Tourism Promotion Services (Pakistan) Limited

RATING REPORT | Jan-26

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Rating History
Dissemination Date Long-Term Rating Short-Term Rating Outlook Action Rating Watch
12-Jan-26 AA A1 Stable Maintain -
10-Jan-25 AA A1 Stable Maintain -
12-Jan-24 AA A1 Stable Initial -
About the Entity

Tourism Promotion Services Pakistan Limited (“TPSP” or the “Company”), incorporated on March 19, 1969, is an unlisted public company and a subsidiary of the Aga Khan Fund for Economic Development (AKFED). The Company is governed by a seven-member Board of Directors, with Mr. Aziz Boolani, with over 35 years of experience in the industry, serving as the Chief Executive Officer. The Company's registered office is located in Islamabad.

Rating Rationale

Tourism Promotion Services Pakistan Limited (“TPSP” or the “Company”) manages and operates a diversified portfolio of hospitality and heritage assets across Pakistan. Its core operations include eight Serena Hotels located in Islamabad, Faisalabad, Quetta, Hunza, Gilgit, Peshawar, Altit Fort Resort, and the newly developed Sost Serena Hotel. In addition to hotel operations, TPSP generates rental income from the Serena Business Complex in Islamabad and provides management services for heritage properties in Khaplu and Shigar owned by Agha Khan Cultural Services, Pakistan, diversifying its revenue streams. The assigned ratings reflect the Company’s strong sponsor profile, highlighting the operational and financial stability supporting its business. During CY25, the hotel portfolio underwent notable changes. Operations at Swat Serena Hotel ceased effective January 1, 2026, following non-renewal of the lease with the Government of Khyber Pakhtunkhwa. While the closure may have a modest impact on revenue, management expects the bottom line to remain largely stable, as Swat historically contributed a smaller portion of profitability. In parallel, the Sost Serena Hotel, a newly constructed 50-room property near the China border, achieved its COD in December 2025. Revenue generation is yet to materialize due to harsh winter conditions, minor exterior finishing works, and limited local tourism and trade infrastructure. Performance will depend on the development of cross-border trade and tourism, with management cautiously optimistic about its long-term potential. The Peshawar Serena Hotel was renovated during this period; this renovation enhances the experience and overall market offering. Islamabad Serena Hotel remains the largest contributor to revenue and profitability; however, the opening of new hotels in the capital may introduce competitive pressures in the near term. Financial performance for 9MCY25 reflects resilience amid sector-wide challenges. Revenue increased during the first nine months of 2025, with gross profit margins remaining largely stable. Net profit showed a modest improvement compared to the same period last year. Overall performance remained broadly in line with the prior year, though marginally below budget due to regional geopolitical developments, such as the Pakistan-India conflict, and adverse climatic conditions impacting demand and operations. The Company’s funding profile remains sound, with long-term loans obtained to support the construction of Hunza & Sost Serena Hotel and the renovation of Peshawar Serena Hotel, all of which are being serviced on schedule. Short-term borrowing facilities support operational needs and, together with returns from strategic investments, have resulted in net finance income. The Company does not intend to raise additional debt and continues to rely on existing financing lines.

Key Rating Drivers

The assigned ratings reflect the Company’s strong sponsor profile and its strategic portfolio expansion, which has enhanced both asset base and service capacity. While the closure of Swat Serena Hotel and the yet-to-materialize revenue from Sost Serena Hotel introduce some uncertainty, management expects these developments to have a limited impact on overall business performance. The high-revenue contribution of the Islamabad Serena property, combined with improvements across the portfolio and diversified revenue streams, underpins financial resilience and operational stability. Maintaining rating stability will depend on TPSP’s ability to sustain operational efficiency, manage seasonal demand fluctuations, optimize occupancy and profitability, and ensure timely servicing of debt obligations.

REPORT CONTENTS
  1. Rating Analysis
  2. Financial Summary
  3. Rating Scale
  4. Regulatory Disclosure

Tourism Promotion Services (Pakistan) Limited


Rating Analysis

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Profile
Legal Structure

Tourism Promotion Services (Pakistan) Limited (“TPSP” or “the Company”) was incorporated on March 19, 1969, as an unlisted public limited company. The Company’s registered office is located at the Islamabad Serena Hotel, Khayaban-e-Suhrawardy, G-5/1, Islamabad.


Background

TPSP, incorporated in 1969, operates as a key subsidiary of the Aga Khan Fund for Economic Development (AKFED), under the broader Aga Khan Development Network. The company is dedicated to promoting sustainable tourism with a focus on preserving cultural heritage, supporting local communities, and fostering economic growth in the regions where it operates.


Operations

The Company’s core business activities comprise the development and operation of hotels and leisure facilities, along with other tourism-related ventures. It currently operates eight hotels in Pakistan under the Serena brand. Revenue is primarily derived from four segments: Rooms, Food & Beverages, Rental Income, and Ancillary Services. The rental income is sourced from a commercial property in Islamabad, owned by the company, held for letting on an operating lease. Additionally, the company manages heritage properties in Shigar and Khaplu, which are owned by the Aga Khan Cultural Services Pakistan.


Ownership
Ownership Structure

The Company is a subsidiary of the Aga Khan Fund for Economic Development (AKFED), which holds a 95.47% stake in TPSP. Industrial Promotion Services owns 3.2%, while the remaining 1.33% is equally divided between the President of Pakistan and the Pakistan Tourism Development Corporation.


Stability

TPSP’s sponsor, the Aga Khan Fund for Economic Development (“AKFED”), has operated internationally for over 75 years, investing in long-term development projects across 18 countries. This long-term operational presence has fostered a tested approach to sustaining business activities. This stability reinforces the Company’s ability to maintain operations and pursue long-term initiatives without disruption.


Business Acumen

AKFED brings strong business acumen to TPSP through its extensive experience in developing, managing, and scaling hospitality and tourism assets across multiple geographies. AKFED’s disciplined investment approach, emphasis on operational efficiency, and adherence to international best practices in governance contribute positively to TPSP’s strategic direction.


Financial Strength

AKFED is an international development agency with a diversified global portfolio across tourism, financial services, infrastructure, and industrial sectors. The sponsor’s strong financial profile and long-standing experience in developing and operating hospitality assets provide financial stability to TPSP.


Governance
Board Structure

The Board of Directors of the Company comprises seven members, including the Chairman and the Chief Executive Officer (CEO). The structure ensures a balance of strategic oversight and operational guidance, enabling effective decision-making at the highest level.


Members’ Profile

The Chairman, Mr. Prince Amyn Aga Khan, and the Chief Executive Officer, Mr. Aziz Boolani, along with other Board members, have long-standing associations with TPSP. They bring extensive experience in the hospitality and tourism sector and collectively provide the necessary expertise to guide the Company’s strategic direction and oversee key operational decisions.


Board Effectiveness

TPSP’s Board has established several dedicated committees to strengthen governance, including the Human Resource and Remuneration Committee, the Audit Committee, and the Risk Management & Corporate Governance Committee. These committees enhance oversight, risk management, and policy implementation across the Company.


Financial Transparency

KPMG Taseer Hadi & Co. Chartered Accountants serve as the external auditors for TPSP and have issued an unqualified opinion on the financial statements for the year ending December 2024. The audit process for the CY2025 is currently in process and is expected to be conducted on time, ensuring continued transparency and adherence to statutory requirements.


Management
Organizational Structure

The company’s management follows a direct reporting structure in which the key department heads, including the Chief Financial Officer, Company Secretary, Corporate Director of Internal Audit, and Corporate Director of Human Resources & Organizational Development, report directly to the CEO. This streamlined hierarchy supports clear accountability and efficient oversight across financial, governance, audit, and human resource functions.


Management Team

The senior management team consists of experienced executives who have held their positions for several years. Syed Naveed Abbas serves as Chief Financial Officer, appointed in November 2022. Jehanzeb Younas has been the Company Secretary, while Muhammad Uzair has held the role of Corporate Director of Internal Audit. Dr. Moin Uddin has served as Corporate Director of HR & OD, bringing long-term continuity to the company’s leadership in human resources and organizational development.


Effectiveness

The management team ensures oversight by conducting comprehensive tests and analyses to identify discrepancies and verify the accuracy of transactions. The findings are systematically compiled into reports and presented to the Board of Directors and other relevant stakeholders, reflecting the team’s commitment to transparency.


MIS

The Company has made a significant strategic move by implementing Oracle as its Property Management System (PMS), enabling the organization to generate detailed reports on a daily, weekly, and monthly basis. This provides senior management with essential insights into key performance indicators. Additionally, management is in the process of developing a Central Reservation System and an Oracle Central Information System.


Control Environment

The internal audit department plays a central role in the Company’s control environment by systematically reviewing processes, monitoring compliance with established policies, and evaluating the accuracy of financial and operational reporting.


Business Risk
Industry Dynamics

Pakistan’s robust services sector continues to be the largest contributor to the national GDP. In FY25, the country’s nominal GDP reached approximately PKR 114 trillion (FY24: PKR 105 trillion), reflecting a real growth of ~2.7% YoY (FY24: ~2.5%). The services segment accounted for ~58.3% of GDP during the year. Within this sector, the hotel and restaurant industry not only contributes directly to GDP but is also closely tied to the performance of the tourism sector. According to the World Travel & Tourism Council (WTTC), the global travel and tourism sector is projected to contribute around USD 11.7 trillion in 2025, representing ~10.3% of global GDP. Pakistan’s tourism sector shows strong potential and is poised for medium-term growth, with projections reaching USD 5.5 billion by 2029, contingent on supportive structural enablers. However, growth will not be automatic; factors such as quality of experience, safety, international perception, and infrastructure development will play a critical role alongside the country’s natural attractions. Established luxury chains, including Pearl Continental (PC), Serena, Hashwani Hotels, and Avari, are strategically expanding into the budget and mid-scale segments through brands such as Hotel One (PC), Marriott (Hashwani), and AvariXpress, respectively. This diversification, combined with the entry of new local and international hotel operators, marks a transformative phase for the industry, characterized by increased consumer choice and intensifying competition across market segments.


Relative Position

TPSP operates high-end hotels in Pakistan serving business and tourism needs. TPSP operations remain focused on the luxury segment. While competitors expand into mid-scale and budget categories, TPSP continues to operate within the premium segment, with scope to adjust its portfolio based on market developments.


Revenues

The Company generates revenue from four main segments: (i) Rooms, (ii) Food & Beverages, (iii) Rental Income, and (iv) Ancillary Services. Room sales remain the largest contributor, followed by food and beverages, and rental income. For 9MCY25, revenue stood at PKR 11,671 million, compared to PKR 11,244 million in the same period of CY24, reflecting a moderate increase of ~3.8%, largely driven by stable room occupancy and seasonal performance patterns.


Margins

For the 9MCY25, the Company reported a gross profit (GP) margin of 56.1% and a net profit (NP) margin of 19.4%, compared to 56.3% and 19.8%, respectively, in the same period of CY24. While gross profitability remained largely stable, net margins contracted slightly due to ongoing finance and operational costs.


Sustainability

TPSP demonstrates sustainability through its established presence in Pakistan’s hospitality sector, supported by a portfolio that includes operating hotels and investment property. The Company actively engages with local communities by supporting initiatives aimed at preserving local culture and promoting inclusive development, including programs focused on women’s empowerment and skills development. In addition, TPSP participates in environmental initiatives centered on responsible tourism and environmental awareness, reflecting its commitment to long-term operational continuity and community engagement.


Financial Risk
Working capital

The Company’s operational funding requirements are primarily driven by accounts receivable, as its business model does not require maintaining inventory. Effective working capital management continues to be achieved through close monitoring of receivables and payables, resulting in stable gross and net working capital cycles. For the first nine months of CY25 (9MCY25), gross working capital days stood at 25  net working capital days remained steady at 13, both consistent with CY24. This sustained efficiency in working capital management has been a key factor in supporting the Company’s overall liquidity position.


Coverages

For the first nine months of CY25 (9MCY25), the Company reported an EBITDA of PKR 4,397 million, reflecting a moderate decline compared to CY24 (PKR 5,074 million). The EBITDA-to-finance cost ratio improved to 3.9x, up from 3.4x in CY24, indicating stability to cover interest obligations. Free Cash Flow from Operations (FCFO) during 9MCY25 stood at PKR 2,837 million (CY24: 3,345 million), resulting in an FCFO-to-finance cost coverage of 1.2x (CY24: 2.3x), reflecting the impact of ongoing investment activities and higher working capital requirements on cash generation.


Capitalization

The Company maintains a balanced capital structure, with a leverage ratio of 37.8% as of 9MCY25, reflecting a consistent improvement from 38.5% in CY24 and 39.7% in CY23. This trend is primarily driven by the timely repayment of loans. A significant portion of the Company’s debt comprises long-term borrowings, including Term Finance facilities, which were arranged to finance the construction of Hunza & Sost Serena Hotel and the renovation of Peshawar Serena Hotel. Leverage is expected to remain manageable as the Company continues to follow its scheduled debt repayment plan, supporting overall financial stability.
 
 

Jan-26

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Tourism Promotion Services (Pakistan) Limited


Financial Summary

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(PKR mln)


 Sep-25
9M		 Dec-24
12M		 Dec-23
12M		 Dec-22
12M
A. BALANCE SHEET
1. Non-Current Assets 20,571 18,239 14,444 10,522
2. Investments 18,069 18,067 17,510 13,725
3. Related Party Exposure 0 0 0 0
4. Current Assets 2,357 2,453 2,256 1,512
a. Inventories 203 206 169 146
b. Trade Receivables 839 905 872 562
5. Total Assets 40,997 38,759 34,210 25,758
6. Current Liabilities 3,754 4,388 4,104 2,888
a. Trade Payables 454 613 446 248
7. Borrowings 13,348 12,539 11,466 7,520
8. Related Party Exposure 0 0 0 0
9. Non-Current Liabilities 1,899 1,772 1,241 1,207
10. Net Assets 21,995 20,060 17,399 14,144
11. Shareholders' Equity 21,995 20,060 17,399 14,144
B. INCOME STATEMENT
1. Sales 11,671 15,721 13,843 10,290
a. Cost of Good Sold (5,120) (6,991) (5,882) (4,222)
2. Gross Profit 6,551 8,730 7,961 6,068
a. Operating Expenses (2,781) (4,012) (3,165) (2,928)
3. Operating Profit 3,770 4,718 4,796 3,140
a. Non Operating Income or (Expense) 1,412 2,249 2,269 1,144
4. Profit or (Loss) before Interest and Tax 5,182 6,968 7,065 4,284
a. Total Finance Cost (1,201) (1,576) (1,354) (354)
b. Taxation (1,711) (1,939) (2,059) (1,357)
6. Net Income Or (Loss) 2,269 3,453 3,652 2,574
C. CASH FLOW STATEMENT
a. Free Cash Flows from Operations (FCFO) 2,837 3,345 3,840 2,435
b. Net Cash from Operating Activities before Working Capital Changes 1,653 1,478 3,097 2,250
c. Changes in Working Capital (659) 562 16 170
1. Net Cash provided by Operating Activities 994 2,040 3,114 2,420
2. Net Cash (Used in) or Available From Investing Activities (1,454) (1,993) (9,310) (5,856)
3. Net Cash (Used in) or Available From Financing Activities (959) 79 5,778 1,866
4. Net Cash generated or (Used) during the period (1,419) 126 (418) (1,570)
D. RATIO ANALYSIS
1. Performance
a. Sales Growth (for the period) -1.0% 13.6% 34.5% 33.5%
b. Gross Profit Margin 56.1% 55.5% 57.5% 59.0%
c. Net Profit Margin 19.4% 22.0% 26.4% 25.0%
d. Cash Conversion Efficiency (FCFO adjusted for Working Capital/Sales) 18.7% 24.9% 27.9% 25.3%
e. Return on Equity [ Net Profit Margin * Asset Turnover * (Total Assets/Shareholders' Equity )] 14.4% 18.4% 23.2% 19.8%
2. Working Capital Management
a. Gross Working Capital (Average Days) 25 25 23 24
b. Net Working Capital (Average Days) 13 13 14 16
c. Current Ratio (Current Assets / Current Liabilities) 0.6 0.6 0.5 0.5
3. Coverages
a. EBITDA / Finance Cost 3.9 3.4 4.2 13.6
b. FCFO / Finance Cost+CMLTB+Excess STB 1.2 1.3 3.0 4.1
c. Debt Payback (Total Borrowings+Excess STB) / (FCFO-Finance Cost) 4.2 5.5 3.6 1.4
4. Capital Structure
a. Total Borrowings / (Total Borrowings+Shareholders' Equity) 37.8% 38.5% 39.7% 34.7%
b. Interest or Markup Payable (Days) 0.0 0.0 67.2 141.0
c. Entity Average Borrowing Rate 11.6% 11.9% 14.5% 6.8%

Jan-26

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Tourism Promotion Services (Pakistan) Limited


Rating Scale

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Jan-26

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Tourism Promotion Services (Pakistan) Limited


regulatory disclosure

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  1. Rating Team Statements
    1. Rating is just an opinion about the creditworthiness of the entity and does not constitute a recommendation to buy, hold, or sell any security of the entity rated or to buy, hold, or sell the security rated, as the case may be. (Chapter III; 14-3-(x))
    2. Conflict of Interest
      1. The Rating Team or any of their family members have no interest in this rating (Chapter III; 12-2-(j))
      2. PACRA, the analysts involved in the rating process, and members of its rating committee and their family members do not have any conflict of interest relating to the rating done by them (Chapter III; 12-2-(e) & (k))
      3. The analyst is not a substantial shareholder of the customer being rated by PACRA [Annexure F; d-(ii)]
      4. Explanation: for the purpose of the above clause, the term "family members" shall include only those family members who are dependent on the analyst and members of the rating committee.
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Jan-26

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