Internationalization In The Hospitality Industry
Introduction to the Hospitality Industry
The hospitality industry composed with service oriented industries which included industries in vast range of fields like Tourism, Hotels, Restaurants, Lodges, Leisure Parks, Transports, Medical Hospitals & Services, Advisory Services, etc..
It consists with low profitability an industry to Highest Profitability industries which are broadly distributed among the world and also this profitability is greatly fluctuates than manufacturing industries due to the several reasons. These each and every Hospitality firm consists of several working groups such as Front Office, Back Office, Maintenance Unit; Operations Unit, Human Resources, Marketing, Promotion and Advertising, etc (David, and Chon, 2006).
Depend on the type of service they offer, this hospitality industries covers a broad range of organizations. They can further divided into sub categories depend on the Skills and qualifications their workers have to cater their customers with the set of services they have.
E.g; Cooking, Nursing, Entertaining, Advising, etc
They are in position to cater the needs of customers better than the competition is more likely able to sustain competitive advantage over time. Catering to customer needs is dominant to delivering desirable levels of customer satisfaction in the tourism industry. The formula for executing this task is particularly fragile in tourism because of the heterogeneous and simultaneous nature of service production and consumption.
Tourism experiences are rarely, if ever, delivered without in-depth employee-customer interactions. Thus, tourism experiences are people-intensive on both sides of the service fence. Additionally, tourists tend to have higher expectations for hospitality and overall levels of service quality because their context is typically more emotionally charged. An empowered workforce is a secret to success in these unique area employees who are inspired and enabled to make meaningful and suitable decisions close to customers in order to take care of important customer needs
Internationalization is described as the expanding of activities and resources among the other countries of the world, beyond domestic level. However, in the internationalization the firm should be more effective and efficient enough to cater the customers in the world over domestic level. Although starts at that level, when a firm becomes a larger, they can generates more profit and thus with their efficiency, they can reached far and wide variety of consumers while making the market more attractive. It leads to broaden the market continuous way in the world (David, and Chon, 2006).
Strategies of internationalization in hospitality industry
There are several strategies of internationalization to gain more customer satisfaction n with effectively and efficiently.
The development of computer technology, communication technology, and new means of transportation all leads to develop the internationalization. Today, internationalization has turn into one of the major concern of firms As barriers to international trade fall down in most of the parts of the world, managers happen to attentive in new trends in an fluctuating global environment (Macleod, 2004).
For example, the Euro currency is ahead a chief position within the European market and it forced to the Eastern European markets to develop rapidly to face this competition, it effects to the Asian markets too. They are opening to the world.
International firms change their strategies from one geographical region to another, to sustain in the competitive business environment.
Eg: One of express delivery service in the world, Federal Express (FedEx) dominates the market in the American Region, but in the other markets like European Region, FedEx was not successful. That market dominated by DHL.
Hotel franchising agreements is a legal document in which a franchiser offers an approved opportunity to a franchisee to carry out their business. This is permission to franchisee use brand name, reservation systems, products, operating systems. Franchising strategy is used by Hilton International as a part of its international strategy decision (Shepherd, and Cooper, 1997).
Management contracts means in which management is separated from their ownership, where a company can contract its overseas operation of management to a management team in revisit for a payment
For an example: Sodehxo is one of the companies which use management contract in the industry.
Strategic alliances means in which a bond or a partnership or a connection forms between two or more companies that can support from larger market exposure, economies of scope or range enlarged visibility for the brand name . The best example is the strategic alliance between Nortel and Microsoft Company.
Joint venture means in which the international firm provides a partial equity venture to home businesses to protect their promise to the agreement. Accor is actively involved in joint ventures in different Asian markets such as Malaysia and Vietnam
Call Center Service Recovery means Telephone based customer service is the largest customer services’ channel in both North America, and Europe (The Editors 2007). Call centers’ customer service volume is higher than electronic mail support service. Despite this lack of acknowledgement from call centers, there is a gap between the service provided and customer expectations.
The Green strategy means industry perceptions and perspectives as a new market -driven business focus for gaining competitive advantages. All businesses no matter how benign or smart their operations are create some level of environmental harm. These impacts can be minimized or controlled by a adopting a well-articulated firm-level green strategy. This require to green should not just be to address companywide environmental challenge but also a proactive strategy to stay on the right side of the regulation and for profitability (Kotler, Bowen, and Makens, 2003).
Issues and impacts of internationalization on hospitality industry
Issues and impacts bring together the latest developments in international hospitality operations with the current management principles. It provides a truly international viewpoint on the hospitality and tourism industries and provides a fresh insight into hospitality and tourism management.
Internationalization is a major trend for today’s organizations. The services sector is also unquestionably becoming increasingly international in scope. A rapid Internationalization of world economy during the 1990s has increased the opportunities to export services and services are now the fastest growing part of international trade. Speed up by their aspiration for growth and profit, host governments provide incentives, and invest throughout the world. Hospitality organizations have revealed that their survival and growth in the future depend on extending of their services around the world (Hearns, Baum, and Devine, 2009).
The global hospitality industry is therefore one of major part of international business. Those companies therefore have to look up the inferences of the global framework in which they operate and always need to prepare for the changes of this highly fluctuating environment.
The Internationalization of industry and its way is characterized by communicating over vast distances in foreign languages, normally travel to overseas countries, trading in many currencies, and coping with social systems, series of political and, cultures and customs. And regulatory environments, the aspects of Internationalization of are very easy to identify, considerate the basic current and future trends and market can be analysis and reveals a number of issues are reshaping the Internationalization hospitality industry, though there are very clearly some multifaceted questions that are still to be resolved (Mason, 2008).
International spreading out with general product and brand position;
Organizational structures that tolerate delivery of services with local operational control;
Cross-border employee training to support operations; and
Use of the world capital markets as sources of funding.
The Positive Impacts of Internationalization on the hospitality industry;
Exposure to different cultures: Due to the internationalization of the managers of hospitality industry, they would be able to gain knowledge of different cultures, as they get to fuse with people from different walks of life and thus, enhance their awareness.
Larger Market: Due to internationalization, the customer base has enlarged significantly. Not only for holydays, people travel all over the world for various purposes like business, Pilgrims, Education, health, etc. Thus, this has widened the market of hospitality industry, which gets their major income from these international visitors.
Boosts the economy: As visitors come in and spend money it effects to the foreign exchange of the country and it gets increase. Thus it gives huge boost to the economy as internationalization leads to pump money into the country.
Technology Development: Since firm needs to attract more tourists as possible, hospitality organizations always need to improve and develop their products and services.
Example: Fly Kingfisher, use innovative and newer technologies in hotels to satisfy their customer needs.
Allow to creativity: Firms are continuously thinking of new and innovative ideas to draw more customers.
More Jobs: Due to internationalization, more visitors come into the country and thus more people will be required to serve their needs. Therefore, with the internationalization, there are lots of more jobs opportunities for people within the areas which hospitality industries are located.
Variety of International Services: Since there are lot of diverse visitors from various cultures, cuisines, traditions, and languages, hospitality industry should include cuisines and various other services to cater them. These services also will be available to the
locals, which makes more satisfied local customers.
Boosts the Travel Industry: Due to internationalization more people travel around the countries. To facilitate this, the tours and travels industry require to develop as well.
People who come into the country by air, ship or land, will use the transport services obtainable as well.
The negative impacts of internationalization on the hospitality industry;
Language Barriers: Due to internationalization, the hospitality Industry can make use of people from different type of countries as they are usually cheaper. They may have troubles in communicating with customers.
Events/Disasters in the Countries: A disaster or incident taking place in one country may affect to the other country also.
For example, the financial crisis makes people to spend less money. It drops down the travelling, Hotel bookings, etc.
Due to increase in terrorism activities some visitors are not willing to travel to those places.
Cultural Barriers: As there are people from a mixture of cultures, one needs to be watchful not to insult them.
For Example, a Muslim not eats pork. Service provider have to make sure not serve food with pork. What’s acceptable by one culture may be reject by another.
Seasonal Employment: During climax periods, a lot of jobs are available in some industries, but as soon as the customers return to their countries, the jobs get vanished as well.
Example: Goa of India; the people in Goa get their revenue only during the climax season, (Dec- Feb and April – July) In other seasons, they have no jobs and no earnings.
Growth of the Communication Technology: Due to international barriers, there is a constant growth in the use of communication technology (Internet, Email, etc). This
reduces the human involvement.
Developing Countries: As technology continuously gets developing, some Countries are unable to keep up with these developments in the technology and they tend to lose out. Example: Though the some African countries have lot of natural resources for the attraction of tourists, they do not have proper infrastructure to cater that large amount of tourists. To maintain that large amount of visitors, they should have to improve
infrastructure.
Increase in Crimes: When tourist arrival increases, crimes increase too.
Example: smuggling, hustling, rape, etc
Bad Habits: Tourists come from other countries sometimes may influence to the local youth in a bad manner. Increase of drug consumption and promiscuous behavior, etc
(Source: Market of sustainable tourism, [online],
Available from: http://towards2015.co.uk [Accessed 12th April 2011])
Integration of the hospitality industry
To offer a better customer service and keep loyal client come back today’s hospitality industry require integration system. Thereby they can maintain their controls and improve their business. To have a smooth running integration system can aid organizations with a sustainable competitive advantage by improving quality of the service while reducing cost.
Superior performance and sustainable product with good quality can help a company to reduce the threat of conflicts/problems with their Suppliers, Staff, Local People, and Government and improve its position as an esteemed partner in destination. That mean, better access to major business resources such as funds, the capability to improve products to meet rising market demand, better dealings with governments, and a motivated and faithful staff.
Egg: The computer software is a combination of various modules, which cater to the various aspects of hotel management. It including with hotel staff management, hotel reservation and hotel accounting are taken care of by the different modules in a single software unit. Many software companies have gathered more areas of hotel management into their software. All the operations like bookings, billings, reservations, check-ins, checkouts and etc, are available on screen and can do within few clicks of mouse. Therefore, taken as a whole, efficiency of the hotel staff and the management system is increased. Clients can reserve the rooms and other services through the hotel website directly. There is no room for any third party connection in these events (Kneafsey, 1998).
However, there are some advantages in this integration as follows;
It helps to reduce the cost of transportation as the general ownership outcome in closer geographic regions.
The costs for transactions can be managed if a firm gets hold of the other firms in the vertical chain, so the one division of the company can transfer the goods to the other divisions of the same company. Thereby, transaction costs for transport, negotiations; Monitoring, control & etc. will be eliminated. The by and large, average cost of the firm will be reduced, because if the divisions are in under the same management, then there will be internal supply and department heads will decide the transfer price (Macleod, 2004).
If a firm purchases half finished goods from an outside firm then the work culture could be different and there are opportunities of dispute concerning terms and conditions of supplying or if the outside supplier make a contract and couldn’t supply the goods on time then the firm cannot accomplish its assurance to the third party and the good will of a firm will come to an end. Organizational inferences; if the supplies provider supplying the goods to a firm is big, in terms of sales, size and structure, then it will state the terms and conditions. On the other hand if an internal source is used then there will be no market difference and the supplier cannot oblige any adverse conditions (Haywood, and Maki, 1992)
We can split the benefits of integration into short-term or static gains and more long-term dynamic gains.
The establishment of the Single market within Europe has led to significant gains for the participating member states. The removal of internal market barriers and the harmonization of national regulations are expected to lead to an increase in trade and reductions in cost.
Conclusion
Hospitality and tourism industry plays a key role in international competitive business environment. On one hand, it goes for lot of fluctuations due to different types of global factors. Although, it has been sustained over long period of time by facing to those factors, the two main parts of Hospitality and Tourism Industry combined with is Internationalization and integration. They lead to the growth, sustainability and profitability of the Hospitality Industry and their impacts will be directly involved to the evolutionary change of this Industry.
