Globalization and Hospitality Industry

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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)

ECONOMYHorizontal and vertical integration strategies of tourism enterprises

Foreign investment in hotels and tourist attractions ("global tourism markets")

Global players and strategic alliances (air companies, hotels, tour operators)

Global tourism management

Global competition of holiday resortsTECHNOLOGYGlobal booking systems

Standardized technologies in transport systemsCULTUREGlobal tourist: uniform traveller behaviour

Creation of "global tourist village"ECOLOGYTourism as "global syndrome of ecology problem"

Climate changes and their effects on destinationsPOLITICSIncreasing importance of international tourism organizations

Necessity for global coordination and regulation of passenger circulation

Sustainable development as quality and dominant idea.

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 Lufthansas 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 (

PositiveNegativeExposure to different cultures: Due to globalization the managers of the Hospitality industry are able to learn about different cultures-as they get to mingle with people from various walks of life - and thus, increase their knowledge. Language Barriers: Due to globalization, the hospitality industry can employ people from different countries - as it is usually cheaper - they may sometimes have problems in communicating with customers. Many customers get quite irate as a result of this.Larger Market: Due to globalization the customer base has increased greatly. People travel not only for holidays, but business, health and various other purposes too. Thus, this has increased the market for the hospitality industry, which gets its major income from international travellers.Cultural Barriers: As there are people from various cultures, one needs to be careful not to offend them. What is acceptable by one culture may be frowned upon by another.

Boosts the economy: Visitors come in and spend money - multiplier effect - and foreign exchange increases. Thus it is of great value to the economy as globalization helps to pump in money into the country.

Events/Disasters in other countries: A disaster or even taking place in one country may affect other countries also. As an example, the financial crisis makes less people want to spend money or travel; due to increase in terrorism some visitors yet are not ready to travel to certain countries. Technology Advancement: Since one wants to attract as many tourists as possible, hospitality organizations constantly need to upgrade and improve their product and servicesSeasonal Employment: During peak periods, a lot of jobs are available but as soon as tourists go back the jobs disappear as well and after local population has no income. Promote creativity: Organizations are constantly thinking of new and creative ideas to attract more tourists.

Increasing use of technology to communicate: Due to international barriers, there has been a steady increase in the use of technology for communication (through the internet, voice recording). This removes the human touch. More Job Opportunities: Due to globalization, more visitors coming and thus more people are needed to serve and cater to their needs. So, with the advent of globalization, there are a lot of more jobs available for people within the hospitality industry.Developing countries: Countries that are unable to keep up with the advancement in technology tend to lose out. (E.g. Africa does not have the infrastructure or technology as yet to welcome a large amount of foreign visitors, though it does have a lot of natural attractions. To increase the flow, it would have to improve conditions; otherwise tourists have a vast sea of areas to choose from).Boosts the Travel Industry: Due to globalization more people move around, to facilitate this, the travel industry needs to grow as well. People come to their destinations by air, or ship, or land use the transport services offered as well.Increase in crime rate: With the increase in tourists, crimes such as pick-pocketing, hustling, rape and smuggling increase too.

Variety of International Services/Cuisines: Since there are a lot of different visitors with various cultures, customs, cuisines, and languages, the hospitality industry includes recipes and various other services to cater to them. These services are available to the local too, which makes it even better. Bad Habits: People from other countries sometimes influence the local youth in a bad way. Increase in drugs and promiscuous behaviour, etc.Environmental Depletion: Globalization causes an imbalance in the eco system. People usually throw their garbage around everywhere which could cause sicknesses, to encourage more visitors, areas of greenery are cleared and wildlife killed - which is a major cause for global warming.Loss of cultural pride and values: To suit customer needs one needs to change or modify various services and product (e.g. certain dishes are changed (in taste, names become more westernized) to make them more attractive to visitors). This, in a way, leads to the loss of culture as one wants to become and behave like most of the tourists.

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.

Dramatic changes of the business environment of hotel chains due to globalisation, advances in information and communication technology, and increased focus on shareholder value call for modern forms of marketing. Relationship marketing and its practitioners equivalent customer relationship management are the promising, but disputed replies to these challenges (Medlik, S. 2001).