Impact of Globalization on Hospitality

Term Paper (Advanced seminar) 2011 12 Pages

Business economics - Miscellaneous



The rapid development of international economic integration and globalization has led to significant changes in hospitality industry. Therefore, it is necessary to dwell on various aspects of globalization as the process influencing the current and future developments in hospitality industry. This research will be based on the assumption of a generally beneficial impact of globalization on the industry’s development, and the analysis presented here will seek to substantiate this claim.

For the purposes of this discussion, globalization shall be defined as the “ever-tightening network of connections which cut across national boundaries, integrating communities in new space-time combinations” (Hall 1992, p.299). While this definition may seem excessively broad, it is likely to better encapsulate the essence of globalization than the explicitly economy-oriented ones.

This paper shall deal with the various expressions of globalization influences in modern hospitality industry. Given the extremely important role of the multinational corporations (MNCs) in contemporary tourism and hotel sectors, a case study of Hilton Hotels Corp. as the paragon of the globalized hotel chain will be integrated in this research. Further, a Business Performance Management (BPM) theoretical model shall be employed to evaluate the comparative performance of the prominent global hotel chains. Proceeding from the latter, a preliminary conclusion on the present state of the market may be formulated. Similarly, the problems of labour market and technological innovations shall be integrated into the study’s research framework. Finally, the issue of business strategies shall be raised, with several examples thereof being subjected to comparative analysis.

The MNCs and the State of the Global Hospitality Market

Knowles, Diamantis, & El Mourhabi (2004) observe that the development of standardized hotel and restaurant chains may be one of the most prominent impacts of globalization on the modern hospitality industry. In particular, such regions as East Asia would appear to be particularly affected by the rise of the multinational hotel chains (Knowles, Diamantis, & El Mourhabi 2004, p.18), with British and U.S. hotel chains being especially prominent in this regard. Hence, in order to receive a more objective view of the global hospitality industry, one should review the phenomenon of the rise of the MNCs in hospitality market.

According to Cheng, Wang, & Chu (2011), the combined number of hotel room controlled by 9 largest hotel chains, or “nine giants” (2011, p.214), amounted to 2.98 million in 2009, as opposed to 2,84 million in 2005. In the percentage terms, the total market share of these companies would amount to more than 75%, making the world hospitality market increasingly monopolized (Das & De Groote 2008, p.4). Thus, the examination of these companies’ business situation and their responses to the changes in market trends would enable the researcher to formulate more general perspectives on the state of the industry at large.

Das & De Groote (2008) present a comprehensive account of the situation of the world’s top hotel chains. They observe that while in the 1980s, the U.S.-based were retaining their grasp over the market, from the 1990s onwards, the UK and even East Asian hotel chains have begun to advance to the external markets as well. Such hotel chains as Mandarin Oriental and Shangri-La Hotels have opened several hotels in Paris and other major European cities, hoping to attract additional customer base (Das & De Groote 2008, p.3). Nevertheless, the major players in the global hotel market still include predominantly Western corporations. Table 1 includes some data on the comparative business performance of 10 main multinational hotel chains, with the data provided as of October 2007. The table, reproduced below, is found in Das & De Groote (2008, p.5).



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Title: Impact of Globalization on Hospitality