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Avari Group: Organizational Values and Crisis Leadership (A)

Nasir Afghan
Asian Journal of Management Cases 2012 9: 59
DOI: 10.1177/097282011100900106

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Case
Editor’s Introduction 59

Avari Group: Organizational Asian Journal of Management Cases

9(1) 59–78
Values and Crisis Leadership (A) © 2012 Lahore University of
Management Sciences
SAGE Publications
Los Angeles, London,
New Delhi, Singapore,
Washington DC
Nasir Afghan DOI: 10.1177/097282011100900106
http://ajc.sagepub.com

Abstract
In 2010, Avari Group was approaching the end of six decades of successful operations. While reflecting
on Avari Group’s past successes, Byram D. Avari, the Chairman, was also thinking about the organ-
ization’s 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 the other hand, he was
thinking about the dilemma he was facing regarding the lifelong employment policy of Avari Group.
Avari Group was established by his father, Dinshaw Byramji Avari, and he founded the organization on
the core values of respect, honesty, lifelong employment (no retirement) and equal opportunities for
people from all religions and backgrounds. In recent years, however, due to low business opportuni-
ties and low growth in Pakistan, most of the other five-star hotels were reducing headcounts in their
organizations. However, Avari Group’s top leadership was reluctant to change its lifelong employment
policy, yet they were thinking about different alternatives. Furthermore, if they decided to change it,
what would the next steps be?

Keywords
Family business, crisis leadership, value-based leadership, entrepreneurship, succession in family busi-
ness, leadership development

Avari Group: Organizational Values and Crisis Leadership

The year 2010 brought to a close, six decades of successful operations of the Avari Group. While reflect-
ing on the Group’s past successes, Byram D. Avari, the Chairman of the Avari Group, was concerned
about its future. He wondered how successful his sons, Dinshaw and Xerxes, would be in bringing up
another generation of leading entrepreneurs and how they could preserve and continue the lifelong
employment policy of the Avari Group.
Byram Avari’s late father, Dinshaw Byramji Avari, founded this organization on the core values of
respect, honesty, lifelong employment (no retirement) and equal opportunities for people from all reli-
gions and backgrounds. In recent years, as a result of low business opportunities and low growth, most
of the five-star hotels in Pakistan were reducing headcounts in their organizations. The Avari family, on

This case was prepared by Nasir Afghan, Director of MBA Program and Assistant Professor at the Institute
of Business Administration, to serve as a basis for class discussion rather than to illustrate either effective or
ineffective handling of an administrative situation. This case is the first part of two parts; case B may be obtained
from the author (nafghan@iba.edu.pk). This case was accepted and presented at the AJMC-SDSB International
Case Conference 2011 held at the Lahore University of Management Sciences, Pakistan.

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60 Nasir Afghan

the other hand, was hesitant about altering the core values on which the organization had been founded.
However, they had to think about different growth alternatives to handle this business crisis.

Brief Introduction to the Avari Group

The Avari group started its journey almost immediately after Pakistan came into existence in 1947.
Starting initially from a small hotel in Karachi, the group by 2010 owned and operated one three-star and
two five-star hotels in Pakistan, and managed two four-star hotels in Dubai. Their real estate ventures
included office complexes in Karachi and Lahore under the name, Avari Plaza. By 2010, an international
standard five-star, all-suite 417-room hotel was being constructed in Islamabad which was scheduled for
a 2013 launch.
The Group had also recently opened a 30-room boutique hotel in Islamabad, under a new lease con-
cept, whereby an independent owner of the hotel refurbished it to Avari’s standards for Avari to operate;
in return, the owner received a high percentage lease rent on room sales. It was this model which the
Group was now using for other such hotels in Pakistan’s secondary cities.
The Avari Group continued to expand by venturing into the air travel business as well. Avari Travel
Agencies (ATA) had acted as the general sales agents for American Airlines and Canadian Airlines
International in Pakistan for the past twenty and twenty-three years, respectively. Similar to the hotel
business, the Group gained a lot of respect in the air travel industry and ATA won numerous sales
achievement awards from both its clients.
Spencer Pakistan was another brand owned by the Group. It had been operating since 1948 as a hold-
ing and real estate management company, owning a number of properties in Karachi. Since 1991,
Spencer-Pharma diversified into the production of generic medicines as well as acquiring tolling/out-
source assignments from multinational companies.
The Group also had some presence in the fields of Power Generation and Communications. At the
moment, however, the primary focus was on managing/leasing three-star and four-star hotels in Pakistan
and on signing managing contracts for targeted hotels in the Middle East.

Hotel Industry Overview

Introduction
The hotel industry in Pakistan catered to the basic needs of any client. Both food and accommodation
were of very good standard. Nevertheless, due to uncertain political conditions and unrest, tourists did
not often prefer Pakistan when choosing a place for vacation. Business travel was expected to increase
with the gradual growth of the economy. Overall though, due to lack of security for tourists and travel-
lers, the hotel industry had suffered in the past. On average, the share of foreign guests in hotels had
increased to roughly 35 per cent. Worldwide, the hotel industry had a direct linkage with the tourism
industry. The tourism industry at present was among the fastest growing industries in the world and was
also a major source of foreign exchange. In general, this industry was a potent agent for economic devel-
opment around the globe. The service sector in Pakistan was growing rapidly and this included tourism
as well. In addition, as more and more people moved up the class ladder, they had more leisure time and

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Avari Group 61

thus would have a positive influence on the travel industry. However, admittedly, this industry was still
in its early phases of development and had not been accorded a lot of importance. This being stated, the
country had immense tourist potential (mountains, valleys, rivers, rich cultural and historical heritage)
and with the present government policies, one could be quite optimistic provided the international sce-
nario was favourable.

Geographical Distribution
The need for internationally acclaimed chain hotels to bolster tourism and investment, and consequently
the economy, was felt soon after the country’s 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 had restricted their presence to 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 in Table 1.

Table 1. Total Number of Rooms Available in All the Five-star Hotels in Pakistan

City Avari Pearl Marriott Sheraton Serena Regent Beach

Karachi 218 290 219 407 – 413 80
Lahore 186 559 – – – –
Islamabad/Rawalpindi 417∗ 193 150 – 392 –
Bhurban – 190 – – – –
Quetta – – – – 140 –
Peshawar – 52 – – – –
Faisalabad – – – – 144 –
Source: Avari Hotels’ official reports.
Note: ∗Avari Islamabad—new project.

The hotel business was an integral part of the tourism industry, which ranked among the three fastest
growing business sectors in the world. It was a major source of foreign exchange earnings and a power-
ful agent of economic development. The tourism industry and hotels in particular were a major source of
direct and indirect employment, too. Contrary to popular belief, tourism was a capital intensive industry.
It demanded 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, play-
grounds, and last but not least, an efficient and comfortable transport system was also a necessary ingre-
dient of a successful tourist destination.
The period 2003–06 witnessed strong growth in the hotel industry, especially in the city of Islamabad.
Significant excess demand during the peak seasons had also rekindled investor interest in the industry.
The reason for the industry rebound could be best understood in the context of the country’s economic
recovery and improved international profile in that period. The above led to the following major devel-
opments for the hospitality industry in Pakistan:
z Intra-country and international corporate travel increased.
z Pakistan in general and Islamabad in particular (then and now) housed international community
members involved in the ongoing reconstruction in Afghanistan.

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62 Nasir Afghan

z USAID and the World Food Programme increased their presence and activities in Pakistan.
z The Kerry Lugar Bill also brought an influx of US citizens to administer the programme (with
many more expected).
z Earthquake relief activities generated an influx of NGOs and other foreigners.
z Improved political and trade relations with India between 2003–06 yielded considerable incre-
mental travel between the two countries.
z The year 2010 saw an increase in hotel occupancy because of the devastating floods, which
brought in international NGOs and other foreigners.

Average Occupancy
Revenues in the hotel sector were almost 70 per cent dependent on occupancy levels, which generated
income not only from guestrooms but also other sources such as food, beverages, laundry and other ser-
vice-related hotel departments. Hotel revenues were positively correlated with occupancy levels.
Table 2 provides a basic comparison of the occupancy levels between Avari Hotels Limited and Pearl
Continental (PC), Pakistan Services Limited.

Table 2. Occupancy Level

2008–09 2009–10
Average (Avari) 57.66% 57.86%
Average (PC) 49.55% 53.93%
Source: Avari Hotels’ official reports.

The segments of the client mix of the hotel industry are depicted in Figure 1.
Typically, corporate clientele provided the bulk of hotel revenues in Pakistan. These payments
accrued not only in the form of room food and beverage revenues from corporate travellers but also from

Figure 1. Client Mix

Source: Avari Hotels Ltd (2009).

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Avari Group 63

conferences and meeting room utilization, demand for which grew annually in line with the pace of eco-
nomic activity in Pakistan, as depicted in Table 3. For instance, between 2003 and 2006, the demand
grew at almost 15 per cent per year. Yet another avenue of corporate revenues, quite significant in the
case of Avari (the head offices of both Unilever and Dubai Islamic Bank were situated in the Avari
Karachi hotel), comprised rents received in relation to office space permanently occupied by companies
within hotel sites.
With Pakistan’s support of the war on terror and generally improved international image, substantial
foreign traffic also began flowing into the country. An increasing number of foreigners from the interna-
tional donor community with responsibilities in Afghanistan and organizations involved with earthquake
rehabilitation work in the northern areas of Pakistan began operating out of Islamabad. The 2005 peace
initiatives and increased interaction with India had a positive impact on the industry. Unfortunately, with
the severance of ties between India and Pakistan, this inflow of Indian tourists, business people and Sikh
Yatris (given that Punjab is home to many Sikh religious temples and shrines) dried to a trickle. Other
triggers for growth in the hotel industry were the international cricket team tours, the World Cup in 2011
and the Basant Festival in Lahore—which was attended by leading Indian and Pakistani actors, artists
and tourists from overseas.

Table 3. The Client Mix for Avari Hotels and Beach Luxury Hotel in 2009–10

Nature Avari Towers Avari Lahore Beach Luxury

Corporate/conferences/meetings 79% 79% 72%
Airlines (layover) 1% 1% 1%
Government 5% 5% 10%
Diplomats 10% 10% NGOs 12%
Long staying guests 5% 5% 5%
Source: Avari Hotels’ official reports.

Competition in the Industry

Avari Group’s hotels consistently competed successfully against peers over the decades and, as such, it
was reasonable to assume that the trend would continue in the years to come. Table 4 provides a basic
comparison of occupancy levels between Avari Hotels Limited and Pakistan Services Limited.
Table 5 compares the profitability between Avari Hotel Limited and Pakistan Services Limited.
The illustration of Table 6 depicts the changes in the income statement of Avari Hotels from the year
2007 to 2009. 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 benefited from the economies of scale, thereby reducing
overall operating expenses.

Forthcoming Hotels in Islamabad

In 2006, the following were optimistically promoted by sponsors and the government alike.

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64 Nasir Afghan

Table 4. Comparison of Occupancy Levels of Different Hotels City-wise

2008–09 2009–10
Avari Lahore 54.53% 55.33%
Avari Towers Karachi 60.80% 60.40%
Average (Avari) 57.66% 57.86%
PC Lahore 53.00% 47.34%
PC Karachi 49.76% 42.89%
PC Rawalpindi 52.00% 61.20%
PC Peshawar 36.00% –
PC Bhurban 57.00% 64.28%
Average (PC) 49.55% 53.93%
Source: Avari Hotels’ official reports.

Table 5. Profitability Comparison

Performance for the Year Ended 30 June 2010

Avari % of Sales PSL % of Sales
Sales and services 1,131,010 4,238,232
Cost of sales and services 694,278 61.39 2,698,003 63.66
Gross profit 436,732 38.61 1,540,229 36.34
Other income 127,080 11.24 339,339 8.01
Administrative and selling expenses 338,443 29.92 1,092,180 25.77
Operating profit 225,369 19.93 766,310 18.08
Financial charges 69,038 6.10 161,173 3.80
Profit before taxation 156,331 13.82 605,137 14.28
Taxation 7,893 177,205
Profit after taxation 148,438 13.12 427,932 10.10
Total number of guest rooms 324∗ 1,306
Source: Avari Hotels’ official reports.
Note: ∗Due to 98 rooms being closed at Avari Towers for renovations.

Table 6. Year-wise Income Statement for Avari Hotels (Amount in PKR million)

2007 2008 2009

Total revenues (sales and services) 1,057 948 1,025
Cost of sale and services 635 600 678
Gross profit 422 348 347
Administrative expenses 294 294 321
Operating profit 179 112 150
Financial charges 68 46 75
PBIT 111 65 76
Tax 5 5 5
Profit after tax 106 61 71
Source: Avari Hotels’ official reports.

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Avari Group 65

Centaurus Hotel Islamabad

This would be the first of the seven-star 350 suites hotel in Islamabad, Pakistan, and was expected to
break ground on the hotel portion after four years (2011). The project was located in Sector F-8 between
Jinnah and Faysal Avenue. It was a combination of a residential plaza, corporate offices and a shopping
mall; thus, success of the project depended on cash flow from the sale of apartments, offices and shops.

Intercontinental Hotel
The Intercontinental was 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 June to September 2008.

Avari Islamabad
The Avari Group has started to build a five-star (417 rooms) hotel in Islamabad. This project was expected
to be operational by 2011.

Other Expected Projects

Serena was also expected to launch its second phase five years from now which would be a 200-room
(approximately) hotel. Serena was looking for a composition similar in combination as that of Centaurus
that was a combination of apartments, a shopping mall and an office complex; however, the hotel was
not expected to begin commercial operations until 2011. Moreover, Bismillah Group of Faisalabad was
also looking at the possibility of a 300-room hotel near the convention center, which was also expected
to break ground after four years.

History of the Avari Family

Dinshaw Byramji Avari

Dinshaw Byramji Avari, born in 1902, was brought up and schooled in an orphanage—later he would
also teach the 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 get a degree in Commerce 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 period of eight months in Bombay, he was sent to Karachi
in 1929 to launch the company’s branch in the nation’s port city. Soon he was made incharge of the prov-
inces of Punjab, Sindh, Baluchistan, NWFP (now Khyber Pakhtunkhwa) 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 mortgag-
ing his wife’s jewelry, 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

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66 Nasir Afghan

deal, to train him 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 4 a.m. The knowledge he gained from his predecessors, combined with his own busi-
ness 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 sceptical 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, five-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 the country.
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, that is, the purchase of Nedous
Hotel in Lahore through the highest bid ever made in the history of property auctions, that is, PKR 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 con-
verted 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 sub-
continent. The first challenge faced by the new venture was the decline in the demand for five-star hotel
accommodations in Pakistan. To cope with this issue, Dinshaw decided to develop 150,000 sq. feet of
office and shopping space around Avari Towers and named it ‘Avari Plaza’. The plaza was able to attract
offices of many multinational corporations and airlines.
Dinshaw dealt with capital constraints by introducing the concept of receiving advance rents. Having
expertise in running hotels, Dinshaw decided to run the Avari Towers himself unlike Lahore Hilton
which was managed by the Hilton Hotels. 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 into 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 chil-
dren of schools.’
Even though, he worked hard all his life to make his way up in the business world, 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 Box 1 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.

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Avari Group 67

Box 1. List of Organizations Dinshaw Byramji Avari was Associated with

z The Karachi Parsi Anjuman Trust Funds, as Trustee and Chairman from 1985 to 1987.
z The Jehangir Rajkotwalla Baugh Trust, as Chairman for 11 years.
z The Parsi Hew Year Celebration Committee, as Chairman for 30 years.
z The Young Men’s Zoroastrian Association, as Chairman for 10 years.
z The Jehangir P. Dubash Health Culture Institute, as Chairman for 34 years.
z The Rotary Club of Karachi, as Founder Member and Founder President.
z The Pakistan Sea Scouts, as Treasurer.
z The Deaf & Dumb Centre at Karachi, as Founder President for 13 years.
z Society for Prevention of Cruelty to Animals, as Member of the Managing Committee for 45 years.
z Founder President of the Pakistan Hotels Association from 1948 to1987.
z Bai Virbaiji Katrak Charity Funds, as its Chairman for the last 25 years.
z Director of Pakistan Tourism Development Corporation for 6 years.
z Sind Red Cross/Red Crescent Society as a Member of the Managing Committee from 1941 to 1987.
z Director of Premier Bank for 8 years before Nationalization, and a Director of Spencer & Company
(Pakistan) Limited for 15 years.
z Member of the Managing Committee of the BVS Parsi Boys School and Mama School.
z Vice President of World Association of World Federalists, English Speaking Union, the Pak-Kuwait Friendship
Association and numerous other social and community projects.
z Justice of the Peace from 1941 to 1988.

Source: Avari Hotels’ official reports.

Byram Avari
Byram Avari joined his father’s business after doing his MBA from IBA-Karachi. He started by working
at the lowest level. His first assignment was as a potato peeler in the hotel kitchen. He then moved on to
working as the Personal Assistant (PA) to the General Manager, Beach Luxury. He would open the GM’s
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.
(See Figure 2 for the organizational roles defined by the Avari Hotels.) He then worked side by side with
his father to build the Lahore Hilton and completed the Avari Towers himself. He was then appointed as
the Managing Director and continued in this position until his father’s demise at which time he became
Chairman and Chief Executive (see Box 2 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 follows: ‘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:

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68 Om Prakash Mathur

Figure 2. Avari Organizational Chart

Source: Avari Hotels’ official reports.

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Avari Group 69

Box 2. CV of Byram D. Avari (Justice of Peace)

CURRICULUM VITAE
NAME Byram D. Avari (Justice of Peace)
ADDRESS Beach Luxury Hotel, M.T. Khan Road, Karachi, Pakistan
BORN February 07, 1941
STUDIES 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: Chairman–Avari 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 & Chairman–Karachi Parsi Anjuman Trust Fund (1990)
COMMUNITY 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
(Box 2 continued)

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(Box 2 continued)

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 up to 1993)
„ Federal Parliamentary Secretary for Planning & Development National Assembly,
1991)
„ 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 Cul-
ture, 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, PATA–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, 1988–93 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, 1987–89
„ 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 Common-
wealth Heads of Government Meeting (CHOGM), October 1989
„ Member of Prime Minister Nawaz Sharif’s entourage in 1992 to Uzbekistan
„ Member of Prime Minister Benazir Bhutto’s entourage to Turkmenistan and
Ashgabad in 1993
„ 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)
(Box 2 continued)

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(Box 2 continued)
„ 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 (1982–91)
„ 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 (2000–04)
„ President–Pakistan–Kuwait Friendship Association (1990)
„ Vice President–Dastur Dr Dhalla Memorial Institute, Karachi (1982)
„ Manager, Pakistan/Bangladesh–Canadian Airlines International (1999–2000)
„ 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)

Source: Avari Hotels’ official reports.

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 took his children along whenever he had to travel. He considered such contact critical for
building a strong bond with his children and an opportunity to inculcate family values in them. He took

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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 plan-
ning (see Figure 3 for complete family tree details). While they were kids, he showed his sons the

Figure 3. Avari Family Tree

Source: Avari Hotels’ official reports.

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Avari Group 73

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 taking from the cupboard; how-
ever, the condition was removed as they grew up. Byram considered this exercise very useful in develop-
ing 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 his 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 ever-motivated human resource. They developed an
environment where there was no concept of retirement. If employees wished to work after the age of
sixty they could do so on a contractual arrangement. When they were too old 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 served the organization for over thirty to forty years. He insisted that he would never lose inter-
est in family business and community work; ‘Like my father always said—If you rest, you rust and if
you rust, you die.’

Dinshaw and Xerxes Avari

Following the footsteps of their father, both Dinshaw and Xerxes (see Box 3 for CV details) acquired an
MBA from IBA-Karachi. They had begun summer internships in the hotel while they were still in high
school. The internships helped them become familiar with the different sections of the hotel and to learn

Box 3. CVs of Dinshaw and Xerxes Avari

CURRICULUM VITAE
NAME DINSHAW B. AVARI
STATUS Married (two children)
ADDRESS 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
D.O.B. July 14, 1967
STUDIES LLB (1997)
BBA (Hons) (1988)/MBA (1989)
London Chamber of Commerce Accounting (Elementary)
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)
PAST Chief Executive, Spencer & Co. (Pakistan) Limited
(Work) Chief Executive, Beach Brewery (Pvt.) Limited
(Box 3 continued)

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(Box 3 continued)
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)
PAST Honorary Secretary, Honorary Sailing Secretary & Honorary Secretary Trophies—Karachi
(Sports) Yacht Club (2009–10)
Vice Commodore & Honorary Treasurer, Karachi Yacht Club (2008–09)
Personnel sub-committee, Karachi Boat Club (2007–08)
Honorary Sailing Secretary & Managing Committee Member—Karachi Yacht Club
(2003–05)
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)
SPORTS Participant in Royal Hong Kong Yacht Club’s ‘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 (Fremantle–
Singapore–Qingdao) (January 1, 2008, to February 16, 2008) (Skipper: Simon Bradley)
Participant in the Enterprise Worlds’ Sailing Championships, Cornwall, UK (1992)
Participant in the Enterprise Worlds’ Sailing Championships Bombay, India (1991)
Participant in the Enterprise Worlds’ Sailing Championships, Sudbury–Canada (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)
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 August 25, 1968
BIRTH
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
(Box 3 continued)

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(Box 3 continued)
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)
Swimming – 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
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

Source: Avari Hotels’ official reports.

how work was done in all the different departments. Their father also kept them generally abreast with
the Group happenings over dinner, which went a long way in easing the transition and continuity of
actions when they started working there eventually.
Dinshaw formally joined the business in 1990 and Xerxes followed in 1991. During 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 did not 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 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 project
development and renovations at their hotels, while Dinshaw looked after the 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 descriptions. 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 a 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.

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Avari Group—Core Values

The Avari family rejected the impression of trying to run a seth (dictatorial) organization. They saw their
business as a family-owned enterprise, managed in compliance with corporate rules with an extremely
professional organizational culture. The core values depicted a deep spiritual side of the business leaders
with a strong focus on social development. Byram had become the head of the Parsi (Zoroastrian) com-
munity in Karachi after the death of his father in 1988.
The Avari family’s core group philosophy was as follows: employee compassion, welfare, motivation,
growth, development and loyalty (of both staff and management). This philosophy was one of the pri-
mary goals of Avari’s organizational policies and procedures. Pakistan’s 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, 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 in
accordance with their strong family traditions. At the same time, they endorsed the importance of pro-
fessional management, professional education and on-the-job training for the development of high
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.

Succession in the Future

Dinshaw and Xerxes had an approach towards succession planning that contrasted with their father and
grandfather. They planned to send their children to universities abroad for professional education.
According to them, they had come to a stage where strategic issues were more pressing than operational
issues. They had highly skilled operational managers reporting to them. In their successors, they wanted
to develop competencies that would help them better manage the corporate office. After completing uni-
versity 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 tried to inculcate
in their children the importance of the value system that had held the Avari family together. While they

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liked their families to enjoy their own space at home, they made sure to take all business decisions in
consultation with each other and their father. They wanted to pass on the same sense of belonging to their
next generation.
The brothers foresaw a bright future for the business not only as a result of opportunities (see
Figure 4 for the timeline of events faced by Avari Hotels) coming up for further success and development
but also because of a firm belief in God and the philosophy that ‘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.’

Figure 4. Avari Group—Timeline of Important Events

Source: Avari Hotels’ official reports.

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 Group’s lifelong employment policy. In
2007, 2008 and 2009 the hotel industry was facing a major challenge in Pakistan. As a result of the poor
law and order situation, economic problems and the ongoing war on terror, most hotels were experienc-
ing low occupancy and decline in the business activities of the hotel industry in all major cities—Karachi,
Islamabad and Lahore.
Several top hotels in Karachi and Islamabad were reducing their headcounts. The challenge Avari
Group was facing, according to Byram; ‘We are a values-driven organization, we exist and survived

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78 Nasir Afghan

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 a real test of their core value. One
option was to change the lifelong employment policy 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 values intact during a crisis. In weak economic times, these core values were put to a real test.

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