1978, the Avari Group of hotels made their first collaboration with an international hotel management company, and hence Hilton International converted Park Luxury Hotel to Lahore Hilton. Realizing the synergies between the hotel business and the air travel business, Dinshaw started the Avari Travel Agencies in the same year.
While the Lahore Hilton was being developed, Dinshaw envisioned the construction of the tallest building in Pakistan, and came up with the idea of constructing Avari Towers in Karachi. The project faced many hardships including floods, devaluation of the Pakistani Rupee and many other infrastructural issues, but it finally materialized in 1985. Avari Towers housed the first Japanese restaurant in the subcontinent. The first challenge faced by the new venture was the decline in the demand for 5-star hotel accommodation in Pakistan. To cope with this issue, Dinshaw decided to develop 150,000 sq. feet of office and shop space around Avari Towers and named it Avari Plaza. The plaza was able to attract the offices of many multinational corporations and airlines. Dinshaw dealt with capital constraints by introducing the concept of receiving advance rents. Having the expertise in running hotels, Dinshaw decided to run the Avari Towers himself unlike Lahore Hilton which was managed by Hilton. However, to attract international clientele, Dinshaw licensed the Ramada name under a franchise arrangement. Dinshaw was known to be a visionary and could foresee where the money and opportunity was. He instilled his values in the organization in the form of documented policies. He gave special importance to successor development and always emphasized the importance of giving complete independence to the upcoming generations of managers. In his words: Rules are meant for donkeys and mules and children of schools. While he kept struggling all his life to make his way up in business, he never let his social and community involvement relax. His social initiatives involved establishing the Rotary Club of Karachi as well as setting up the Karachi Parsi Anjuman Trust Funds (see Exhibit 3 for a complete list of organizations Dinshaw was associated with). He attributed his motivation to the Zoroastrian motto: Contented with what I have but discontented with what I am. Dinshaw died at the age of 86, his son Byram Avari took over as the new Chairman.
2.2 Byram Avari Byram Avari joined the business of his father after doing his MBA from IBA-Karachi. He started by working at the lowest level. His first assignment was to peel potatoes in the kitchen. He then moved on to working as the PA to the General Manager Beach Luxury. He would open the GMs mails and accompanied him everywhere to take meeting minutes and would assist him in everyday tasks. In a similar, gradual manner, he worked his way through different levels of responsibilities in the hotel. He then worked side by side with his father to build the Lahore Hilton and completed the Avari Towers himself. He was then appointed Managing Director and continued in this position until his fathers demise at which time he became Chairman & Chief Executive. (See Exhibit 4 for CV details). In business as well as in all other aspects of life, Byram was deeply impressed by his father. However unlike Dinshaw, he was not a risk taker. The president of Hilton International once compared the father and son as: Dinshaw is an old man with a young thought; while his son is a young man with conservative thought. Over time Byram became aggressive in venturing into new businesses, and under his tenure the Group took full control of Spencer & Company, Spencer Pharma and started Spencer Powergen Company of Pakistan Ltd. However, this venture faced a technical knockout by the Government of Pakistan and could not reach completion in spite of financial closure being achieved. Byram had a very flexible approach towards his employees, because his father used to say to him; We look after the poor because we were once poor too. One of his employees recalled an incident: Once an employee filed an application for 40 days paid leave as his mother had died. The GM refused because the rules allowed for only 30 days of such leave. When the issue got to the notice of Mr.
Byram Avari, he directed the GM to approve the application, and added that the rules could always be changed by the top management because their purpose is to help employees in every way. From there onwards, all the policies of the Avari Group were made to suit the employees. Byram always saw his father as his best friend and wanted to become the same for his children. Therefore he used to take his children along whenever he had to travel. He considered such contact critical for building a strong bond with the children and an opportunity to inculcate family values in them. He took family ties to be of utmost importance, preceded by nothing. He set a tradition of having a family dinner every Sunday which every family member had to attend. No one was allowed to make any other dinner commitments for Sunday. The tradition is still religiously followed in the family. Like his father, Byram also considered trust and independence the key features of succession planning. While they were kids, he showed his sons the cupboard where he kept his cash, and allowed them to take the money they required instead of asking for pocket money. As children they were required to take permission before getting money from the cupboard, however the condition was removed as they grew up. Byram considered this exercise very useful in developing the trust he wanted to have in his successors. His father had built an environment in Avari where someone could join the group as a peon, but, based on the abilities, could rise to the managerial and even directorial ranks. It was believed that such a system would result in producing an extremely loyal and evermotivated human resource. They developed an environment where there was no concept of retirement. If employees wished to work after the age of 60 they could do so on a contractual arrangement. When they were too old to be able to work, they received their last drawn monthly salary and medical benefits for the rest of their lives. The policies developed by Byram and his father paid off in the form of extremely low attrition rates. A
large number of employees of Avari have served the organization for over 30 to 40 years. He insisted that he would never lose interest in family business and community work: Like my father always said If You Rest, You Rust and if You Rust, You Die." 2.3 Dinshaw and Xerxes Avari Following the footsteps of their father, both Dinshaw and Xerxes (See Exhibit 5 for CV details) did an MBA from IBA-Karachi. They had started doing summer internships in the hotel while they were in high school. The internships helped them become familiar with the different sections of the hotel and to learn how work was done at the lowest levels. Their father also kept them generally abreast with Group happenings over dinner, which went a long way in easing the transition and continuity of actions when they started working eventually. Dinshaw formally joined the business in 1990 and Xerxes followed in 1991. In the first two years all three of them used to sit on one large table, where they would share every piece of information with each other. After two years in the same room, they started sitting with their father in the next room (which didnt have a door) so that they could listen to his business conversations and he could ask their opinions. They also acted as secretaries to their father, accompanying him to the organizational meetings and handling his official correspondence. Initially they were doing all sorts of work, however their interests got streamlined after some time Xerxes started dealing with financials, budgeting, tax, new projects development and renovations at their hotels, while Dinshaw looked after the group marketing, operations (the GMs reported to him), Information Technology, Security and Human Resources. Jointly with their father, Dinshaw and Xerxes looked after the development of new hotels. According to Dinshaw, they never had any job description. They had developed most of the managerial and business skills while working on the job and most importantly, their father had been the best coach and mentor for them.
According to Dinshaw, their future aim would be to continue to manage the Avari family business as true family business, based on the core values of caring, honesty and respect for others, encouragement for diversity and sharing their wealth with their employees. As Dinshaw stated: Treat everyone how you would like to be treated. At the same time, Dinshaw was of the view that they would never allow anyone to take advantage of them or take their soft image for granted. 3.0 Avari Group Core Values The Avari family rejects the impression of trying to run a seth organization. They see their business as a family-owned enterprise, managed in compliance with the corporate rules with an extremely professional organizational culture. The core values depict a deep spiritual side of the business leaders with a strong focus on social development. Byram became the head of the Parsi community in Karachi after the death of his father in 1988. The Avari familys core group philosophy is; employee compassion, welfare, motivation, growth, development & loyalty (of both staff & management). This philosophy is one of the primary goals of Avaris organizational policies & procedures. Pakistans nuclear tests in 1999 preceded a painful slump in the hotel business, combined with a hike in import prices. Many hotels underwent major downsizing in that period, however Avari Group decided not to follow suit. They announced a salary cut across the board at all managerial levels only which was welcomed by the employees after they were taken into confidence about the circumstances. The situation improved in a matter of three months and the group rewarded its management staff by giving special bonuses on top of the compensation for salary cuts. Dinshaw and Xerxes attributed their ability to stay together and run their business successfully to the strong family traditions. At the same time, they endorsed the importance of professional management, professional education and on-the-job training for the
development of achievers in management. With their house right on the hotel premises, they came to work before office time and worked till late in the evening. According to Dinshaw; While living in the same big house, and having individual space, we learn how to look after each other and share our issues and understand each other better. In addition to the career development opportunities and financial incentives, the brothers consider mutual respect to be one of the main reasons for employee retention. According to Xerxes: In the workforce there are a number of employees who joined Avari even before we were born. We have been treating them as uncles since childhood. Now that we have become their bosses, we see no reason in not giving them the same respect. In fact we treat all employees with respect because that is how we get respect in return. Agreed that a bit of arrogance comes with power, but whenever we realize our mistake, we make it a point to go and apologize to the employees, and this only adds to our regard in their eyes. 4.0 Succession in the Future Dinshaw and Xerxes have an approach towards succession planning that contrasts with their father and grandfather. They plan to send their children to universities abroad for professional education. According to them, they have come to a stage where strategic issues should bother them more than the operational issues. They have highly skilled operational managers reporting to them. In their successors, they want to develop the competencies that would help them better manage the corporate office. After completing the university education and before joining the family business, they would like their successors to work in a large international chain of hotels, preferably as assistants to the CEO. Above all, they try to inculcate in their children the importance of the value system that holds the Avari family together. While they like their families to enjoy their own space at home, they make sure to take all business decisions in consultation with each other and their father. They want to pass on the same sense of belonging to their next generation.
The brothers foresee a bright future for the business not only due to opportunities coming up for further success and development, but also due to a firm belief in God and the philosophy; Whatever happens, happens for the best; whatever happens, happens the way God wants it to happen. In the words of their father: God does not look at the oratory of your prayers how eloquent they are, nor at the arithmetic how many they are, nor at the logic how methodical they are, but He looks at the sincerity, how spiritual they are. 5.0 Future Challenge In December 2010, Byram D Avari, the Chairman of Avari Group along with his sons Dinshaw Avari and Xerxes Avari were having a meeting to discuss the Avari Groups lifelong employment policy. In 2007, 2008 and 2009 the hotel industry was facing a major challenge in Pakistan. Due to the poor law and order situation, economic problems and the ongoing war on terror on Pakistans soil, most of these hotels were experiencing low occupancy and decline in the business activities in the hotel industry in all the major cities Karachi, Islamabad, and Lahore. Several top hotels in Karachi and Islamabad were reducing the headcounts. The challenge Avari Group was facing, according to Byram; We are a values-driven organization, we exist and survived because of our core values but now it is becoming very difficult to keep our head above the water. All of the top leaders including Byram, were worried as they were facing the real test of their core value. One option was to change the lifelong employment in order to save the organization. On the other hand, the real test of the organization was how it was holding and keeping the sprit and core value intact during the crisis situation. In that weak economic time, these core values were put to a real test.
Exhibit 1 Avari Organizational Chart
Chairman
Corporate Director Taxation
Corporate Auditor
Corporate Director IT
Corporate Director Marketing
Corporate Director Purchasing
Corporate Director Administration
Corporate Director Finance
Company Secretarial Office
Corporate Director Human Resources and Public Relations
General Manager Development
Tax Department
General Managers Towers Lahore Dubai BLH Toronto
Accounts Department
Controllers
F&B Director
F/O
Security Sales Director
Training Manager Assistant Manager IT / System Admin Chief Engineer
Banquets
PABX
Business Center
Health Club/Pool
Purchase Manager Laundry
The author developed the case for class discussion rather than to illustrate either effective or i neffective handling of the situation. The case, instructors manual and synopsis were anonymously peer reviewed and accepted by the Case Research Centre (CRC) for its 1st AJMC Internati onal Case Conference HR Credit 2011, at the Lahore University of Management Sciences (LUMS), May 24-26, 2011. All rights are reserved to the author Manager Manager and LUMS. 2011 by Nasir Afghan.
H/K Executive Chef Speciality Chef
Exhibit 2 Avari Family Tree
Dinshaw Byramji Avari
First Generation
Byram D Avari
Second Generation
Dinshaw Avari
Xerxes Avari
Third Generation
Byram D. Avari (Jr.)
Dinshaw X. Avari (Jr.)
The author developed the case for class discussion rather than to illustrate either effective or ineffective handling Fourth Generation of the situation. The case, instructors manual and synopsis were anonymously peer reviewed and accepted by the Case Research Centre (CRC) for its 1st AJMC International Case Conference 2011, at the Lahore University of Management Sciences (LUMS), May 24-26, 2011. All rights are reserved to the author and LUMS. 2011 by Nasir Afghan.
Exhibit 3 List of Organizations Dinshaw Byramji Avari was associated with
The Karachi Parsi Anjuman Trust Funds, as Trustee and Chairman from 1985 to 1987. The Jehangir Rajkotwalla Baugh Trust, as Chairman for 11 years. The Parsi Hew Year Celebration Committee, as Chairman for 30 years. The Young Men's Zoroastrian Association, as Chairman for 10 years. The Jehangir P. Dubash Health Culture Institute, as Chairman for 34 years. The Rotary Club of Karachi, as Founder Member and Founder President. The Pakistan Sea Scouts, as Treasurer. The Deaf & Dumb Centre at Karachi, as Founder President for 13 years. Society for Prevention of Cruelty to Animals, as Member of the Managing Committee for 45 years. Founder President of the Pakistan Hotels Association from 1948 to1987. Bai Virbaiji Katrak Charity Funds, as its Chairman for the last 25 years. Director of Pakistan Tourism Development Corporation for 6 Years. Sind Red Cross/Red Crescent Society as a Member of the Managing Committee from 1941 to 1987. Director of Premier Bank for 8 years before Nationalisation, and a Director of Spencer & Company (Pakistan) Limited for 15 years. Member of the Managing Committee of the BVS Parsi Boys School and Mama School Vice President of World Association of World Federalists, English Speaking Union, the Pak-Kuwait Friendship Association and numerous other social and community projects. Justice of the Peace from 1941 to 1988
Exhibit 4 Byram D Avari (Justice of Peace) CV

CURRICULUM VITAE NAME ADDRESS BORN STUDIES By ram D Avari (Justice of Peace) Beach Luxury Hotel. M. T. Khan Road, Karachi, Pakistan February 07, 1941 B. Com. LLB Diploma in Business Administration Diploma from Cornell University, USA - Hotel Management Senior Certificate from Trinity College, UK (Music-Violin)
APPOINTMENTS : Honorary Consul of Canada BUSINESS : ChairmanAvari Group Avari Hotels Ltd. - Avari Towers Karachi/Avari Lahore Avari International Hotels Limited-Hotels at Dubai & Toronto Avari Travel Agencies (Pvt) Limited Beach Luxury Hotel (Pvt) Limited Beach Brewery (Pvt) Limited Spencer & Co. (Pakistan) Limited Spencer Pharma (Pvt) Limited Spencer Powergen Co. of Pakistan Limited
SOCIAL & COMMUNITY: Chairman- Karachi Parsi Anjuman Trust Fund (1990) Chairman - Parsi New Year Celebration Committee (1988) President- Dastur Dr Dhalla Memorial Institute (1998) Trustee - Jehangir Rajkotwalla Baug Trust Senior Vice President - English Speaking Union of Pakistan (2000) Patron-Karachi Sea Scouts Council(1998) General Body of Strengthening Participatory Organization (SPO) 2006 Senior Vice Chairman of Minority Advisory Council, Punjab (2006) Trustee, Board of Trustees, Karachi Port Trust (2006) Honorary Member, World Zarathushti Chamber of Commerce (2007)
SPORTS
Gold Medal in Yachting in VI11 Asian Games, Thailand 1978 Gold Medal in Yachting at IX Asian Games, India 1982 Runner-up at World Sailing Championship, Canada 1981 Runner-up at USA Opens National Sailing Championship 1981 Manager/Captain Pakistan Team, South Asian Yachting Regatta Sri Lanka 1978 Winner of Lipton Trophy 1979 Winner of State of Ontario (Canada) Sailing Champion 1981 Winner of Canadian Inco Regatta 1981
DECORATIONS : President's Gold Medal January 1979 PRIDE OF PERFORMANCE MEDAL (Yachting) Govt of Pakistan Award 1982 Pakistan Commemorative Postage Stamp issued December 31, 1983 (with Byram & Goshpi Avari in Enterprise Sailing Dinghy CORPORATE EXCELLENCE AWARD 1999 HAMDARD INSTITUTE OF MANAGEMENT SCIENCES (Chancellor Mr Justice Ajmal Mian, Chief Justice of Pakistan) Presented by the President of Pakistan in March 1999 CLUBS Member, Karachi Boat Club/Sind Club/Yacht Club/Golf Club/SKAL Club Karachi Parsi Institute/Honorary Member, Karachi Caledonian Society Life Member, Pakistan Red Crescent Society
PAST
Member, Parliament (Majlis-e-Shura), Government of Pakistan 1982-85 Member, Parliament - National Assembly of Pakistan (1988 upto 1993) Federal Parliamentary Secretary for Planning & Development National Assembly '91) Pakistan Delegate to the United Nations General Assembly 38th Session 1983 Member, Federal Advisory Council for Minority Affairs (1984) Member, Standing Committee of Parliament (National Assembly) 1991, on Culture, Tourism, Youth Affairs, Sports, Planning and Development
Member, Advisory Committee for the Dept of Archaeology, Govt of Pakistan (1992) Member, Federal Government Standing Committee "Industry" 1982-85 Commodore, Karachi Yacht Club (Three Terms) 1976, 1979, 1980 Member. Film Censor Board of Sind 1978 to 1981 Founder 1st Vice President, Asian Yachting Federation 1978-82 Member - Managing Committee, Adult Deaf& Dumb Centre Chairman, Pakistan Hotels Association (Three Terms) 1981, 1982 and 1983 and Vice Chairman (1986/87) President, SKAL Club of Karachi (2 Terms) & subsequently on Managing Committee Member, Committee for arranging Annual Finances for Parsi Charitable Hospital 1st Vice President, PAT A - Pacific Asia Travel Association (Pakistan Chapter) Board of Governors, Pakistan Institute of Tourism & Hotel Management 1981/82/83 1st Vice President, Karachi American School 1981 to 1986 Member, District Social Welfare Committee South - Karachi 1984-88
Member, Federal Planning Commission - 7th Plan Tourism 1988-1993 and Perspective Plan 1986-2006 Member, Karachi District Peace Committee 1987 Chairman, Association of Owners of Hotels Operated by Hilton International Worldwide 1986-88 Chief Warden of Civil Defence for District West, Karachi 198 7-89 Director - Pakistan Gulf Economist Member, Federation of Pakistan Chamber of Commerce & Industry Standing Committee on Tourism & Hoteliering 1984-86 Leader of the Delegation for negotiations on behalf of the Government of Pakistan with Suzuki Motor Company of Japan February 1989 Member of Prime Minister Benazir Bhutto's entourage to Malaysia for Commonwealth Heads of Government Meeting (CHOGM) - October 1989 Member of Prime Minister Nawaz Sharifs entourage in 1992 to Uzbekistan Member of Prime Minister Benazir Bhutto's entourage to Turkmenistan and Ashgabad in Member of Delegation from Pakistan of the "Canada-Pakistan Business Council" to attend meetings at Montreal, Ottawa and Toronto to develop investment interest in Pakistan (November 1989) Member - Ministry of Finance, Advisory Council for Finance Budget 1989-90 Managing Trustee, Karachi Parsi Anjuman Trust Fund 1983/Trustee since 1982 Vice Chairman, Pakistan-Kuwait Friendship Association 1987 to 1990 Member, Board of Directors, Spencer & Co (Pakistan) Ltd 1976 & then from 1989 Member - Public Accounts Committee of National Assembly (1989) Member - Federal Advisory Council for Ministry of Commerce (1989) Member, Federal Advisory Council for Ministry of Finance (1989) Vice President, Pakistan Hungary Friendship Group in the Pak. Parliament 1990 Member, Federal Government Hotels & Restaurants Advisory Committee (1979) Member, Board of Directors, Zeal-Pak Cement Factory Limited (1989) Member, Managing Committee, Young Men's Zoroastrian Association (1982-1991) Member, Resources Mobilization & Tax Reforms Commission (1991) Member, Advisory Council of the Pakistan Association for Computer Education in Schools (PACES) 1987 Member, Board of Directors, Pakistan Special Olympics (1989) Member, Rotary Club (Main) President - Jehangir Peerozshah Dubash Health Culture Institute (1989) Vice President - English Speaking Union of Pakistan (1989) President - English Speaking Union of Pakistan (2000-2004) President - Pakistan-Kuwait Friendship Association (1990) Vice President - Dastur Dr Dhalla Memorial Institute, Karachi (1982) Manager, Pakistan/Bangladesh - Canadian Airlines International (19..-2000) Member - Divisional Minority Committee, Karachi (1981) Member - Pakistan Maritime Museum Advisory Board Executive Committee of Pakistan Sports Board, Islamabad(1999) Judges Committee of 7th World Zoroastrian Congress Awards 2000 (May 2000)
President - Friends of a Cleaner Sea, NGO (1996) Vice President - International Hotel Association South Asia (1984) Member, Government of Sindh Co-op Housing Authority (1983) : Member, Advisory Board of Citizens-Police Liaison Committee (CPLC) (1997) Member, Central Board of Film Censors (1998) Member & Vice Chairman, Minority Advisory Council, Govt. of Punjab (2000) Member, Advisory Board of Ministry of Minorities, Culture Sports, Tourism & Youth Affairs(2001) Member, Advisory Council, Ministry of Industries & Production (2003) Member, Managing Committee - Pakistan-Kuwait Friendship Association (1990)
Exhibit 5 Dinshaw and Xerxes Avari CVs
CURRICULUM VITAE
NAME STATUS ADDRESS DINSHAW B AVARI Married (two children) Beach Luxury, M.T. Khan Road, Karachi 74000, Pakistan Tel: 92-21-5611031 Fax: (92-21) 5610673 & 5610674 Email: headoffice@avari.com; dba@avari.com SKYPE: dinshawskype July 14, 1967 LLB (1997) B.B.A. (Hons) (1988) / M.B.A. (1989) London Chamber of Commerce Accounting (Elementary)
D.O.B. STUDIES
BUSINESS Director- Spencer Pharma (Pvt) Ltd (formerly Fisons) - Avari Travel Agencies (Pvt) Limited - Avari International Hotels Limited Avari Dubai MEMBER Balloting sub-committee, Karachi Yacht Club (2000-present) Joint Secretary Young Mazdayasnian Zoroastrian Association (1991- present) Chief Executive - Spencer & Co. (Pakistan) Limited Chief Executive- Beach Brewery (Pvt) Limited Director - Spencer Powergen Company of Pakistan Limited Member- Chambers sub-committee, Sind Club, Karachi (2006) Member- Catering sub-committee, Sind Club, Karachi (2005) Treasurer-Management Association, Institute of Business Administration (1988) Treasurer-Marketing Association, Institute of Business Administration (1987) Joint Secretary Pakistan Parsi Collegiate Association (1985) Honorary Secretary, Honorary Sailing Secretary & Honorary Secretary Trophies Karachi Yacht Club (2009-10) Vice Commodore & Honorary Treasurer, Karachi Yacht Club (2008-09) Personnel sub-committee, Karachi Boat Club (2007-2008) Honorary Sailing Secretary & Managing Committee Member Karachi Yacht
PAST (Work)
PAST (Sports)
Club (2003-2005) Member- Managing Committee Karachi Yacht Club (1990-91) CLUBS Royal Ocean Racing Club, UK / Karachi Yacht Club / Karachi Boat Club / Karachi Sind Club / English Speaking Union (ESU) / Young Mazdayasnian Zoroastrian Association (YMZA) / Pakistan Parsi Collegiate Association (PPCA) Participant in Royal Hong Kong Yacht Clubs Rolex South China Sea Race April 1-5, 2010 (from Hong Kong to Subic Bay, Philippines) on Calamansi (Skipper: (Steve) Ho, Chin Wah) Participant in Clipper Ventures Round the World Race on Leg 4 (FremantleSingapore-Qingdao) (January 1, 2008 to February 16, 2008) (Skipper: Simon Bradley) Participant in the Enterprise Worlds Sailing Championships, Cornwall, U.K. (1992) Participant in the Enterprise Worlds Sailing Championships Bombay, India (1991) Participant in the Enterprise Worlds Sailing Championships, SudburyCanada (1981) Participant in Southern Asian Yachting Regatta, Sri Lanka (1980) Winner of Southern Asian Yachting Regatta, Karachi (1979) Winner of Pakistan Junior National Sailing Championship (1979) Participant in Pakistan Junior National Sailing Championship (1978)
SPORTS
INTERESTS Sailing / Scuba Diving / Swimming / Water Skiing / Reading / Movies
CURRICULUM VITAE
NAME:
XERXES B. AVARI
STATUS:
Married (three children)
ADDRESS:
Beach Luxury, M.T. Khan Road, Karachi 74000, Pakistan Tel: (92-21) 5611031 Fax: (92-21) 5610673 / 4
DATE OF BIRTH:
August 25, 1968
STUDIES:
Master of Business Administration (MBA) Bachelor Business Administration (BBA Hons.) High School Diploma American School, Karachi
BUSINESS:
Executive Director -
Avari Group Avari Hotels Ltd. Beach Luxury Holdings Spencer & Co. (Pakistan) Limited Spencer Pharma (Pvt) Ltd Avari Travel Agencies
SPORTS:
Sailing
- Asian Games Guangzhou China Represented Pakistan in (Participated) 470 Class (2010) - Asian Games Doha Qatar - Represented Pakistan in 470 Class (2006) - Asian Sailing Championship Doha Qatar - Represented Pakistan in 470 Class (2006) - 470 European Championship Gdynia Poland (2005) - 470 World Championship Cadiz Spain (2003)
- Asian Games Busan Korea - Represented Pakistan in 470 Class (2002) - 470 European Championship Dun Loghare Ireland (2001) - 470 World Championship Balatonfured Hungary (2000) - Enterprise World Championship Porthpian, UK (1992) - Enterprise World Championship Bombay, India (1991) - Enterprise World Championship Sudbury, Canada (1981) - 1st Place American Inter School (Broke own Record which stands unbroken) - 1996 - 1st Place American Inter-School Championships (Broke Record) - 1995 - 1st places in various entries Sind Club Galas - 1st places in various entries Karachi Parsi Institute
Swimming
PAST:
Member Managing Committee of Karachi Yacht Club.
CLUBS:
Karachi Yacht Club / Boat Club / Sind Club / Skal Club / Parsi Institute / YMZA
INTERESTS:
Soccer, Volleyball, Snorkeling, Water-Skiing, Wind Surfing.
Exhibit 6 Avari Group Timeline of Important Events
1937 Dinshaw Byramji Avari Acquires Bristol Hotel
1962 Nedous Hotel in Lahore Bought by Avari Group and Converted to Park Luxury Hotel
1988 Dinshaw Dies and Byram becomes the New Chairman 1995 Management Contract for Avari Dubai is signed & Hotel opens
1978 Lahore Hilton is completed and opens
2010 1948 Opens Beach Luxury Hotel 1946 Dinshaw Avari acquires land and starts to build Beach Luxury Hotel in Karachi 1997 1990 - 91 Dinshaw (Jr.) and Xerxes Join the Business Management Contract for Ramada Hotel Toronto
1985 Avari Towers in Karachi is Completed Completed and opens
Airport is signed & Group takes over hotel on
Management
The author developed the case for class discussion rather than to illustrate either effective or i neffective handling of the situation. The case, instructors manual and synopsis were anonymously peer reviewed and accepted by the Case Research Centre (CRC) for its 1st AJMC Internati onal Case Conference 2011, at the Lahore University of Management Sciences (LUMS), May 24-26, 2011. All rights are reserved to the author and LUMS. 2011 by Nasir Afghan.

Avari (A) Mba

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Avari (A) Mba

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Avari Group: Organizational Values and Crisis Leadership Case A In 2010, Avari Group was approaching the end

City Karachi Lahore Islamabad/ Rawalpindi Bhurban Quetta Peshawar Faisalabad

Avari 218 186 417*

Pearl 290 559 193

Marriott 219 150

Source: Avari Hotels official reports.

Table 3 Comparison of occupancy levels of different hotels city-wise

225,369 69,038 156,331 7,893 148,438 324*

19.93 6.10 13.82

766,310 161,173 605,137 177,205

18.08 3.80 14.28

* Due to 98 rooms being closed at Avari Towers for renovations.

Source: Avari Hotels official reports.

Table 5 Year-wise income statement for Avari Hotels

Exhibit 1 Avari Organizational Chart

Corporate Director Taxation

Corporate Director Marketing

Corporate Director Purchasing

Corporate Director Administration

Corporate Director Finance

Company Secretarial Office

Corporate Director Human Resources and Public Relations

General Manager Development

General Managers Towers Lahore Dubai BLH Toronto

Security Sales Director

Training Manager Assistant Manager IT / System Admin Chief Engineer

Purchase Manager Laundry

Exhibit 2 Avari Family Tree

Dinshaw Byramji Avari

Byram D. Avari (Jr.)

Dinshaw X. Avari (Jr.)

Exhibit 3 List of Organizations Dinshaw Byramji Avari was associated with

Exhibit 4 Byram D Avari (Justice of Peace) CV

Exhibit 5 Dinshaw and Xerxes Avari CVs

INTERESTS Sailing / Scuba Diving / Swimming / Water Skiing / Reading / Movies

Married (three children)

August 25, 1968

Member Managing Committee of Karachi Yacht Club.

Soccer, Volleyball, Snorkeling, Water-Skiing, Wind Surfing.

Exhibit 6 Avari Group Timeline of Important Events

1937 Dinshaw Byramji Avari Acquires Bristol Hotel

1978 Lahore Hilton is completed and opens

1985 Avari Towers in Karachi is Completed Completed and opens

Airport is signed & Group takes over hotel on

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