96964 (Globalization and Hospitality Industry)

Table of content

Table of content

Introduction

1. Globalization and its definition

2. Globalization and Hospitality Industry

3. Challenges brought by Globalization

3.1 Globalizing marketing

3.2 Global promotion

3.3 Global advertising

3.4 Global e-marketing

3.5 Global pricing

3.6 Global ethics

4. Strategies and tends toward Globalization

Conclusion

References

Introduction

World maps define national boundaries, but those lines belay the increasingly clear nature of the global economy. As recently as 30 years ago the international enterprise was a relatively rare phenomenon, and the term multinational was seldom heard (Gomes, 1991). Today, many companies have transcended the multinational phase and operate as trans-national or global companies. These labels reflect a major shift in the structure of the world market for goods and services - a shift to a competitive framework that has far-reaching impacts for almost all industries. Experts have predicted that by the year 2015, global corporations will control approximately half of the world’s assets. Сompanies are in the process of internationalizing the production of a vast array of manufactured goods, with mega-companies controlling factories all over the world.

Globalization has become an umbrella word for a number of political, sociological, environmental and economic trends which present challenges on a worldwide scale. The world as it was known long time ago, does not exist any longer, now we experience “shrunk" world (Dr. M.Cho, 2005). The globalization of business and lifestyles is characterized by communicating over vast distances in foreign languages, frequent travel to overseas countries, dealing in many currencies, and coping with a variety of political and social systems, regulatory environments, cultures and customs. While these aspects of globalization are easy to identify, understanding the underlying current and future trends can be problematic. Analysis, however, reveals that a number of issues are reshaping the global hospitality industry, although there are clearly some complex questions that are still to be resolved:

• International expansion with common product and brand position;

• Sales and marketing programs that fully capture global economies of scale;

• Organizational structures that allow global delivery of services with local operational control;

• Cross-border employee training to support operations (Cline R.S. n.d.).

Globalization is typified by the rapid movement of people, information and capital across national borders worldwide in ways that would have been difficult to envision not too many years ago. Yet 'globalization,' accepted though it is as a fashionable force, is a big concept requiring careful definition. As many experts you as many definitions you will get, therefore in this paper I will challenge to point out different definition of globalization and what is behind it. This paper will outline such issues as globalization vs. Internationalization and its difference. Globalization has huge influence on Hospitality Industry, and it brought lots of challenges, consequently Hospitality Industry should and does keep up with rigid business by defining strategies and tends toward Globalization.

1. Globalization and its definition

In order to understand globalization, after defining it, we should have a look at how it got started. “During the 1970s the word “globalization” was never mentioned in the pages of the New York Times. In the 1980s the word cropped up less than once a week, in the first half of the 1990s less than twice a week - and in the latter half of the decade no more than three times a week. In 2000 there were 514 stories in the paper that made reference to “globalization”; there were 364 stories in 2001 and 393 references in 2002.

Based on stories in the New York Times, the idea of being “anti-globalization" was not one that existed before about 1999. Turning from the newspaper to the internet, “globalization” brings up 1.6m links through the use of the Google search engine, and typing in “anti-globalization" brings up 80,000 links.

Type in globalization and inequality and there are almost 500,000 references, 700,000 references to globalization and environment, almost 200,000 links to globalization and labour standards, 50,000 references to globalization and multinationals, and 70,000 references to globalization and cultural diversity and search of globalization and the IMF yields 180,000 suggestions.

The search for better and cheaper ways of doing business always seems to be an unstoppable force that drives multinationals to locales that offer the greatest “incentives" - subsidies, low taxes, low wages, and easy access to markets" (S. Fischer, 2003).

These locales almost never include the home country whose very success has made it unattractive due to high wages and societal protectors such as labour unions which struggle for working rights and employment law.

With such vast variety of product, companies need to keep customers’ loyalty, thus forced to go internationally. People nowadays aggressively travel, therefore expecting to find known product or service worldwide. Business world works in a jungle way - “either you have dinner or you are dinner”.

What is Globalization?

There are nearly as many definitions of globalization as authors who write on the subject. One review, by Scholte, provides a classification of at least five broad sets of definitions:

Globalization, as internationalization. The “global" in globalization is viewed “as simply another adjective to describe cross-border relations between countries.” It describes the growth in international exchange and interdependence.

Globalization, as liberalization. Removing government-imposed restrictions on movements between countries.

Globalization as universalization. Process of spreading ideas and experiences to people at all corners of the earth so that aspirations and experiences around the world become harmonized.

Globalization as westernization or modernization. The social structures of modernity (capitalism, industrialism, etc.) are spread the world over, destroying cultures and local self-determination in the process.

Globalization as deterritorialization. Process of the “reconfiguration of geography, so that social space is no longer wholly mapped in terms of territorial places, territorial distances and territorial borders.” (Najam, A., Runnalls, D., Halle, M., 2007)

Values can play a role in defining globalization. A definition of globalization as "Americanization" or, perhaps, the "McDonaldization," of the world presents globalization as a process driven by American consumer culture that rolls over other cultures. On the other hand, another definition of globalization highlights its cross-cultural impact, taking into account the nature of globalization as a way cultures interact and learn from each other. Globalization is the acceleration and intensification of interaction and integration among the people, companies, and governments of different nations (Rothenberg, L.E., 2002-2003).

The term “globalization” is widely used to describe the increasing internationalization of financial markets and of markets for goods and services. Globalization refers above all to a dynamic and multidimensional process whereby national resources become more and more internationally mobile while national economies become increasingly interdependent. (OECD’s Handbook on Economic Globalization Indicators, p.11 cited by C.S. Carson (2006)).

Out of all these definitions the one which state that Globalization is the system of interaction among the countries of the world in order to develop the global economy and refers to the integration of economics and societies all over the world, involving technological, economic, political, and cultural exchanges, which made possible largely by advances in communication, transportation, and infrastructure, is the most common one. Having in mind different areas of business, we can define globalization in a dissimilar way, but no matter how it is described, globalization will drive us toward something innovate and unexplored, which we will have to face and deal with.

2. Globalization and Hospitality Industry

The hospitality industry is by nature an international one. As international trade and business expand, there is little question but that international linkage will become even more important for the industry in such competitive business environment. Defining the international hotel industry is not an easy mission. Broadly, the international hotel industry can be defined as an industry that exports hospitality services and generates export income. In a sense the hotel industry has always been international, because most hotels have received foreign guests at one time or another. As the industry has evolved over the years, its structure has become increasingly more complex with respect to range, ownership, management, and affiliation. There are many models one may observe, such as independently owned and operated properties; properties that are independently owned and operated with chain affiliation; chain-owned and-operated properties; independently owned, chain-operated properties; franchised properties; referral group properties and others (Gee, 1994).

Table 1. Characteristics of Globalization in Tourism (Feige 1998: 111)

Most of sub industries of hospitality industry were influenced by globalization. Here are some examples:

Hotels: in the period between 1980 and 1998 the global accommodation capacity increased from 8 to 15.4 million beds. The largest increase took place in Europe, it accounts for 38.5 percent and is followed by the USA accounting for 33.5 percent. In the nineties most hotels, around 70,000, were opened in south Asia, a 45 percent growth was achieved in East Asia and in the Pacific Ocean. Six Continents Hotels has established strategic partnerships with 47 global air carriers. Radisson Hotels, which are part of Carlson Group travel companies, expanded with the help of international strategy based on SP with local hotels worldwide, such as Edwardian Hotels in Great Britain and Movenpick in Switzerland (Tipurić 2002: 212).

Tour operators: global distribution network of tour operators and travel agencies is one of the most consolidated businesses. The German TUI, former Preussag, features on the list of the largest corporations. Preussag entered the European travel market only in 1997 when it purchased TUI, the biggest German tour operator. One year later it bought Thomas Cook and Carlson UK and in May 2000 the major British tour operator Thomson. Due to anti-monopoly regulations Preussag was forced to sell Thomas Cook. C&N Touristik was founded in 1998 when the German company Karlstadt Quells decided to start cooperation between its TO NUR Touristic Gmbh and Lufthansa's charter air company Condor Flugdienst Gmbh. They purchased Thomas Cook, whom they were forced to sell, if it wanted to overtake Thomson. They decided to stop using the name C&N since Thomas Cook sounds better (Klančnik 2003: 55). In addition, in the year 2000 TUI formed a strategic partnership with the French tour operator Nouvelles Frontierres by purchasing 13 percent of its shares. It also entered into a SP with the leading Italian tour operator Alpitour by buying 10 percent of its shares (Tipurić 2002, 212).

The air travel industry: air companies are merging worldwide. The five major alliances are: Star Alliance, Oneworld, Wings, Qualifier and Global Sky Team. Everything started with the appearance of hubs offering services to millions of passengers from smaller emissive markets, such as Frankfurt and Vienna. Deregulation, the measure allowing flights out of the domestic country, made it possible for air companies to fly from everywhere and in all directions which is the most evident proof of globalization (V. Peric, 2005)

Globalization has positive and negative impacts on the Hospitality Industry.

Table 2. Positive and Negative Impacts on the Hospitality Industry (http://www.scribd.com/doc/8691190/Discuss-the-Impact-of-Globalization-on-the-Hospitality-Industry)

Globalization has increased the interdependence between countries, economies and people. Tourism has become big business and is run by great trusts. Nevertheless, in addition to all gratuities, globalization brought lots of challenges.

3. Challenges brought by Globalization

Globalization is, in one way or another, related to or has relevance for the many challenges world is facing today and the discontents experienced by its population. Whether the challenge is educational, economic or political, the rise of a global economy is rendering national economies obsolete and creating markets that transcend national boundaries. These changes are rippling across our lives and focusing attention on our education systems, producing economic displacement, and engendering intense reactionary movements. As we move into the future we can expect that national economies will become part of macro-regional economies (European Union and North American), and that competition across these economies will result in, among other things, upward pressures on the skill sets of our labour force, increases in transnational labour and its movements, and increased public health issues for all nations.