Avari Group: Organizational Values and Crisis Leadership (A)

In 2010, Avari Group was approaching the end of 6 decades of successful operations. While reflecting 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 will his sons Dinshaw and Xerxes 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, Mr. Dinshaw Byramji Avari, who founded this organization on core values; respect, honesty, life-long employment (no retirement) and equal opportunities for people from all religion and backgrounds to grow. In recent years due to low business opportunities and low growth, most of the 5-Stars 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 now owns and operates one Three -Star and two Five-Star hotels in Pakistan. It also manages two Four-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 5-star, all-suite, 417 room hotel is being constructed in Islamabad, which is scheduled for 2013. It has also recently opened a 30 room boutique hotel in Islamabad, under a new lease concept, whereby an independent owner of the hotel refurbished it to Avaris standards for Avari to operate; in return, the owner receives a high percentage lease rent on Room sales. It is this model which the Group is now using for other such hotels in Pakistans secondary cities. 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 Three-Star and Four-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 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 would 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. Having stated this, 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, 2

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: Showing total numbers of rooms available in all five stars hotels in Pakistan.
City Karachi Lahore Islamabad/ Avari 218 186 417* Pearl 290 559 193 190 52 Marriott 219 150 Sheraton 407 Serena 392 140 144 Regent 413 Beach 80

Rawalpindi Bhurban Quetta Peshawar Faisalabad *Avari Islamabad new project

(Source: Avari hotels official reports) The hotel business is in fact 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, play grounds 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 in 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 reasoning 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 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 reconstruction on-going in Afghanistan; US Aid and World Food Program have increased their presence and activities in Pakistan; Kerry Lugar Bill has seen an influx of U.S. citizens to administer the Program (with many more expected); Earthquake Relief Activities generated a lot of 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 this year (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 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: Showing Client Mix Client mix of hotel industry is made up of the following segments:

Source: Avari Hotels Ltd, 2009.

Typically, corporate clientele have provided 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 case of Avari (head office of both Unilevers 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 on 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, lastly, Sikh Yatris (given that Punjab is the home to many Sikh religious temples and shrines) has tried to a trickle. Other triggers for growth in Hotel Industry are international cricket team tours, forthcoming world cup in 2011 and the Basant Festival in Lahore which used to be attended by leading Indian & Pakistani actors, artists, tourist from abroad etc. 5

Table 2: Showing Client Mix for Avari Hotels and Beach Luxury Hotel in 2009-2010.
Nature Corporate/Conferences/ Meetings Airlines (layover) Government Diplomats Long Staying Guests Avari Towers 79% 1% 5% 10% 5% Avari Lahore 79% 1% 5% 10% 5% Beach Luxury 72% 1% 10% NGOs 12% 5%

(Source: Avari hotels official reports) 1.1.4 Competition in the Industry The Hotels of the Avari Group 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: Showing comparison of occupancy levels of different hotels city vise
Avari Lahore Avari Towers Karachi Average (Avari) PC Lahore PC Karachi PC Rawalpindi PC Peshawar PC Bhurban Average (PC) 2008-09 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) The table 4 below compares the profitability between Avari Hotel Limited and Pakistan Services Limited: Table 4: Showing profitability comparison (Source: Avari hotels official reports)
Performance for the Year Ended June 30, 2010 Avari Sales and Services Cost of Sales and Services Gross Profit 1,131,010 694.278 436.732 % of Sales 61.39 38.61 PSL 4,238,232 2,698,003 1,540,229 % of Sales 63.66 36.34

Other Income Administrative

127,080 & Selling

11.24

339,339 1,092,180 766,310 161,173 605,137 177,205 427,932 1306

8.01 25.77 18.08 3.80 14.28 10.10

338,443 29.92 expenses Operating Profit 225,369 19.93 Financial Charges 69,038 6.10 Profit Before Taxation 156,331 13.82 Taxation 7,893 Profit After Taxation 148,438 13.12 Total number of guestrooms 324* (* Due to 98 rooms being closed at Avari Towers for renovations)

Table 5: Showing year wise income statement for Avari Hotels

200 Total Revenues (sales 7 1,0 57 635 422 294 179 68 111 5 106 Amount in PKR Million 200 200 8 948 600 348 294 112 46 65 5 61 9 1,02 5 678 347 321 150 75 76 5 71

and services) Cost of Sale & Services Gross Profit Administrative Expenses Operating Profit Financial Charges PBIT Tax Profit After Tax

(Source: Avari hotels official reports) With Avari Hotels having only 422 operational rooms (actually 324 due to close of 98 rooms at Avari Towers for renovations) compared to the 1306 room capacity enjoyed by Pearl Continental Hotels, Pakistan Services Ltd benefit 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 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 earthquake affected areas, the hotel industry is expected to continue strong demand, especially in the capital city. Islamabad is the gateway to northern area of Pakistan, Afghanistan and the

Central Asian States, it has seen tremendous demand for hotels. Due to lack of hotel facilities as per existing demand in Islamabad, guest room business is ever flourishing. Moreover, adjacent cities especially Lahore shares some of the burden of hotel requirements subject to availability of Islamabad- Lahore flights or in other case easy accessibility through 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 combination of residential plaza, corporate offices and shopping mall, thus success of the project depends on cash flow from the sale of apartments, offices and shops. 1.2.2 Intercontinental Hotel Intercontinental is also going to launch its 190 room hotel in the close proximity of Marriott hotel Islamabad. This project is expected to be operational by June- September 2008.

1.2.3 Avari Islamabad

The Avari Group has started to build a five 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 on which will be around 200 room hotel. Serena is looking for composition similar in combination as that of Centaurus that is combination of apartments, shopping mall and office complex; however the hotel is not expected to begin commercial operations until 2011. Moreover, Bismillah group of Faisalabad is also looking for possibility of 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, he went on to do his B.Com and joined Sunlife Insurance Company of Canada as a clerk to the Chief Executive. His talents showed from the very beginning. After doing the highest sales for 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, Sind, 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 the Empress Market at 4 AM. The knowledge he gained from his predecessors combined with his own business acumen, eventually paid off and Bristol Hotel became a business success. 9

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 way 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 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 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 Five-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 Air lines. He dealt with capital constraints by introducing the concept of receiving advance rents. Having the expertise running hotels, Dinshaw decided to run the Avari Towers himself unlike 10

Lahore Hilton which was managed by Hilton.

However, to attract international clientele

Dinshaw licensed the Ramada name under a franchise arrangement. Dinshaw Avari 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 & 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 because 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 Mr. 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. 11

Over time Mr. Byram Avari 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 technical knock out by Government of Pakistan and could not reach completion in spite of financial closure being achieved. Byram had a very flexible approach towards employees, because what his father use to say to him that we look after 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 12

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 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 loose 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) went for 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 use to sit on one large table, where they would share every piece of information with each other. After two years in the same room and same table they started sitting with their father in the next room with the no door in between, so they could listen to his business conversations and he could ask their opinions. They also acted as secretaries to their father, accompanying him in the organizational meeting and handling his official correspondence. Initially they were doing all sorts of work, however their interests got streamlined after some time and started Xerxes dealing with financials, budgeting, tax, new projects development and renovations at their hotels, while Dinshaw looks after the group marketing, operations (and all GMs report to him), Information Technology, Security and Human Resources. Both jointly with their father look after development of new hotels. But all three of them know what other is doing and what issues he is managing and seek advice from each others on these issues. According to Dinshaw they never had any job description they were doing every what their father was doing before. They have developed most of the managerial 13

and business skills while working on the job and most importantly their father has (and IS) been the best coach and mentor for them. According to Dinshaw Avari their future aim would be to continue to manage Avari family business as true family business, based on the core values of caring, honesty and respect for others, encouragement for diversity and sharing our wealth with our employees. He further said that we want our (employees) Dua and not their Baddua. As Dinshaw likes to quote to their General Managers and Head of Departments Treat everyone how you would like to be treated But at the same time he was of the view that they would never allow anyone to take advantages from 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.
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 come to work before office time and work till late in the evening. According to Dinshaw while living in the same big house with having individual space we learn how to look after each other and share our issue and understand 14

each other better. We have dinners together but if one desires he could have dinner in his own area as well. 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 their 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 mange 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 decision in consultation with each other and their father. They want to pass on the same sense of belonging in 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. 15

5.0 Future Challenge

In December 2010 Mr. 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 poor law and order situation, economic problems and the ongoing war on terror on Pakistans own soil most of these hotels were experiencing low occupancy and decline in the business activities in hotel industry in all 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 Mr. Avari that we are 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 Mr. Byram D Avari, the Chairman of Avari Group 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 organization was how it is 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.

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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

Tax Department

Corporate Director Human Resources and Public Relations

General Manager Development

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 Credit Manager Executive Chef Speciality Chef

Banquets

PABX

Business Center

Health Club/Pool

Purchase Manager Laundry HR Manager H/K

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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.)

Fourth Generation

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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

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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

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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
(1992) Member, Advisory Committee for the Dept of Archaeology, Govt of Pakistan 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

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 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 (19821991) 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 &

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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 PAST (Work) 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) 23

PAST (Sports)

Honorary Sailing Secretary & Managing Committee Member Karachi Yacht 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 (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) INTERESTS Sailing / Scuba Diving / Swimming / Water Skiing / Reading / Movies

SPORTS Calamansi

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CURRICULUM VITAE NAME: STATUS: ADDRESS: XERXES B. AVARI Married (three children) Beach Luxury, M.T. Khan Road, Karachi 74000, Pakistan Tel: (92-21) 5611031 DATE OF BIRTH: STUDIES: August 25, 1968 Master of Business Administration (MBA) Bachelor Business Administration (BBA Hons.) High School Diploma American School, Karachi BUSINESS: Executive Director SPORTS: Sailing Avari Group Avari Hotels Ltd. Beach Luxury Holdings Spencer & Co. (Pakistan) Limited Spencer Pharma (Pvt) Ltd Avari Travel Agencies Fax: (92-21) 5610673 / 4

- 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)

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(2001)

470 European Championship Dun Loghare Ireland

- 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 - 1 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: CLUBS: Member Managing Committee of Karachi Yacht Club. Karachi Yacht Club / Boat Club / Sind Club / Skal Club / Parsi Institute / YMZA INTERESTS: Soccer, Volleyball, Snorkeling, Water-Skiing, Wind Surfing.
st

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Exhibit 6: Avari Group Timeline of Important Events

196 Nedous 2 Hotel in Bought by Avari Lahore and Group Converted Park Luxury to 1937 Dinshaw Byramji Hotel Lahore Acquires Bristol Avari opens Hotel

Dinshaw Chairman 197 is completed 8

Dies

and

198 Byram 8

becomes

the 1995

New

Hilton

and

Management Contract for Avari Dubai is signed & Hotel opens

201 0 1948 Opens Beach Luxury Hotel 1946 Dinshaw Avari acquires land and starts to build Beach Luxury Hotel in Karachi Avari 198 Towers 5 in and opens Karachi 199 Ramada takes 1997 Management Contract for Hotel over Toronto on Airport is signed & Group hotel Management

0 91 Dinshaw (Jr.) and Xerxes Join the Business is

Completed

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