Globalization and Hospitality Industry

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3.5 Global pricing

Pricing globally is much trickier that pricing in the home market. The level of price is often a minor headache compared with problems of currency fluctuations and devaluations, price escalation through tariffs, difficult-to-access credit risks, transfer prices, and price controls - all common issues in global pricing. Many of the problems in global pricing concern host country institutional limitations that constrain strategy. The problem is that of coordinating pricing across countries, to satisfy multinational customers, without imposing a straitjacket on local subsidiaries and illegally fixing prices for independent distributors.

The competitive analysis might be as simple as finding out what global and domestic competitors in particular country maker charge for their products and services. These prices tend to set the “reservation” prices in the local market, that is, those limits beyond which firm’s product will not be considered and people will avoid buying. The analysis can go further and attempt to isolate the differential advantages that the firm’s product might have over these existing offerings, so-called “perceived value" pricing (Johansson, J.K., 1997).

When a company operates in several nations, the same product might appear on the market in different countries at widely different prices. A global customer does not usually like to pay different prices for the same product in different parts of the world.

3.6 Global ethics

There is a question about the extent to which the whole of ethics of marketing thinking and practice is accepted. In many newly opened markets, customers are not used to the way of Western marketing, and many can be expected to voice opposition to the unabashed trumpeting of a firm’s product. It is not just the hard-hitting advertisements that cause problems; people might find the “everything has a price" mentally abhorrent. Certain promotional activities are likely to become regulated as the free-to-all euphoria in the new countries recedes. It will be important for marketers to correctly read the mood of the populace and to not engage in practices that will stir up negative sentiments. Ethical marketing is likely to be enforces much in some of these countries than it is in the United States (W.J. Keggan, 2002).

The marketer in China is likely to find it difficult to protect a successful brand from imitators, at the same time as will challenge the foreign influence of a global brand.

4. Strategies and tends toward Globalization

Global hotel markets are expected to continue to feel pressure from contracting economies and reduced leisure and business travel across much of the world in 2009. However, despite declines across most major regions of the world in 2008, operating performance in the global hotel industry remained profitable as hoteliers focused on controlling costs and preserving the bottom line (Ernst & Young LLP, 2009, New York).

The challenge, however, is larger than efficiency alone. It is also about making the various components of the system work together and towards a shared vision. As an initial step, one could envisage choosing just one area with which to begin and establishing modalities for deep and permanent links between institutions that are dealing with clearly related issues (Najam, A., Runnalls, D., Halle, M. (2007).

Besides all marketing challenges stated before, there are numbers of others, including operating issues (labour shortages, cost containment, increased competition), technological (interactive reservation systems, guest-room innovations, data mining, yield management) and economic issues (dependence upon the nation’s economy).

All these issues are challenging companies around the globe in a different degree; therefore they are also managed in a different ways. A number of international hotel companies have sought the economies of scale attendant to developing single brands and products, and providing them in a uniform fashion to as many markets around the globe as possible.

Hospitality companies that seek capital from the public marketplace (a trend which is clearly going to continue and expand) trying to function as global enterprises. Hotel companies expanding globally confront varying traditions, structures and attitudes to property investment and valuation in different countries.

To compete, they must pay closer attention to the trends of globalization. The industry must reflect the requirements of the global village in many aspects of its operations, including food, services, amenities, staffing policies and training.


“There is little doubt that most markets in the current economic climate are challenging at best and growth will be hard to come by most operators, “said Michael Fishbin, National Director of Hospitality Services. “As a result, this year we will see hotel operators continue to focus more of their energies on cost reduction, improving operating efficiencies in their hotels, reaching out to guests via enhanced Internet communication and strengthening their brands through an emphasis on green principles in activities related to both development and operations," he added.

The message today is that it is incumbent on all hotel organizations that have aspirations to develop brand names across national boundaries to understand what globalization means. A truly global enterprise will have the ability to react quickly to market opportunities, no matter where they present themselves by applying business concepts that have been proven in a context of a global undertaking.

For the larger well-established international hotel companies that have circled the world in the quest for new opportunity, globalization has been a strategic concept for a number of years. International hotel companies have had to confront virtually all of the issues facing global enterprises - and in many cases more. Unlike a manufacturer with an overseas plant, for example, a hotel company must export its entire operating business to function in diverse cultural and geographic settings. Hotel companies must have the capability of establishing an entire business concept in dramatically different local environments.

In a world moving more and more towards globalization, hotel organizations will need to communicate more quickly, operate more productively, offer their employees greater opportunity and deliver their customers enhanced benefits Those companies that address these issues today will be better prepared for the global market space of tomorrow.


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  19. Globalization and Recent Financial Crises in Developing Countries" pdf, available at

  20. Positive and Negative Impacts on the Hospitality Industry” pdf, available at: (

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3.5 Global pricing

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