In the current market, companies with enough capital are attempting to expand internationally in an attempt to bring in more revenue. Although many companies attempt this, not all companies are successful, as it is not easy to break into a market in an industry that is already so global. However, there are some fundamental ways in which companies manage to expand their facilities internationally.
A technique companies in the hospitality industry are using is the method of finding a need and filling it effectively. Although it is a basic principle in all of business, hotels do this in a unique way. They identify a need by watching other companies identify needs of their own to exploit. For example, there is a huge increase in hotels setting up in the United Arab Emirates, more specifically Dubai. The economic success of this emerging city is bringing more and more companies and investors into the city. Huge multi-billion dollar companies are moving offices or even headquarters over to Dubai, while thousands of new businesses are attempting to break out. The obvious result of this is a drastic increase in business travel; companies need to bring people into the country while setting up a business, and they need a place to stay. This is just one example of finding a need. Russia is another example. It is a nation with 37 regional cities that have more than 500,000 residents, making them good locations for companies to expand into. “We have had Russia as a key strategic development market for some five years and we see tremendous opportunities in these regional markets for our Hampton by Hilton and Hilton Garden Inn brands,” said Michael Collini, who is the VP of Development in Turkey, Russia, and Eastern Europe for Hilton Worldwide. With the success of hotels in Russia’s biggest cities such as St. Petersburg and Moscow, banks and investors are looking favorably at hotels attempting to set up in the other 30+ large cities.
The second part of this process is filling the need effectively. For example, Petr Chitipakhovyan, who workers with Marriot and has successfully built multiple Marriot Hotels in Russia, stresses the importance of finding a good local partner. He says that a good local partner “understands the local market and is able to position and sell the hotel to maximum impact.” Building a hotel in a foreign country is a complicated task, and having first-hand knowledge of the demographics of your target area is a key factor to success. In addition, being one of the first companies to break into a new area is also key, as there will usually come the point where the market in a certain area becomes too saturated for new businesses to be profitable. Although there are several more factors that determine a company’s success, these are some fundamental techniques that should be used to have a strong start in an attempt at effective international expansion.
This post address many key concepts within the business world, but, most importantly, it applies them to the hospitality industry. Penetrating global markets is one of the most difficult things to do, but it is one of the most important things for hospitality companies to do, if they want to stay competitive. I like how the post gives specifics regarding how companies are entering and attempting to be successful in these markets. Issues, such as having access to knowledge on local markets, is not just beneficial for lodging companies, but also for restaurants. Take McDonald's for example; they need to adopt their menu options to meet the food needs of local consumers/ cultures.
ReplyDelete-Laura Iaffaldano