What is Micro Environment?

A macro environment refers to the overall, broader economy and the

forces affecting it versus a microenvironment, which focuses on a
specific sector or region’s economy. There are macroeconomic
conditions or factors that affect how all businesses operate, which, in
turn, affect the economy as a whole. In general, macroeconomics deals
with:
 Spending
 Price level
 Aggregate Production
Macroeconomic factors affect companies that are more dependent on the
overall health of the economy. Industries involving the production and
distribution of staple goods and services tend to function more
independently.

Analyzing a Macro Environment:

In order to strategically manage a company, analysts often
perform a DEPEST analysis, which identifies the
demographical, ecological, political, economic, socio-cultural,
and technological factors in the macro environment that can
affect how companies operate.

 DEMOGRAPHICS:
Demographics refer to the characteristics of human population including such factors as size, distribution
and growth. Because the people constitute markets, demographics are of special interest to the marketing
executives.
The PC Hotel makes its market mix on the basis of the following Basic Demographics.
1. Income
2. Occupation
3. Gender
4. Social Class
5. Family cycle

1. INCOME:
The main basic factor affecting the marketing strategies of the PC hotel is the Income factor. The more
income a person earn, the more money he will spend on the luxuries. The PC hotel management has
divided the income of people in 5 groups.
 Income Below Rs 15,000
 Income between Rs 15,000 to 25,000
 Income between Rs 25,000 to 50,000
 Income between Rs 50,000 to 75,000
 Income between Rs 75,000 to 100,000

INCOME BELOW RS 15000

People who earn an income of Rs 15000 are very less likely to visit the PC hotel. Because in the current
era of high inflation, it is very difficult for a person to manage his household in just Rs 15000. The PC
hotel management has no means to attract people belonging to this income category. Because Rs 15000
income leave no room for extra expenditures.

INCOME b/w Rs 15000 – 25000

People who earn an income of Rs 25000 will visit the Pc hotel, but just once in 3, 4 months. Because even
this Rs 25000 income is not enough to manage a household in Pakistan. In order to attract people of this
income class, the PC hotel comes with several discount packages. Special Buffet dinners, lunches are
examples. Or special offers in Ramzan, summers, weekends etc.

INCOME b/w Rs 25,000 – 50,000

People earning an income of Rs 50000 will surely visit the Hotel. Their main reason to visit the Hotel will
just be to have a quality food. people belonging to this income class will not choose PC hotel for staying
purpose when they will be out on a holiday and the reason for this is the high per night charges of the
hotel’s rooms. In order to attract people of this income category PC hotel comes with special discount
packages like 1 nights and 2 day stay in hotel for Rs 40000. the PC hotel will also will also use the above
mentioned way to attract people of this category. Like discount packages on meals e.g. a dinner of 5
people for Rs10000 only. In order to encourage this income class Pc hotel also brings new products i.e.
like the inexpensive Bar B Q items, or a cheap High Tea package. 

INCOME b/w Rs 50,000 –75,000

People belonging to an income class of Rs 75000 will not only choose PC hotel for having meals, but also
for staying for few days while they will be on holidays. However these people will just stay in the hotel
for 2 or 3 nights because of the high per night charges. As these people frequently visit the Hotel for
meals purpose, so reducing the prices or discount packages on food will not much affect the hotel visit
rate of these people. Because these people can afford dinners etc at high prices. The main objective of the
PC hotel is to encourage these people for over nights stays in the hotel. Now in order to encourage this
class of people for over night stays the Hotel comes with new exciting offers like a stay in the hotel for 2
nights and 3 days only for Rs 400000 including free meals.

INCOME of 100,000 and Above

And finally people earning an income of Rs 100000 and above are the people who belong to a high class,
and for them having dinner in PC is just a routine task. Hey will surely choose PC hotel for a long stay
while they are out of town. These are the people who take different types of memberships of the PC hotel.
These people have enough money to spend on luxuries. Reducing prices of meals or over night stays will
not at all affect their hotel visit rate. In order to attract people of this class, the hotel strongly emphasizes
on quality and standard of service. Providing these people with extra ordinary standards of services and
quality will surely increase the hotel visit rate of these people. Moreover, exciting hotel memberships,
clubs and other event participation will also help PC hotel to increase its visit rate by the people. 

2. OCCUPATION:
The type of occupation a person has will surely affect his expenditures. People who are managers, CEOs,
secretaries, presidents, entrepreneurs etc will spend a large part of their income on luxuries. The are more
likely to visit hotels for dinners, lunches or for staying over night. For these people visiting hotels is also a
status symbol. More solid occupation a person has, the more he will visit the PC hotel. In contrast The
people who are home makers, labors, sales man, students, unemployed, teachers etc are very less likely to
afford any kind of hoteling, because for them to manage a household in their respective incomes is a big
deal. These people will avoid unnecessary expenditures. These people will choose restaurants or fast
foods when will face a need of quality meals.

3. GENDER:
Mostly the Pakistani families don’t like their women working outside homes. So the 87% of the Pakistani
work force comprises of males. As a matter of common sense, as mostly the men are employed therefore
only the males will have money to spend on hotels. The males are the once who will have the maximum
hotel’s memberships. They are the once who will choose the Pc hotel for over night stays. By knowing
the gender, we can know about the occupation level of the person and through occupation level the PC
hotel will analyze the income level of people and after analyzing it, the hotel will bring about the special
discount packages on meals, over night stays, improving the standards of services and quality of life
given to customers in the PC hotel.
As the women are less employed so only a few percentage of women will have enough money to spend
on hotels, for meals or for stays. Now it depends on the occupation of woman to measure the hotel visit
rate. Same is the case with the women, analyzing occupation level and income level of people will help
PC to bring about plans for improving its customer services and other factor. 

4. SOCIAL CLASS:
As I have above mentioned the income and the occupation factor of the demographics, the social class
factor also deals with the same. However in the light of PC hotel let us highlight the hotel usage rate by
the people.
 UPPER CLASS:
People belonging to the upper class have an enough income to be spent on the luxuries. Upper class
people visit hotels frequently as a part of routine. They host meeting, parties, and functions in the hotels.
When out of city, they will surely choose PC hotel to stay over night.

 UPPER MIDDLE CLASS:

People belonging to this type of social class have a satisfactory part of income which they could spend on
the hoteling purpose. They mostly visit the hotel for having meals. They also choose the hotel for special
parties and events. They are also likely to choose PC hotel to stay for a couple of nights.
 LOWER MIDDLE CLASS:
People belonging to Lower middle class will only choose PC hotel for lunches, dinners, brunches etc.
these people can not afford to choose PC hotel for over night staying purpose. These people may visit the
hotel once in 2 months.
  UPPER LOWER and LOWER CLASS:
People who belong to these 2 types of social class will avoid any kind of unnecessary expenditures. They
are very, very likely to visit the hotel.

5. FAMILY CYCLE:
Let us divide the family cycle factor in the following groups in the light of PC Hotel.
 YOUNG-SINGLE:
People who are young and single have no tensions at all. They have no responsibilities of household.
They are free to do anything. Therefore they are free to spend and portion of their incomes on their
luxuries. They are most likely to visit hotel for a luxurious meal or more a luxurious over night stay in the
hotel. According to the occupation and income level of the young single people, the PC hotel will come
up with plans to cater this area of family cycle. For overnight stays purpose, the PC hotel will design
special kind of rooms and sweeps for these type of people. The recent approach to target this class of
people by the PC hotel is to employ a good looking staff of waiters room cleaners and etc. the hotel in the
past years has also started hosting special parties, clubs etc to encourage them to visit the hotel. Special
types of club memberships are also available for these people.

 YOUNG-MARRIED:
People who are young and married have no children. They have very less responsibilities of household.
They can spend a satisfactory portion of their incomes on their luxuries. They can choose the PC hotel for
both, luxurious meal or a stay. Again after analyzing the occupation and income level of these married
people, the PC hotel will come up with plans to cater this area of family cycle. For overnight stays
purpose, the PC hotel will design special kind of rooms and sweeps for these types of people like
honeymoon sweeps etc. 

 MARRIED WITH DEPENDENT CHILDREN:

The type of people has a large responsibility on their heads. Before taking a decision they have to think
about their family. When children are dependent on you, you will allow less unnecessary expenditures.
Therefore the people of this type of family cycle are very less likely to visit the hotel. Or they might visit
but very rarely. According to age group of dependent children, the PC hotel comes up with new plans like
playing area for children or discount packages on meals for children under 12 year old.

 PARENTS WITH INDEPENDENT CHILDREN:

When children are married, parents are free again to lead their lives on their own ways. They can spend as
much of their income on themselves. Therefore their hotel visit rates increases. The can choose the hotel
for hosting parties and events, for meals and for stays. According to age of the parents whose children are
married, the PC hotel design rooms for over night stays purpose. Certain Club memberships are available
for people above a specific age group. E.g. the PC has few clubs for both men and women who are above
45. These clubs consists of social workers who work for the benefit of their country.

 Other attractions in PC hotel for all sort of demographics are:

 Gymnasium
 health club
 Fashion shows which are conducted every season
 small sport complex
 swimming pools
 Basant nights.
  POLITICAL & LEAGAL FORCES:

Every company’s conduct if influenced, often a great deal, by the political and legal processes in our
society. The political and legal forces on marketing can be grouped into the following four categories.

1. Monetary and Fiscal policies

2. Social Legislation and regulations
3. Govt. relationships with the industries
4. legislation related specifically to marketing.

Affect of political and legal forces on PC Hotel:

 Hotel industry in Pakistan has been under a lot of stress in the past few years due to the severity
drives launched by the successive government, the deteriorating law and order situation in the
country and continued duty of large number of taxes. This industry is dependent upon the
business and tourist activity in the country. In Pakistan, repeated efforts with the government to
come to the rescue of the hotel industry have so far been all in vein. The business activity in
Pakistan has overall remained sluggish. Tourism, also, has never been properly emphasized,
including development of tourist spots and support infrastructure, despite the exquisite scenic
beauty of the landscape of Pakistan and its rich cultural heritage. The fall in foreign nationals
traffic to Pakistan in the upshot of September 11 incident and frequent acts of terrorism have
continued to adversely affect the hotel industry. 

 After September 11 there was a slight downfall in the growth of PC hotel. But from the last 2
years, PC hotel is facing a serious downfall. People have reduced their visits to any hotels
because of the terrorists attack. Pakistani people have started to avoid visiting those places where
there is a crowd. PC hotel faced a historic setback after the Islamabad Marriot attack. From that
day, people have almost quit, going to the hotels. The average dine in percentage of one day used
to be 75% to 85%. But after the Marriot attack, the percentage has dropped to 65% - 75%.
However, this percentage is slowly increasing with the passage of time. The average room
occupancy rate per day of PC hotel is 40% to 45% of the total no. of rooms. The PC hotel has
total 200 rooms. 3 years back, the average room occupancy rate used to be 75% to 80%.
 Every successive government increases the taxes. PC hotel has to pay large amount of; Property
taxes, Sales taxes and Excise duty. Every 2, 3 years the government reinforces the “Marriage
Ordinance Act” according to which only one dish menu will be allowed in the hotel. Not only
taxes, the governments also increase the electricity, gas and water rates.
 The political conditions were much better before 1999. the inflation rate was less, therefore
people had enough money to be spend on hotel visits. But in the era of president Musharraf,
Pakistan noticed a high rate of inflation which tightened the hand of people

 ECONOMIC CONDITIONS:

 PC hotel was in its boom before September 11 attacks. After the 9/11 attacks the situation
changed. War on terrorism was fought in Afghanistan and Iraq. And Pakistan was declared a
“dangerous country”. Not only PC but all the other hotels in Pakistan were affected by the 9/11
 attacks. The Pc hotel’s boom period ended. But there was no such major downfall. Things were
favorable. But after 2005 PC hotel entered in its Recession stage. And till now it is in Recession.
For two months PC was in Depression stage also. This stage was when the Marriott attack
happened.

 Pearl continental hotel, is the most preferred hotel chain to visit by its customer, but due to
economic upheaval in the country and effect of international environment on tourism and hotel
industry, PC could not retain its growth momentum as required. Though the Company was able to
achieve sales and services of Rs.1.932 billion for the current year, which was almost equal to
what they had achieved during the last year; change in sales mix gave rise to increase in cost of
sales and the administrative cost as compared to last year. As a result, the profit after tax declined
to Rs.32.889 million for the year as compared to Rs.84.891 million last years. The rooms sales
during the year, did not maintain the desired growth momentum. Pearl Continental Hotels of
Lahore, Rawalpindi and Peshawar have won an exclusive contract for the lodging of cabin and
cockpit crew of the national carrier, Pakistan International Airlines (PIA). This success
contributed towards increase in overall room occupancy to 58% as compared to 54% during the
corresponding period last year. However, due to decline in average room rate, the room revenue
stood at Rs. 831 million as against Rs.890 million in the corresponding period last year, which is
a decrease of Rs. 59 million. In order to get more business and maximize profit, Pearl Continental
executed a Marketing & Reservation Agreement with M.H.R. Collection Limited (Motels, Hotels
and Resorts). As per agreement, MHR Collection will provide the services through their network
for promoting PC hotels in Pakistan and for making room reservations, which will positively
improve room revenue in the years to come. This revenue generating business comprised
approximately 51% of the total sales revenue of the hotel as compared to 44% last year.

 Pearl Tours & Travels (Private) Limited registered a decline in both Sales and Operating Profit by
Rs.5.8 million (10%) and Rs.6.6 (85.68%) respectively as compared to last year. However, due to
increase in other income and favorable tax decision at appeal levels, Company made after tax
profit of Rs. 1.2 million as compared to last year’s after tax loss of Rs. 3.8 million. During the
year2003, old vehicles were disposed of and new additions to its fleet were made in order to
provide better service to the customers. In order to improve the liquidity of the holding company
to meet other hotels projects, the directors have proposed to dispose off this company.

 Trans Air Travels (Private) Limited, despite recording a modest decrease in revenue by Rs. 0.433
million as compared to last year, succeeded in reducing its after tax loss to Rs. 3.366 million as
compared to after tax loss of Rs. 4.917 million of last year. This Company is under consideration
of disposal due to continuous accumulation of losses during the last several years.

 During the year, food and beverage revenue increased to Rs. 988 million from Rs. 851 million,
marking an improvement of 16%. The diagram on next page shows the trend analysis for the
sales of food and beverage from year 1998 to 2003.

 Pearl Tours & Travels (Private) Limited registered a decline in both Sales and Operating Profit by
Rs.5.8 million (10%) and Rs.6.6 (85.68%) respectively as compared to last year. However, due to
increase in other income and favorable tax decision at appeal levels, Company made after tax
profit of Rs. 1.2 million as compared to last year’s after tax loss of Rs. 3.8 million. During the
year2003, old vehicles were disposed of and new additions to its fleet were made in order to
provide better service to the customers. In order to improve the liquidity of the holding company
to meet other hotels projects, the directors have proposed to dispose off this company.
  Trans Air Travels (Private) Limited, despite recording a modest decrease in revenue by Rs. 0.433
million as compared to last year, succeeded in reducing its after tax loss to Rs. 3.366 million as
compared to after tax loss of Rs. 4.917 million of last year. This Company is under consideration
of disposal due to continuous accumulation of losses during the last several years.

 During the year, food and beverage revenue increased to Rs. 988 million from Rs. 851 million,
marking an improvement of 16%. The diagram on next page shows the trend analysis for the
sales of food and beverage from year 1998 to 2003.

 TECHNOLOGY:

 Technology has a tremendous impact on our life styles, our consumption patterns, and our
economic well being. Just think of the effect of technological developments like airplanes,
plastics, televisions, computers, lasers, robots etc. We owe our lives to technology. Just imagine
the life 200 years back. It would have been very hard. Technology has also played an important
role in progress and prosperity of the PC hotel.
 When the PC hotels were established, Pakistan was not technologically advanced. There used to
be air conditioners and heaters in every room. There was no concept of high security. Just few
watchmen and security guards used to check people and cars entering the hotel. PC hotel had no
credit card machines. No A.T.M machines were there. The conditions of the elevators were poor.
The ovens they had worked on gas. The electricity generators were small which could not bear
high loads. There was no concept of central heating or cooling. The laundry machines were
primitive. Even the buildings of hotel were not as large as of now.
 As time passed, technology became advanced. Each passing year added new equipment,
techniques and procedures. Lets us take a look on the technological advancements in the PC
hotels.
In 2005 the PC hotel purchased a large electricity generator of worth 20 million Rs. This electricity
generator has a high load bearing capacity.
 1990’s the PC hotel installed plants for central air conditioning and heating.
Now big television boxes have been replaced by LCDs.
 The laundry and kitchen are now equipped by latest machinery which stands at par with those of
the Europe and America.
 Security system has been enhanced. Close circuit television systems have been installed in the
hotel to prevent terrorist attacks.
 This year PC has installed a chiller plant that was imported from Germany and costs more than 10
million Rs.
 10 years back, there used to be key locks with keys. This lead to many thefts as anybody can steal
or make a duplicate of the original key. Now these keys are replaced with card locks. Just pass the
card through the lock on the door. The door lock scans the card and the door opens.
 Pearl Continental Tower is a building under construction in Lahore , Pakistan . The project was
proposed by the Pearl Continental hotels and resorts. It is a 6 star hotel situated in the heart of
Lahore, and is expected to be completed in 2010 boasting world-class facilities. The construction
cost is 80 mil US$ (PR 3 bil). The estimated height of the building is 168 m (550 ft.).
 The hotel extension plan will be completed in just 20 months with a cost of $50 million . The 42-
storey building has been planned after the district government decision to relax rules set for the
height of hotel building. The current PC building in Lahore is 33.5 m (110 feet) high while the
new building will be 152 m.

 SOCIAL & CUTURAL FORCES:

Before opening any new Hotel, the PC hotel first looks for a suitable place, city or region. Then they
analyze the environment of that region. What are the social and cultural patterns. Because these socio-
cultural patterns influence the values, traditions, behavior and life styles of the people. The PC hotel
management analyzes the trends, traditions and values of the people of that area in order to know their
needs, wants and desire.