Geography Reference
In-Depth Information
experience (ambience, lifestyle) based on kinds and qualities of accommodation, on-site
recreation and shopping facilities, and catering, the offering of off-premises services
(airport shuttles, local excursions, booking facilities) and a trademark guarantee which
signals to the customer a predictable quality of service.
The competitive strategies which follow from these features are based on an
understanding of the customer (i.e. needs and preferences), where the brand name is able
to command a premium price in the marketplace. Britton (1991:460) explains the
commercial advantage of international chains in terms of
• the firms' location in the customers' home country
• experience in understanding demand through operating hotels in the domestic markets
• managerial expertise and staff training to ensure the elements of the tourists' experience
related to the brand name are met through appropriate training and operating manuals.
The key to successful competition is for the hotel company to internalise its firm-specific
intellectual property (i.e. training methods and manuals), while ensuring profit levels for
shareholders. Unfortunately this is extremely difficult when staff leave and move to
competitors, since the intellectual property is essentially 'know-how'. Yet this is often the
basis for horizontal integration into overseas markets, with management contracts a
preferred mechanism for operation rather than outright ownership to control design,
operation, pricing and staffing, though the same companies (e.g. Holiday Inns) prefer to
use franchising as a mechanism to control managerial, organisational and professional
input. One notable dimension here is the effect of international hotel and tourism
development on less developed countries. For example, in Kenya, 60 per cent of hotel
beds were accounted for through equity participation schemes with such hotel groups
(Rosemary 1987; Sinclair 1991). The implications are that where international
Table 3.6:
Operating performance of Hilton
International by region in 2001
Turnover (£
million)
Profit (£
million)
UK
598.2
126.1
Europe, Middle East and Africa
786.9
72.8
Asia/Australasia
496.6
14.0
Living Well (health and fitness clubs in the UK)
53.8
4.1
New Scandic operation (154 hotels with 132 in
Scandinavia)
257.2
33.9
2,454.5
255.3
Source: modified from Hilton Group plc (2002)
involvement occurs, there is a concomitant loss of central control and leakage of foreign
earnings, and where there is concentrated development of enclaves remote from local
population this inevitably leads to little benefit for the host country. Despite these
problems, attitudes towards such development among a survey of 22 developing
countries (WTO 1985) saw the benefits outweighing the cash. This may lead to
dependency relationships, as Britton (1980a) indicated in his innovative study of the
distribution of ownership and commercial control by metropolitan tourist markets of less
