Slide 1: THE IMPACTS OF GLOBALISTION IN HOTEL INDUSTRY AND ITS NEGATIVE EFFECTS Slide 2: In the 21st century , with the increasing levels of globalization in hotel industry, hotel companies will need to learn different management approaches to survive and develop in environmental circumstances with high levels of uncertainty as well as understand the implication of future impacts, both positive and negative, of the changing environment in which they operate. As international trade and business expand, there is no question that international linkage will become more important for the hotel industry. This project focuses on globalization in the hotel industry and explains how the increasing levels of globalization, in this particular industry may affect the internal operating environment (e.g. organizational culture, structure, management styles etc.) of hotel companies . ABSTRACT Slide 4: INTRODUCTION Globalization has become part of everyday vocabulary. Every day we hear the term globalization on the news, read it in the papers, and overhear people talking about it . What is globalization? We have tried to focus on the effects of globalization in the hotel industry and find how the increasing levels of globalization has effected the industry. Globalization refers to the shift toward a more integrated and interdependent world economy Slide 5: INCREASING LEVELS OF GLOBALISATION IN HOTEL INDUSTRY As international trade and business expanding, so there is no question that international linkage will become more important for the hotel industry. In the early stages, most hotels have received foreign guests at one time or another. Then, as the industry evolved, and with the development of technology and transportation systems, the industry's structure has become increasingly more complex with respect to scope, ownership, management and affiliation. There are many models including: Slide 7: However, in terms of the number of rooms, chain hotels are the dominant sector. There were two main reasons why hotel chains began looking for opportunities to enter into the global marketplace. They are comparative advantages, especially in developing countries, and the overcapacity or saturation in their home markets. Unfortunately, hotel investment outside one’s home country incurs high risks with a wide range of environmental influences affecting organisational strategies and performance. Those environmental factors include Slide 10: IMPACTS ON ORGANIZATIONAL CULTURES There is an often-told story of a person, new to a company, asking an experienced worker what an employee should do when a customer calls. The old-timer responds: In most organizations, the “Company Way” is derived from the CORPORATION’S CULTURE . Corporate culture is the collection of beliefs, expectations, and values learned and shared by a corporation’s members and transmitted from one generation of employees to another , A strong culture can create the basis for a superior competitive position. When a hotel company makes a decision to invest outside its home country, it has to adjust more or less of its company’s culture to adapt to the cultural diversity in the new work environment. This new work environment thus becomes enriched by the multiple cultures. “There are three ways to do any job—the right way , the wrong way , and the company way . Around here, we always do things the COMPANY WAY Slide 11: However such cultural diversity can also bring some negative effects, which can generally be attributed to individuals, and how they relate to difficulties arising from departmental concentration of minority ethnic groups , especially from language and cultural differences . But this kind of adjustment is not an easy task to fulfilL. Even for a domestic hotel, when businesspeople are all from the same culture and speak the same language, the actual construction of the facility can be difficult. The many interdependent players sometimes have conflicting objectives and a number of timetables to coordinate. An international hotel is even more complex because the developers and employees come from different cultures with different business. Slide 12: Good communication between the regional office and the individual hotel’s sales department helps produce more business for the individual property. T he policy of Equality Of Opportunity is also an essential part of its organization’s culture. This policy ensures that there shall be no unfair discrimination, in respect of gender, marital status, sexual orientation, colour, religion, race, nationality, ethnic origins, disability or age, and that equal opportunity shall be given to all employees. Slide 14: IMPACTS ON MANAGEMENT STYLE An organization’s culture is translated into practice largely as a result of actions taken by managers. Thus, the quality and style of managerial leadership is crucial in shaping perceptions that will support cultural values and hence, the organization’s strategy . Managers have been classified by their decision-making style: Authoritarian Democratic ( the leader actively involves subordinates in the decision-making process)Sharing problems (soliciting input and sharing authority) and laissez-faire. Slide 15: Sometimes, a hotel company operating around the whole world may focus on democratic management style rather than an authoritarian style since it has to relate to different employees from different cultures or social backgrounds. For example, Six-Continents PLC , the second largest hotel group by the number of rooms, has a “Disclosure Procedure” to ensure such a democratic management environment. If in doubt, in this organization, employees are encouraged to discuss the matter with the person to whom they report or to the company’s secretary. The other issues can be as such 1)They also all have a responsibility to draw attention to issues Slide 16: 1)They also all have a responsibility to draw attention to issues that come to their attentions or that comes to their knowledge. 2)They are also responsible for helping to maintain a safe and healthy workplace for their employees. Thus employees can enjoy the work in a pleasant and comfortable environment. Moreover, despite the increasing levels of globalization, the management style in the hotel industry tends to be localization, which can meet the specific needs of local employees. While labour supply is not a problem in most developing countries, skilled personnel are sometimes difficult to find, due to a shortage of training facilities and trainers. Slide 17: However, local labors usually have quite different needs from those of imported laborers or immigrants. Facing such an issue, a multinational hotel company has to set up some new management approaches or adjust its management style. For example, the reward system will be different in China and in Australia. IN AUSTRALIA Australian employees have been required to reduce their working hours each week, although most of them have been promised overtime payments. IN CHINA : Two of the greatest ways to show appreciation to a Chinese employees is through 1)Giving higher salaries 2)Promotions instead of giving them vacations or leave to spend with their families. At the same time, training and education has become more important for transnational’s hotel companies. Slide 18: Such training is provided from within their own organizations . With good communication sense , multilingual staff will become increasingly satisfied. Communications and cultural sensitivity may become an escalating problem, especially where there is a large no. of immigrant labour or a large numbers of foreign guests. Solutions to the labour problems are as varied as the causes, for the various and different locations around the world. Ultimately, it will be up to the hotels to make themselves more attractive employers and to improve in the recruitment, retention, training and rewarding of staff. Slide 20: IMPACTS ON ORGANISATIONAL STRUCTURE What is an organizational structure ? Slide 21: Every organization depends on its environment to some degree. The evidence demonstrates that a dynamic environment has more influence on a structure than does a static environment. In the volatile world of Transnational corporations (TNC) there is no such thing as a "universal" global manager . Rather, there are three groups of specialists: a)Business managers. b)Country managers . c)Functional managers. There are also top executives at corporate headquarters who manage the complex interactions between these three specialists. Slide 22: specialists and can also identify and develop the talented executives a successful transnational requires. This kind of organizational structure characterizes a T ransnational rather than an old-line multinational, international or global company . A multidivisional structure is built up of separate divisions on the basis of products, services or geographical areas. for example, Six Continents PLC is the leading hotel group in the world with over 3,300 hotels across nearly 100 countries and territories. Its organizational structure is described as follows. In the board, Chairman is backed by a finance executive and a CEO. Slide 23: The business of Six Continents PLC is divided into three main regions: America Asia and pacific Europe Middle East Africa. In each area, there is a head office, which is supported by two management teams: 1) a management committee and 2) senior managers who manage different brands of the group in specific areas. This kind of organizational structure has its disadvantages. The two main disadvantages are that it is costly and the divisions grow too large. The Six Continents PLC, established itself in a similar structure with head offices. Slide 24: DISSCUSSING THE IMPACTS OF GLOBALISATION ON HOTEL INDUSTRY Globalization is a very debatable topic as it has goods and the bads to the people. It depends upon the person whether the Globalization is good or bad or it has : Positive Effects Negative effects Slide 25: POSITIVE EFFECTS Slide 26: 1. Exposure to different cultures : Due to Globalization the managers of the hospitality industry are able to learn about different cultures – as they get to mingle with people from various walks of life – and thus, increase their knowledge. 2. Larger Market : Due to Globalization the customer base has increased greatly. People travel not only for holidays, but business, health and various other purposes too. Thus, this has increased the market for the hospitality industry, which gets its major income is from international visitors. 3. Boosts the economy : Visitors come in and spend money – multiplier effect – and foreign exchange increases. Thus it is of great value to the economy as Globalization helps to pump in money into the country. Slide 27: 4. Technology Advancement : Since one wants to attract as many tourists as possible, hospitality organizations constantly need to upgrade and improve their products and services Example: Singapore Flyer, using faster and newer technology in hotels to so that the customer is satisfied. 5. Promotes Creativity : Organizations are constantly thinking of new and creative ideas to attract more tourists 6. More Job Opportunities : Due to Globalization, more visitors come into our country and thus more people are needed to serve and cater to their needs. So, with the advent of globalization, there are a lot of more jobs available for people within the hospitality industry Slide 28: 7. Boosts the Travel Industry : Due to globalization more people move around, to facilitate this, the travel industry needs to grow as well. People who come into our country – by air, or ship, or land – use the transport services offered as well. 8. Variety of International Services/Cuisines : Since there are a lot of different visitors with various cultures, customs, cuisines, and languages, the hospitality industry includes recipes and various other services to cater to them. These services are available to the locals too, which makes it even better. Slide 29: NEGATIVE EEFECTS Slide 30: 1. Language Barriers : Due to Globalization in the hospitality Industry we can employ people from different countries – as it is usually cheaper – they may sometimes have problems in communicating with the customers. Many customers get quite irritate as a result of this. 2. Cultural Barriers : As there are people from various cultures, one needs to be careful not to offend them. For Example, a Muslim will not eat pork – one needs to make sure not serve food which contains pork.(unless specifically asked). Whats acceptable by one culture may be frowned upon by another. Slide 31: 3. Events/Disasters in other Countries : A disaster or event taking place in one country may affect our country (the home country) also. For example, the financial crisis makes less people want to spend money or travel; due to increase in terrorism some visitors get are not ready to travel to certain countries. 4. Seasonal Employment : During peak periods, a lot of jobs are available but as soon as the tourists go back the jobs disappear as well. For example: Goa – India; the locals in Goa get their income only during the peak season, (Dec- Feb and April – July) after which they have no jobs and no income. 5. Increasing use of technology to communicate : Due to international barriers, there has been a steady increase in the use of technology for communication (through the internet, voice recordings). This removes the human touch. Slide 32: 6. Developing Countries : Countries that are unable to keep up with the advancement in technology tend to lose out. Example: Africa does not have the infrastructure or technology as yet to welcome a large amount of foreign visitors, though it does have a lot of natural attractions. To increase the flow, it would have to improve conditions; otherwise tourists have a vast sea of areas to choose from. 7. Increase in Crime Rate : With the increase in tourists, crimes increase too. Example: pick-pocketing, hustling, rape, smuggling. 8. Bad Habits : People from other countries sometimes influence the local youth in a bad way. Increase in drugs and promiscuous behaviour, etc. Slide 33: 9.Effects on SMALL HOTELS... There are many hotels which are not having more lavish and has high luxurious facility. Big hotel groups coming to India creates a huge mess for the small hotels owners. There is always a problem for employees as big hotels owners will take away the employees giving higher salary and opportunities. Now-a-days small hotels are being extinct and there is a huge increase in hotels coming from outside of India. Rectifying Negative Points:: Rectifying Negative Points: Language barrier : As people are employed from all over the world, they should be trained efficiently, such that we can solve language problem. Cultural barrier : Any hotel starting its business in any new country or location they should first have deep research about that place like, religion, type of cuisine ,and standard of living. Events/disaster in other country : if there is any events or disaster taken place in any country, neighboring countries should try to help in all events. For example : Recently, a huge destruction took place in Japan due to earthquake and tsunami India helped them by sending food packages. Rectifying Negative Points: : Rectifying Negative Points: 5) increasing use of technology/communication : As world is changing fast every type of industry should be modernize/or should be updated other wise there can be threat to face heavy loss and be out of market. Developing countries : These countries attracts foreign business in them .developed countries help these countries in getting modern technology and making them successful. Increase in bad habits : it is in individual to have bad habits or not. Effects on small hotels : If small hotels try to merge with big or brand hotel group they can increase there business and compete in market. Qestionaire: Qestionaire Do you think globalization is having a positive or negative effect on your hotel? Regardless of their social back ground do you believe all people in your hotel have same opportunity to fulfill their potential? Does globalization has encouraged hotel company to invest and explore opportunity world wide? Hotel that do not modernize or do have top notch would likely to fail, do you think so? Do you feel optimistic or discouraged ,to see globalization spreading in hotel industry? RESULTS BASED ON QESTIONAIRE: RESULTS BASED ON QESTIONAIRE Slide 39: CONCLUSION In the 21st century, with the increasing levels of globalisation in hotel industry, hotel companies will need to learn different management approaches to survive and develop in environmental circumstances with high levels of uncertainty as well as understand the implication of future impacts, both positive and negative, of the changing environment in which they operate. The only certainty about today’s hotel industry is that only those who plan for uncertainty and change, and who are able and willing to respond to global events with speed and decisiveness, will reap the full rewards of success. Successful hoteliers will be those who are able to anticipate, determine and solve problems of a varied nature in the context of their organization’s goals and in the environment of an increasingly globalized and complex society.