Critical Analysis of Globalization in the Hotel Industry

Abstract：From both academic and practical perspective， substantial evidence has proven that global expansion is beneficial to the hospitality industry in many aspects. However， failures also can be seen along the way of globalisation in the hospitality industry. This essay will discuss the advantages and disadvantages of globalisation in the field of hotel industry in a critical manner by taking Accor hotel group as a case study.

Key words：Globalisation， economics of scale， risk allocation， Hospitality industry， Accor hotel group

In recent years， we have witnessed the surge of well-known hotels stretching out from North America and Europe to the rest of the world by opening up new subsidiaries and spreading their brand values over the world. In particular， one of the major hotel giants Accor has been seeking every opportunity to branch out their operations globally （Chen， He Gu， 2013）. From both academic and practical perspectives， it is undeniable that the pace of globalisation is continuously increasing in the hospitality industry， has brought hotel chains numerous advantages and benefits. However， failures caused by global expansion also can be seen along the way they scale-up to achieve a ‘global appearance’. This essay will argue the pros and cons of globalization in the field of the hotel industry by taking Accor hotel group as a case study.

By and large， globalisation can be beneficial to hotel groups and their guests. Firstly， globalization can help hotel industry achieve allocation of risks. For one thing， geographical diversification of hotels can be an essential strategy of risk management. For another， brand portfolio also contributes to risk sharing. Many well-known hotel groups have developed their affiliated brands into luxury， mid-scale and budget， and which has been proved as an effective strategy to reduce risks from global economic downturn （Newell Seabrook， 2006）. Secondly， globalised hotel chains are expected to profit from economies of scale. It can noticeably decrease various costs such as procurement cost， operational costs， and promotion cost when reaching a critical mass. Thirdly， globalization facilitates the development of hotel groups （Cline， n. d.）. Until now， hotel groups are still aggressively expanding to obtain larger market share by means of various contracts， such as franchising， management contract and licensing.

From a critical angle， globalisation of hotel chains is not perfect. First of all， it is not necessarily that hotels can well adapt to all different kinds of host cultures in the course of globalization.

In the case of Accor， it has experienced ups and downs during dozens years of globalization process. Firstly， by means of persistent effort in the course of globalization， Accor has obtained great market share and revenue. By the year 2013， Accor has owned 3，516 hotels with 450，487 rooms over 92 countries around the world， with revenue of approximately 7，263.5 million dollars a year （during the financial year of 2012） （Accor SA， 2013）. Such huge market share and revenue made Accor become one of the leading hotel operators in the world. Secondly， Accor has successfully achieved risk sharing through globalisation and brand portfolio. Accor’s managing director has proudly announced that the company operates hotels across five continents， plus its brands cover the whole range of hotel categories from budget to luxury， which can help Accor to accomplish the allocation of risk （Murray， 2008）. On the other hand， Accor has taken steps to balance globalization and localization in order to weaken or avoid possible negative impacts caused by globalization. Accor has taken a leap trying to maintain its brand identity when building subsidiaries in foreign countries. The luxury brand Sofitel， for example， has successfully established and well-maintained its unique ‘Frenchness’ worldwide （Sofitel Hotels， 2007）. Moreover， Accor has developed sophisticated strategies in attracting customers from different market segments respectively. Besides， as a mature globalised hotel group， Accor pays lots of attentions on initiating and participating local public welfare activities in counteracting its environmental and economic impacts to the host communities. However， Accor’s globalization process is not free of flaws since the company failed to fully integrate its corporate culture with some region’s host national culture （Liu Fu， 2005）.

All in all， globalisation undoubtedly brings benefits to hotel groups， and appropriate global expansion can be a favourable strategy for hotel groups’ further development. However， every coin has two sides. Standardised policies or models of operation， which are exactly copied from the parent company might cause management failure in some host regions. The approach of globalisation combined with sensitivity toward local cultures can help hotels achieve the notion of ‘think globally and act locally’.

List of references：

[1]‘ACCOR SWOT Analysis’， Journal of Market Line， July 2013， pp. 1-8.

[2]Chen， L.Y.， He， X. Gu， Y.K. 2013， ‘Accor and Hilton Case Studies’， Journal of Tourism Tribune， vol. 28， issue 10， pp. 52-63.

[3]Cline， R. （n.d）， Hospitality Adjusts to Globalization， viewed 19 September， 2009，

[4]Fu， S. Liu， H. 2005， ‘Corporate Culture vs. National Culture’， Tourism and Hospitality Management Master Thesis， Goteborg University.

[5]Holjevac， I. 2003， ‘A vision of tourism and the hotel industry in the 21stcentury’， Hospitality Management， vol.22， pp.129-134.

[6]Newell， G. Seabrook， R. 2006， ‘Factors influencing hotel investment decisionmaking’， Journal of Property Investment Finance， vol.24， no.4， pp.279-294.

（作者單位：浙江旅游職業學院）