current aspects and developments in hotel industry.

1. [ 187 ]
International Journal of
Contemporary Hospitality
Management
9/5/6 [1997] 187–192
© MCB University Press
[ISSN 0959-6119]
Internationalization in hotels: current aspects and
developments
David Litteljohn
Professor, Department of Hospitality, Tourism and Leisure Management,
Glasgow Caledonian University, Glasgow, UK
Examines the contexts and
some of the issues involved in
hospitality internationaliza-
tion. Sets the scene for some
of the themes that are devel-
oped in later articles and
reflects on some current
literature in the area.
The past is a foreign country: they do
things differently there (L.P. Hartley, The
Go-Between).
This introductory commentary examines the
contexts and some of the issues involved in
hospitality internationalization. It acts to
introduce the articles in this edition – though
neither introduction nor articles can, in any
way, fully cover such a complex area. In
establishing a broad overview of important
issues, statistics are used from a variety of
sources. Reliability and comparability of
some are less than ideal. Given this weak-
ness, it is hoped they allow a broad overview
to be established.
The extent of internationalization
Changes in the scale of international travel
over the past 45 years are of such a magnitude
it would be surprising if the hotel industry
had not itself changed. Figure 1 and Table I
show levels of international travel. While
undoubtedly there has been some substitu-
tion of national by international travel (par-
ticularly in the search for holiday locations),
annual growth rates are of such a high order
that volumes have grown by almost 21 times
over the period 1950 to 1995.
It is more difficult to plot a trajectory of the
growth of the international holdings of hotel
groups. Table II shows the international hotel
holdings of selected hotel groups (rather than
their home country hotels), so chosen
because holdings are available from 1978
(Dunning and McQueen, 1982). These repre-
sent some of the largest international opera-
tors and cannot be taken as typical.
The global hotel industry
Characteristics of the global industry, given
by the International Hotel Association (IHA),
are shown in Table III. With an average size of
27.3 rooms per hotel, the fragmented nature of
the industry is confirmed.
Closer inspection of the table reveals dif-
ferences in average size of hotel by region
(for example, 28 rooms in Europe; 56 in
North America) and in staffing profiles –
regional averages of 0.9 staff per room in
North America, 3.0 in South Asia and 0.5 in
the European Economic Area (EEA). These
reflect variables such as the type of hotels
and the extent of small owner operations in
different parts of the world. Using figures
produced by Slattery, Feehely and Savage
(1996), together with the 1995 IHA figures, it
is possible to estimate penetration rates
globally. Given a corporate total of 16,184
hotels and 2,159,000 rooms, the global corpo-
rate room penetration rate is 19 per cent.
Again, regions exhibit different patterns: for
example, a 35 per cent penetration rate in the
USA, and less than 10 per cent in Western
Europe.
The rise of corporately owned stock has
been well documented. Table IV confirms
that, even during a period of world reces-
sion, growth has been maintained. This
does not indicate that internationalization
and the companies that have driven it and
their plans have always been successful. It
was reported by Litteljohn and Roper (1991)
that the Accor group intended to develop 371
units in the UK by the year 2000. In mid-1996
they had 29 hotels in the UK, having long
abandoned their ambitious plans for such
expansion – though remaining one of the
fastest to grow international holdings. The
UK's Brent Walker and British Airports
Authority (BAA) hotels (where an airport
operator wanted to run hotels in synergy
with its transport role) provide other exam-
ples of failure at the beginning of the
decade.
It would be foolhardy to base notions of
international expansion to looking at inter-
national travel only. Around the globe, the
average split between domestic and foreign
business is not far away from 50/50, as shown
in Table V. Clearly, any hotel chain that oper-
ates internationally must take notice of local
trends.
Much internationalization has been based
on branded, often North American branded,
relatively up-market and business-travel-
oriented provision. Originally, many inter-
national hotel chains had strong vertical
links with airlines and tour operators – 20
per cent from a sample of 81 hotel chains in
1978 were associated with airlines (United

2. [ 188 ]
David Litteljohn
Internationalization in hotels:
current aspects and
developments
International Journal of
Contemporary Hospitality
Management
9/5/6 [1997] 187–192
Nation Centre on Transnationals, 1982) – but
changes of ownership in the 1980s and 1990s
have loosened these links. A further feature
of industry evolution noted extensively has
been the tendency for individual groups to
develop a range of brands where different
product/service specifications are intended
to meet different market segments (Alexan-
der and Lockwood, 1996; Litteljohn and
Roper, 1991).
It is instructive to note patterns of inter-
national firm activity. To date, much devel-
opment is limited to certain types of loca-
tion (international/national gateways) and
certain types of hotel (trophy) as the corpo-
rate groups compete for market share in
similar areas. Slattery et al. (1996) provide
their own locational analysis of their
2,159,000 quoted room stock. On their loca-
tional criteria, 15 per cent of corporate stock
is at major world locations (13 cities which
each possess more than 15,000 quoted hotel
rooms stock); 48 per cent at primary loca-
tions (1,000-14,999 rooms); 26 per cent at
secondary locations (200-999 rooms); and
11 per cent at tertiary locations (less than
200 rooms). Excluding the final category, 89
per cent of corporate stock is limited to
major, primary and secondary locations: a
total of 1,617 locations worldwide (Slattery et
al., 1996) – impressive, but hardly all-perva-
sive.
Future views on
internationalization in the hotel
industry
To gain a view of possible changes in the
industry, a wide range of sources was con-
sulted. Literature covered hospitality,
tourism, services management and general
strategic management literature which had
a bearing on the area. Many researchers feel
that frameworks developed for manufactur-
ing (for example, Prahalad and Doz, 1987) are
not immediately applicable to services man-
agement and that inherent characteristics of
services present unique problems and oppor-
tunities for the effective management of
multinational service corporations (Camp-
bell and Verbeke, 1994; Sarathy, 1994). A
growing literature provides classifications
of service operations relative to internation-
alization (for example, McLaughlin and
Fitzsimmons, 1996) and compares the experi-
ences of service operations (for example,
between financial, consulting, hotels and
data processing in Campbell and Verbeke,
1994, and retailing and hotels in Alexander
and Lockwood, 1996). While many hold that
Figure 1
Growth in international travel arrivals 1950-1995
600
500
400
300
200
100
0
25.8
165.8
284.2
459.2
566.4
1950 1970 1980 1990 1995
World international arrivals, millions
Source: World Tourism Organization,
Compendium of Statistics, 1992
Table I
International travel arrivals: 1990-1995
1990 1995R
Region '000* %** '000 %**
Europe 286,700 62 335,400 59
Americas 93,600 20 110,800 20
East Asia and Pacific 53,100 12 83,200 15
South Asia 3,200 1 4,300 1
Middle East 7,600 2 13,700 2
Africa 15,100 3 19,100 3
Total 459,200 100 566,400 100
Notes: *Numbers rounded ** percentages shown to nearest whole number
Source: British Tourist Authority/English Tourist Board (1997)
Table II
International holdings of groups outside their defined home country
International hotel holdings (units)
Group 1978 1989 1996/97 Growth over
(holding company) units units units period (%)
Holiday Inns (Bass) 114 177 426* 274*
Inter-Continental
(Seibu Saison) 74 95 108* 46*
Hilton International
(Ladbrokes) 72 102* 160* 122*
Sheraton (ITT) 72 99 178* 147*
Forte (Granada) 53 56 122* 130*
Accor 45 263 1,277* 2,738*
Ramada (New World) 33 100 80 142
Hyatt 26 63 76 192
Notes: “Home country” is taken as the 1978 headquarters domicile: thus international
holdings for the following are taken as hotels outside the USA: Holiday Inns (parent Bass,
UK); Inter-Continental (Seibu Saison, Japan); Hilton International (Ladbrokes, UK);
Ramada (New World, Hong Kong)
Sources: see Litteljohn and Ropers, 1991; 1996/97; *derived from Slattery et al., 1996;
others from company Websites, May 1997

3. [ 189 ]
David Litteljohn
Internationalization in hotels:
current aspects and
developments
International Journal of
Contemporary Hospitality
Management
9/5/6 [1997] 187–192
internationalization of services is at an
earlier stage than in product industries,
most authors ascribe similar organizational
models to the phenomenon: goals in service
organizations being seen to mirror those in
manufacturing organizations – to use core
competences (however defined) to ensure
that local needs are met within a framework
of some global corporate imperative, such as
a global vision. Transnationals can capture,
leverage and link resources globally, in order
to build competitive advantage (Bartlett and
Ghoshal, 1989). Hofstede (1994) points to the
importance of considering the cultures
within which people work – and indeed the
construct of work itself where terms like
management are culturally bound.
Ghauri (1992), examining structures of
multinationals based in smaller countries,
suggests an emergent organization structure
using a network dynamic in which subsidi-
aries in different countries operate. Head
office/subsidiary relationships are mediated
by the power of internal networks (for exam-
ple company regional offices) as well as con-
tacts with members of local industry net-
works such as local suppliers, competitors
and host governments. The analysis inte-
grates some of the organizational and exter-
nal conflicts apparent in most centre-periph-
ery debates relevant to hotels which, for
example, Roper et al. (1997) elegantly
describe in their research. This takes an
inter-disciplinary approach to examine cor-
porate performance in international hotel
groups relative to “management’s mind set,
corporate predisposition and subsidiary level
predeliction”: by using a more qualitative
approach this work could test the conclusions
of Dunning and Kundu (1995) who found, in
their study of 118 firms in 18 countries which
owned or were associated with at least one
foreign hotel, that “international experience
is the only factor which is statistically signifi-
cant…across the entire sample” and that,
while size of firm was critical for European
hotel firms, area of geographic expansion was
important to Asian firms.
The literature on international marketing,
a crucial dimension in hotel management,
gives particular attention in the interna-
tional literature on the standardization/
adaptation debate (for example, Alexander
and Lockwood, 1996; Crawford-Welch, 1991),
sometimes assumed as a polarity. Yet, as
demographic, social and economic factors
change, so will attitudes to travel – to such an
extent that one commentator Poon (1993)
characterizes a new age of tourism where
experienced, more sophisticated travellers
will generate “supersegmentation” of mar-
kets (Fayos-Sola, 1996): and in this situation,
conventional national market paradigms
may be superseded, encouraging new, multi-
variate, international segmentation
approaches, as expoused by Baalbaki and
Malhorta (1993).
In a more complex marketing environment,
the use of new technology will be an impor-
tant competitive factor. Already, the develop-
ment of airline Global Distribution Systems
(GDS) – Amadeus, Galileo, Sabre, Worldspan
– has allowed a one-stop-shop facility in book-
ing airline, accommodation and car-rental
services. However, access to the system was
designed for industry intermediaries and is
only recently being made more available.
Thisco is an important development, both
from the point of view of how it came about
Table III
The size and scale of the hotel industry worldwide, 1995
Revenue Hotels Rooms Employees
Region (US$ m) (number) ('000) ('000)
Africa 6,300 10,769 343 1,259
Caribbean 7,917 5,290 155 278
Central America 1,200 1,160 41 232
North America 62,133 66,943 3,739 2,268
South America 9,845 14,576 488 1,284
Americas 81,095 87,969 4,423 4,062
North-east Asia 23,733 10,192 719 1,120
South-east Asia 12,841 13,211 454 731
South Asia 3,083 3,663 159 472
Australia and Pacific 6,602 10,082 229 539
Asia-Pacific 49,259 37,148 1,561 2,862
Middle East 9,238 4,735 162 455
European Economic Area* 87,491 151,945 4,242 1,874
Other Europe 22,521 19,178 677 805
Europe 110,012 171,123 4,919 2,679
Total 252,904 311,744 11,408 11,317
Note: * European Union and European Free Trade Area members
Source: International Hotel Association (1996)
Table IV
Quoted hotel companies: room supply pattern, 1990-1995
Change
1995/1990 Change
Region 1990 1995 (rooms) 1995/1990 (%)
UK 117,700 122,500 +4,850 +4.1
Western Continental
Europe 202,520 277,350 +74,830 +37.0
Eastern Europe 9,390 11,650 +2,260 +24.1
Asia 51,650 83,140 +31,490 +61.0
USA 999,890 1,023,840 +23,950 +2.4
Total 1,381,150 1,518,530 +137,380 +9.95
Source: Slattery (1996)

4. [ 190 ]
David Litteljohn
Internationalization in hotels:
current aspects and
developments
International Journal of
Contemporary Hospitality
Management
9/5/6 [1997] 187–192
and what it does. It has been developed by a
number of hotel companies in partnership in
order to allow consumers and trade interme-
diaries a single point to access details on a
wide number of hotels, in a very full and
clear way. On the Internet, it allows
consumers to access hotel groups and indi-
vidual units and, potentially, to avoid the
commission element of an intermediary-
made booking.
Hamill and Gregory (1997) argue that the
World Wide Web “will have a revolutionary
impact on the conduct of international
trade”, particularly to support or enhance
marketing communications within the firm
and between the firm and its suppliers.
Poon and Jevons (1997) see it as encouraging
the growth of networks for small businesses,
by providing access to groups which other-
wise would be too difficult and/or costly to
enter. Already national tourism organiza-
tions have destination sites (for example,
Austria: http://www.austria-info.at/) hold-
ing information on competing hotel groups.
Hotel chains themselves have corporate
sites, some with visitor comments facilities,
as for example Hyatt and Club Mediter-
ranée. Lonely Planet, which produces travel
guides, provides at its site a facility for trav-
ellers’ comments
(http://www.lonelyplanet.com.au/). News
group sites where specific points are made
and particular queries posted (for example,
news:rec. travel.europe) allow both good and
poor experiences to be relayed to a virtual
audience – an electronic dimension to per-
sonal recommendations currently seen as
an important influencer of hotel choice.
The applications of this new technology
will depend on the diffusion of hardware
systems and the economics of operation.
Currently, commercial providers on the Net
are there for market share rather than imme-
diate profit.
While the potential of the Internet and
associated co-operative sites could allow the
large number of small businesses in the
industry to compete effectively in an
international marketplace, it is mindful to
remember that “the inescapable fact is that
technology is still being used to greatest
effect by the larger groups who are prepared
to invest even comparatively modest sums”
(Boyce, 1996).
At government policy levels, Fayos-Sola
(1996) speculates that, in creating tourism
competitiveness, policy measures will have to
play a closer partnership role with the pri-
vate sector than previously the case. This
may be evidenced in the increasing interest
in the environment and sustainable tourism
(for example, Bramwell, Henry, Jackson, Prat,
Richards, and van der Straaten, 1996). It is
also evident in the view that government
cannot achieve all of its objectives without
working closely with the private sector: for
example ensuring that a destination provides
quality accommodation is influenced by more
than having an accommodation and grading
scheme (control mechanism), but also by
ensuring that there is the right type of sup-
port for businesses that want to train and
retain their staff (co-operation and partner-
ship approaches).
Finally, it should be remembered that all
hotels, as multi-market businesses and that
hotel chains, as multi-site organizations,
already deal to an extent with many of the
issues with which academics surround the
international firm in terms of marketing and
human resources management, research and
so on. Dealing with international markets,
even if only at one location, requires a degree
of “product adaptation” and knowledge of
foreign exchange markets, in order to com-
pete successfully.
Conclusions
Academic restraint together with natural
pragmatism – because of the fast-moving
nature of industry environments – militate
against predictions on the future of the
international hospitality industry. The
analysis is incomplete – only the hotels sec-
tor has been covered here. There are further
interesting areas in the internationalization
among restaurants, contract caterers and
related service providers. From this review,
however, it is possible to generalize on a few
strategic aspects which will become more
important as the industry develops and con-
solidates further. For the sake of clarity, the
old and the new are put in opposition in
Table VI, though it should be recognized
that, in many cases, changes will overlay
existing ways of working rather than replac-
ing them (that is, they are cumulative) and,
Table V
Geographic source of business in hotels by region, 1995 (%)
Africa/ Latin
Source of Middle America/ North All
business East Asia Australia Europe Caribbean America hotels
Domestic 26.8 31.8 67.7 47.8 55.9 77.4 51.4
Foreign 73.2 68.2 32.3 52.2 44.1 22.6 48.6
Note: It is likely, due to samples usually taken by these surveys, that they are more
representative of mid- to up-market operations than the industry as a whole

5. [ 191 ]
David Litteljohn
Internationalization in hotels:
current aspects and
developments
International Journal of
Contemporary Hospitality
Management
9/5/6 [1997] 187–192
in some cases, the new is already apparent.
Whether this constitutes doing new things
or doing what has always been done in a
different way may be open to debate. What is
certain is that the international hotel indus-
try will be faced by a complex and fast-
changing environment, in which hotels will
have to learn and develop themselves to meet
new competitive conditions.
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Table VI
Old and new emphases in international hotel operations
Old emphasis New emphasis
Internationalization perceived as an explicit Internationalization an explicit feature in organizations
organizational feature
Value created through strong, vertical links with Value added through flexible links with wide numbers
chosen suppliers of suppliers
Economies of scale (vertical and horizontal) Economies of scope and scale
Growth strategies use standardized product/service Growth strategies targeted at international and local
specifications, altered as little as possible markets, susceptible to adaptation
International expansion features brands, franchising, Expansion through wider variety of means including
management contracts strategic alliances, joint ventures, loose
confederations
Operations focus Knowledge focus
Internal centre-periphery relationships important in Internal and local networks important; greater
determining management methods communication within and across the organization
Ethnocentric markets and change agents given priority, Market gaps identified
often following markets
Pricing and competitive focus New services development and pricing focus
Markets segmented by purpose, geography, culture Supersegmentation adds multi-variate groupings to
those formerly used

6. [ 192 ]
David Litteljohn
Internationalization in hotels:
current aspects and
developments
International Journal of
Contemporary Hospitality
Management
9/5/6 [1997] 187–192
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