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 (#"_Toc279320972">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 practitioner's equivalent customer relationship management are the promising, but disputed replies to these challenges (Medlik, S. 2001).
Dealing with world-wide globalization trends is new to all of us. Everything is in a state of flux: demands, labour, know-how and capital are all flowing to where the biggest hopes for future lie, with the resultant standardization of production technologies, business strategies, marketing plans and management styles. Although tourism production is tied to local conditions, the tourism industry cannot avoid being affected by globalization. Tourist products, and even whole destinations, are becoming interchangeable; continental and inter-continental transport networks determine the direction and speed of development; distribution channels and reservation systems are increasingly a decisive factor in success (Muller, H. 2001).
Worldwide excess capacity in all departments of tourism-carriers, accommodation, adventure and leisure parks, sport facilities, cultural events, etc. -is a key driving force in globalization. Drops in tourism figures in highly differentiated national economies (Austria, Switzerland, Germany, etc.) are largely due to the fact that almost all national economies worldwide have discovered tourism as a development-promoting factor and been drawn into the globalization maelstrom through the competitive situation (A. Lockwood, et.al, 2001).
Formulating and implementing a global marketing strategy is a complicated task. Expanding overseas will bring trouble sorting out the many complex issues involved, even for those who have great experience in local markets. Good market data on customers and competitors across the globe make the task easier. But perceptive analysis of such data requires some managerial rethinking about customers and competitors.
A strong argument for companies to standardize marketing was made by Ted Levitt, who in 1983 argued that markets were globalizing because of two factors: global communication and technology diffusion. With satellite TV broadcasts beaming the same programs all over the world and with instantaneous global communications, the world is moving inexorably toward greater homogeneity of markets. At the same time, the increasing speed of technological innovation and diffusion make today’s production soon outdated by the onslaught from global competitors able to incorporate the latest product inventions. The joint effect of these two forces makes product standardization not only possible but the preferred alternative. (Johansson, J.K., 1997)
Because of the soft and impressionistic data that usually underlie a proposal for global marketing, the global marketers need to develop and present a more qualitative argument in favour of global approach. The focus should be the degree to which a convergence of preferences is under way (W.J. Keggan, 2002). There are at least three important driving points in an analysis of the global convergence of preferences:
1. Recognize that customer preferences are dynamic and changing.
2. A major driver of changing preferences is new products on the market.
3. The new standard-setting products are first introduced and tested in leading markets.
In addition to the analysis of common customer needs there is also need to analyze competition. The analysis of global competitors adds a level of complexity to the analysis of domestic-only competitors. The global competitor usually has available a wider repertoire of competitive actions, which makes for a stronger competitor and makes prediction more difficult. Global competitors are always a threat to enter any local market where they at the moment might not have a presence (Johansson, J.K., 1997).
Globalizing marketing involves global coordination of marketing activities. It involves taking a global management perspective on the marketing operation in any country. Most typically it involves a certain degree of marketing standardization. There are several advantages and disadvantages of marketing standardization.
Table 3. Advantages and Disadvantages of Marketing Standardization. W.J. Keggan (2002)
Advantages
Disadvantages
Cost reduction. Cost reductions gained by scale economies constitute the primary benefits from standardization. Because of the longer production series there are considerable savings to be gained in manufacturing as well as purchasing.
Off-target. Standardized products, services and promotional mix are likely to miss the exact target in terms of customers’ preferences in any one country, because customers in different countries have widely dissimilar tastes and needs.
Enhanced customer preference. Positive experience with product in one country naturally encourages a consumer to buy the same brand elsewhere.
Lack of uniqueness. Of customization or exclusivity is one of the overriding purchase considerations, a standardised offering is in a weak position.
Improved quality. Since additional recourses can be focused on the product development effort and design, the standardized product or service is likely to be more thoroughly tested.
Sensitive to protectionism. Where country makers are protected be trade barriers, local manufacturing may be necessary and the scale benefits from standardization cannot be reaped.
Global customers. There are an increasing number of global customers who demand uniform quality and services wherever it happen to be and buy.
Strong local competitors. Globalization can also fail simply because local competitors are capable and manage to mount a strong defence.
Global segments. Standardization fits with the emergence of global segments.
Global promotion involves a variety of activities, ranging from in-store point-of-purchase displays and Sunday newspaper coupons to satellite TV advertising to sponsorship of symphony orchestras and athletic events. The global sales promotion, public relation, and publicity have also become powerful promotional tools because of developments in global communications and the opening up of new markets. Then there is participation in international trade fairs, direct marketing, and personal selling, the last typically more localized, but still important (W.J. Keggan, 2002).
Public relations professionals with international responsibility must go beyond media relations and serve as more than a company mouthpiece they are called on to simultaneously build consensus and understanding, create trust and harmony, articulate and influence public opinion, anticipate conflicts and resolve disputes. Public relations practices in specific countries can be affected by cultural traditions, social and political contexts, and economic environment. In developing countries, the best way to communicate might be through gongman, the town crier, the market square, or the chief’s courts. Even in industrialized countries, there are some important differences between PR practices. In the United States, much of the news in a small, local newspaper is placed by means of the hometown news release. In Canada, on the other hand, large metropolitan population centres have combined with Canadian economic and climatic conditions to thwart the emergence of a local press (Johansson, J.K., 1997).
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