International Hospitality Organizations - Coursework Example

International growth strategies (International hospitality organizations) Student’s Name: Instructor’s Name: Course Code: Date of Submission: The major international growth strategies employed by international hospitality organizations Introduction Hospitality industry is one industry that is primarily focused on achieving high level customer satisfaction. The industry entails and is characterized by its emphasis on leisure and luxury-based services. Such facilities as hotels, resorts, airlines and cruise lines as well as different forms of tourism, special event planning and travel as well as restaurants fall under this industry. This is one of the most competitive industries in the world and this is because much of the services provided to the customers are more direct and therefore satisfaction of the customer needs is expected to play a very significant role in the success and sustainability of the business (Kim & Mauborgne 2004). The industry accounts for large part of revenue for many countries and this can be as a result of the social and economical activities that are involved like a vacationing family which decides to travel from one destination in one country to another country, book a resting room for a given duration, dine in the local restaurants and at the same tour the local parks to have a view on local domestic products (Claver et al 2007). In general therefore, the industry is vast and growing to expand its services to various sectors of the economy. The purpose of this essay is to study and answer one of the commonly asked questions in the hospitality industry and which is “major international growth strategies employed by international hospitality organizations.” This is after it has emerged that with globalization, those organizations that were previously to operate in local markets are now trying to expand their territories into new markets especially in the foreign markets so as to grow their revenues and market shares. To achieve this outcome different growth strategies are required and most important ones discussed below. International growth strategies Hotels, resorts, airlines and cruise lines as well as different forms of tourism, special event planning and travel as well as restaurants, are operating in a very challenging environment and this problem could be attributed majorly to global economic eventualities which have continued to influence travel and other leisure and luxury activities offered globally. Hoteliers and all other businesses operating in the industry have no option but rather to comply and adjust to fit into a situation where the demand declines as a result of decreased incomes. On the same line, those customers who do travel demand for value for the money they spend (Kim & Mauborgne 2004). If the businesses operating in the industry demand for growth and reduce their competition for those markets that have already saturated, they can no longer afford to sit and depend on their small markets and already established local markets bases. They must strive to expand and penetrate their businesses into new market territories and especially where market opportunities for the products and services they offer still exists. Widening customer bases into the international bases is one sure way the businesses can attain this outcome. However, this is not an easy go, different business approaches and growth strategies must apply. Consider the case of technology. Technology is one way that any business can use to work smarter without much energy and yet manage to attract large global clientele and also keep them attached to the business. Before engaging in growth strategy especially into the international markets, it is very important to learn to understand who the customers of a given organization are and which countries are making major international businesses for the organization (Harrison & Enz 2005). Through extensive market analysis, the entrepreneurs in the industry stand a chance to know where their existing orders are coming and prevailing trends of customers from different countries. Once this is clear, different market niches can be established and ways to reach and serve them determined accordingly. Extending reach Technology advancement has come to play a very significant role in the way entrepreneurs do their businesses and interact with their customers. This can be learnt from the increased trends in online booking and ordering of hospitality services. This has is more common in Online Travel Agencies (OTAs) for instance who use online ads enabled by the internet to allow their customers to book for their travel prior to their actual days of travel irrespective of their geographical location. Use of internet and new technologies, is one most significant strategy that the business can apply to grow its business internationally. Any business operating in the hospitality industry and seeking to expand grow its business internationally, should always try to investigate into the benefits that are associated with increasing use of online functions, to improve on their relationships with the customers and also target new regions and potential new customers (Lafferty & Fossen 2001). However, widening the channels of distribution by use of online strategies, presents some challenges to the business and which must be managed before its benefits can be realized. For example, the hoteliers and the owners of restaurants have to deal with the issue of managing its online channels which most of them are run manually. Given this scenario therefore, it is becoming a big headache for many of the businesses and this is more common when competing with other enterprises which have a gone a step further to automate all of their channel management systems thus making it easier for any customer to order or access all the services from any location (Wong & Kwan 2001). This is to imply that technology is one best strategy that a business operating in the hospitality industry can apply to penetrate and grow the businesses across borders. However, with the right tools and techniques, stand a better a chance to maximize on their bookings and requests and be able to catch-up with the rest in the global market. Entrepreneurs in the hospitality industry, have nothing to fear when using new technology to develop multiple channels to reach more international markets if they have effective systems on their disposal. For example, with the right software, it could be very easy to manage any number of channels and thereby increasing substantially their relationships with the customers and the already identified market niches. According to Combs (2011), use of the internet is particularly important in connecting businesses with their potential customers in different parts of the world. This does not require much investment to put up the infrastructure near to the potential markets in order to be able to serve the customers more effectively. What is required is well connected and integrated system which allows the business to link all its businesses at a point where directions on operations can be given and maintained. This is especially important in reducing the cost of operations and also ensuring consistent provision of services to different markets. The essence of pursuing an online strategy to grow the business is also important in reaching inbound customers who may not be not be so conversant with the local markets and the services or products that are available. For example, through online channels, different markets are able to find where different businesses are found, their service and product ranges and how they can be accessed. This makes it for the customers to make informed choices on what company they should go for to have demands met. Use of online trading agencies In the current world of business and during the era of globalization, one factor that is emerging a big challenge for many of the businesses to expand into foreign lands is language of communication. For example, when a company founded and owned by Briton can comfortably be established in those countries where English is the first language like the United States, Australia and many other countries, it becomes a very big challenge for the same company to develop a website in different languages so as to be able to communicate effectively with potential customers and who can be inbound visitors from non-English speaking countries (Olsen 2004). This therefore, has made it so difficult for the businesses operating in the hospitality industry to communicate with potential customers who are inbound from other countries but also failed to develop one website through which the business can communicate with customers who speak in different languages. This is because it will come with associated costs like translation and regular updating of the business details (Combs 2011). This has acted as a very big barrier for many of the businesses who are not in a position to develop website that is translated into different languages and trying to have websites translated into different languages is considered as an addition to the already escalating company costs which to some extent can exceed potential revenues generated. However, it is with this regard it’s becomingly advisable for the majority of the organizations that are interested in growing their businesses internationally to consider putting more emphasis on their core activities while living technical ones to the specialists and professionals. For example, the hoteliers and the travel agencies are among the challenged companies in the hospitality industry. This is because they do receive orders and request from almost every part of the world and which must be handled if they have to keep relations with the market and attract any potential customers in the market (Whitla et al 2007). Therefore instead of engaging and putting a lot of effort on trying to develop websites which are translated into different languages so as to help business grow internationally, using online agencies could help a great deal since they are specialized in these areas. For example, online travel agencies could help translate on behalf of the business the different products and services that are available and the means to accessing them. This is particularly important in reaching and interacting with as many markets as possible and consequently expand revenue base and market share. Franchising With franchising, different companies use the same approach as the one used locally to do business in new lands. Franchising businesses establishes their own business in foreign markets and takes full ownership of them. The establishment of franchises entails establishing own infrastructure and support base for the new company offices that are about to be established. Franchising is a business growth strategy whereby the business seeks to capture its own market share. This strategy is based on the idea of creating image of the company in the minds of the customers both for the current and the future ones. Franchising goes a step further to see the establishment of interdependent businesses where each member is allowed to share brand identification, method of carrying out business and one proven marketing and distributing system. In brief terms, franchising can be termed as a strategic alliance that exists between different groups of businesses that have some relationships and responsibilities that are geared towards a common goal and which are to dominate the market and also keep as many customers from their competitors as possible (Zhang et al 2001). This strategy is very common in the hospitality industry and can be learnt from different airline and hotel companies. A good example Holiday Inns & Intercontinental-(IHG), Hilton worldwide, Sheraton (ITT), Accor, Hyatt and Ramada as well as Marriot Hotels all of which have franchises operating in different countries. The reason behind the success of these companies in their hotel businesses world is establishing different business units in different markets so as to give a local view and acceptance by the majority of the customers (Olsen 2004). With the franchising strategy, there are many misconceptions about the strategy, however, one such misconception is that the franchise is buying the franchise. However, the reality is that entrepreneur seeks to invest his assets to have different systems going so as to be able to utilize the brand name, existing operating systems and other available support to prosper the business in a totally new market environment. Like is the case of the Hilton Worldwide which even though established in London almost a century ago and has had numerous franchises operating in different markets including Europe, United States and in Africa and even above all continued to excel the difference in the operating environments. Franchising is preferred as an international growth strategy for majority of the hospitality companies because of the relationship that exist between the mother company and the franchise which seem to give direction on the operation and success strategies for new franchises (Cui & Liu 2001). Optimizing search engines While different market destinations have proved to be very futile and very unproductive for some of the companies operating in the hospitality industry because of their geographical locations and the target markets, use of internet and the numerous search engines it offers for the customer, is proving to be a very important strategy for the entrepreneurs to grow their business and reach as wider markets as possible. Search Engine Optimization (SEO), is one simple way hoteliers and all other businesses operating in the hospitality industry like travel firms can use to win more customers. While the search engine can be well used both in the local markets and the foreign markets, more often than not, it is overlooked by companies in growing their businesses in the international markets (Whitla et al 2007). This is even after realizing that search engines can be used to determine how the business is faring in the international arena. Since the SEO does not vary greatly from one country to another, gaining and accessing information about the local markets could help significantly in understanding different international target markets and the strategies that could be used to reach potential global customers. However, the only difference in the search engines among different countries is the key word. For example, while a Californian searching for an upmarket restaurant is likely to search for luxury “vacation accommodation Miami”, a customer from Australia may decide to search for the same kind of hotel but with the different key word which may look like as “luxury holiday accommodation Miami.” What this means therefore is that understanding the right words to use when targeting a given market, becomes very critical for growth since it will allow to cater for language differences and consequently easy access to the services by different customers. This implies therefore that using accurately interpreted key search words will help in a great deal to access different global markets (Combs 2011). While Google has continued to dominate in the market, in certain countries and in particular China and Russia, local search engines are still preferred and which are known to operate slightly different. What this means is that extensive research is especially important when trying to grow different international customer grounds for businesses in the hospitality industry. Partnering with other channels and companies According to Jeff Abort, for CRN (2012), in the world of business today, everything is about growth and in terms of sales, geographical expansion and in new products. However, the most asked question virtually in almost every industry is how this growth can be achieved amid a changing business environment where competition and economic downturn have continued to dominate now and again. One way many businesses are thinking of and can be very useful in the hospitality industry, is the use of partnerships to grow businesses internationally. Irrespective of the company size, partnerships can play a very significant role in boosting the revenues of the business (Whitla et al 2007). During difficult economic times in the local markets for hospitality products, engaging in channel partnerships be very positive when looked at from the point of cost and risk and this is especially important when the business is considering penetrating into new geographical markets which can prove to be extremely very expensive to undertake by just one business. Partnering in this case could significantly help manage costs and risks fronts (Olsen & Roper 1998). Further, when it comes into growing businesses internationally, partnerships could also be used to ensure that those brands that are difficult to sell to some market segments. In this case partnership could be used as a bag of both familiarities and uncertainties with the aim of introducing new brand to a new market (Zhang et al 2001). For example in the hospitality industry, as a strategy to grow businesses into different markets like in the Middle East, Africa, Asia Pacific and America, three major world hotels operating in the hospitality industries and which include Intercontinental Hotel Group, Hilton Worldwide and Accor Hotels have entered into agreement to see partnering as a strategy to grow their markets into the specific regions named above and with specific attention to where some brands are already established. This aimed at helping the respective hoteliers to create demand for their services and in particular the residential rooms so as to boost their revenue growth avenues from still growing markets. Conclusion This essay was aimed at carrying out a detailed evaluation of the various growth strategies that are being used by international hospitality industry. This is after it had emerged that competition in the local markets has stiffened making it very difficult to grow revenues and market shares. Increase in inbound customers, is one factor that has accelerated the need to expand into foreign markets so as to be able to tap emerging markets. The identified and commonly used strategies for growth in the hospitality industry include extending reach, use of online trading agencies, franchising, optimizing search engines and partnering with other channels and companies in the industry. In general, it can be concluded that the strategy used by any given company is depended on the company goals and what it intends to achieve in terms of revenues and market share and the capacity to do so. References Claver, C, E., Azorín, J. & Pereira, J. (2007). The impact of strategic behaviours on hotel performance. International Journal of Contemporary Hospitality Management, 19(1), p. 6-20. Combs, J. (2011). Using Cases to Discover Theory: The Case of the Poland-Based Restaurant Operator. Cornell Hospitality Quarterly, 49(4), p. 450-53. Cui, G. & Liu, Q. (2001). Emerging Market Segments in a Transitional Economy: A Study of Urban Consumers in China. Journal of International Marketing, 9(1), p. 84-106. Harrison, J. & Enz, C. (2005). Hospitality Strategic Management: Concepts and Cases. Hoboken: Wiley. Kim, W. C. & Mauborgne, R. 2004. Blue ocean strategy. Harvard Business Review, 82(10), p. 76-84. Lafferty, G. & Fossen, A. (2001). Integrating the tourism industry: problems and strategies. Tourism Management, 22(1), p. 11-19. Olsen, M. D. & Roper, A. (1998). Research in strategic management in the hospitality industry. International Journal of Hospitality Management, 17(2), p. 111-24. Olsen, M. D. (2004). Literature in strategic management in the hospitality industry. International Journal of Hospitality Management, 23(5), p. 411-24. Whitla, P., Walters, G. & Davies, H. ( 2007). Global strategies in the international hotel industry. International Journal of Hospitality Management, 26(4), p. 777-92. Wong, K. K. & Kwan, C. (2001). An analysis of the competitive strategies of hotels and travel agents in Hong Kong and Singapore. International Journal of Contemporary Hospitality Management, 13(6), p. 293-303. Zhang, H., Qin, Y. & Li, X. (2001). The Bases and implications of the Economy Hotels Developing in China. Journal of Guilin Institute of Tourism, 11(1), p. 34-38. Read More