Press Release
VIS Reaffirms Bank Loan Rating (BLR) of Avari Hotels (Pvt.) Limited
Karachi, September 22, 2026: VIS Credit Rating Company Limited (VIS) reaffirms medium to long term BLR rating of Avari Hotels (Pvt.) Limited (‘’AHPL’’ or ‘’the Company’’) at 'AA (blr)' (Double A). Medium to long-term rating of 'AA' indicates high credit quality; Protection factors are strong. Risk is modest but may vary slightly from time to time because of economic conditions. Outlook on the assigned rating remains Stable. Previous rating action was announced on August 1, 2025.
Avari Hotels (Private) Limited was incorporated in Pakistan on September 25, 1968 as a private limited company. The Company owns and manages two five-star hotel properties in Pakistan, namely Avari Towers Karachi and Avari Lahore. Its core operations comprise room rentals, sale of food and beverages, banquet services, event hosting, and other related hospitality services. To cater to the mid-market segment, the Company also operates leased properties under the Avari Xpress brand in Islamabad, Multan, Faisalabad, Lahore, and Gilgit, along with Avari Boutique Multan. In addition, the Company owns and operates Avari Plaza Karachi and Avari Plaza Lahore, which generate rental income through leasing of commercial office space on both short- and long-term bases.
The assigned rating draws comfort from the credit enhancement provided by the financing structure. Although the facility is recorded on the books of Avari Hotels (Private) Limited (AHPL), the principal and markup obligations are contractually serviced by its long-standing tenant, Unilever Pakistan Limited (Unilever), a subsidiary of Unilever PLC, which carries an international long-term rating of ‘A+’ by Standard & Poor’s. Unilever has been a tenant of AHPL for more than 35 years and remains contractually responsible for servicing all principal and markup obligations under the facility.
The financing arrangement is structured around the advance discounting of the lease rental agreement, with Unilever providing an undertaking to make payments against rent payable in lieu of the advance rent that would otherwise have been paid to AHPL. The tripartite structure involving the lenders, AHPL and Unilever provides comfort regarding timely debt servicing and substantially insulates repayment from fluctuations in AHPL’s operating performance. Accordingly, the rating of the facility remains primarily dependent on the financial strength and creditworthiness of Unilever, as well as the continued enforceability of the underlying lease and payment arrangements. Any material deterioration in the credit profile of the lessee or adverse changes to the contractual structure could have an impact on the rating. The facility is further secured by a charge over the assets of AHPL and personal guarantees of the sponsors.
While maintaining its two flagship five-star hotels in Karachi and Lahore, AHPL’s growth strategy remains focused on expanding its mid-market Avari Xpress portfolio across various cities. The relatively lean business model provides greater flexibility for expansion and is well positioned to cater to upscale corporate and family travelers, while limiting exposure to the higher capex requirements associated with the development of five-star properties. The Company’s profitability and capitalization remain sound, providing additional support to its overall credit profile.
For further information on this ratings announcement, please contact at 021-35311861-64 or email at info@vis.com.pk.
Applicable Rating Criteria:
Industrial Corporates
https://docs.vis.com.pk/docs/CorporateMethodology.pdf
VIS Issue/Issuer Rating Scale
https://docs.vis.com.pk/docs/VISRatingScales.pdf
VIS Rating Criteria – Bank Loan Rating
https://docs.vis.com.pk/Methodologies%202024/BLR112018.pdf