Elements in global hospitality expansion

This study reflects an investigation into four elements that could affect global expansion strategies within the hotel industry. In both emerging and developed economies, the increased growth within the services sector has become more apparent. There is considerable knowledge and literature available on the process of internationalisation, globalisation and expansion within the services sector and as this information is important to understand the internationalisation process itself, the decision to expand (cross border) presents a number of opportunities and challenges to the hotel industry. Hotels are comprised of a number of divisions and departments, which collectively offer unique services and facilities to various markets. Within this context, careful consideration is required with respect to an organisation‟s overall strategic objectives, the internal structure and how government and cultural influences and differences affect global expansion. Organisational matters such as strategic objectives as well as operational functions such as financial, marketing and sales, human resources and organisational design must also be considered as hotels require synergy within each of these various components in order to function optimally. When international or globalisation opportunities present themselves or are proactively sought, organisations need to ensure that various factors are clearly understood, analysed and identified. These include the most appropriate strategy required, the organisations own internal capacity levels, governmental influences and cultural dynamics. An in-depth literature review regarding the internationalisation process was conducted where-after a review was compiled and interviews set up with directors of hotel groups who are responsible for global expansion within their respective organisations. The sample included three local South African and two international hotel groups who either were contemplating or who had already expanded internationally. It is evident that hotel companies have a preference to non-equity based expansion either through management contracts or joint ventures. In addition, expansion into emerging markets required a different approach to that of developed markets and a unique understanding of the government and cultural influences of the host country was required