Global Story in International Management Contexts
Tricky Tourism
For the second blog assignment, tRIple A chose to tell a global story that concerns tourism globalization and its impact in International Management contexts.
First of all, a description of our global indicator (GI) will be done, then this GI will be linked to the globalization process in general. Finally, we will uncover some tricky truths about tourism by explaining how the global indicator informs international management in the global context.
Definition of Tourism
To begin with, we should first define what tourism is.
You certainly think that the tourism is simply the fact to travel. But the
definition is much more complex. There are moreover many definitions. The one
that we are going to retain is one issued by The World Tourism Organization: Tourism is defined as “the
activities of persons traveling to and staying in places outside their usual
environment for no more than one consecutive year for leisure, business and
other purposes.”
Therefore, it is clear than tourism has a direct impact
on the national revenue for all of the "touristic" countries. At the first glimpse, we may say that tourism globalization creates work
opportunities, new industries, and several investments to serve and raise nations
performance and cultures, also distributes their history, civilization, and
traditions.
The Global Indicator
After some researches, we all agreed that the pertinent global indicator that we are going to use would the number of inbound tourist arrivals per year and per city.
Basically it is possible to define our global indicator as “the number of individuals who travel to a country other than the one in which they have their usual residence, but outside their usual environment, for a period not exceeding 12 months and whose main purpose in visiting is other than an activity remunerated from within the country visited”.
Method of calculation
The number of inbound tourist per year and per city is known thanks to
border statistics like the police, immigration, and supplemented by border
surveys. But the calculation method can differ across countries. Then, for some countries,
number of arrivals is limited to arrivals by air while for others, to arrivals
stating in hotels.
Difficulties and Biases
It appears though that it is difficult to compute this global
indicator and to have a real estimation since the calculation method differs
upon the country. It would be very difficult and restrictive to impose only one
calculation method for all the country around the world!
We have to figure that the data on international tourists is the number
of arrivals, not the number of people traveling. One person visiting the same
country several times during the year is counted each time as a new arrival. Then, the same person visiting several countries
during the same trip is counted each time as a new arrival.
Moreover, not
all of the data are completed and many countries fail to submit their
statistics on time.
For example, Barcelona and Rome just give statistics on arrivals stating in hostel. New York and Antalya do not precise if their calculations include visitors who are staying less than 24 hours…
For example, Barcelona and Rome just give statistics on arrivals stating in hostel. New York and Antalya do not precise if their calculations include visitors who are staying less than 24 hours…
The 10 most visited cities in the World
To gain on clarity in our story, we decided to restrain our subject and limit our linkage between our global indicator and the top 10 most visited cities in the World.
Indeed, we wondered what is magnetic with those cities? What is done (and by whom) for those cities that create a unique worldwide "identity" and thus make them so attractive around the world? In other words, what is really influencing the tourism rate (our global indicator) in the top 10 most visited cities in the World?
We found many different rankings due to the various collection methods that depend on the countries. However, even if all the rankings were different, the same 10 cities were always quoted.
Based on a 2010 ranking released by The WTO, the current top 10 most visited cities are:
How the globalization process allowed to our global indicator to increase over time.
The link between the globalization and the number of inbound tourist arrivals per year and per city.
The characteristics of
globalization help improve tourism in many different aspects. Economically speaking, tourism would help push the economy to improve as a
whole. For example, with tourism becoming increasingly popular, foreign
investment in hotels and tourist attractions to attract more visitors would
help the economy group in a couple of ways, such as job employment for the
construction of hotels, etc. Not only would foreign investment increase, global
players and strategic alliances would help the economy rise as well.The demand
for services such as air companies, hotels and tour operators would attract
many businesses in the market, yet again increasing the productivity of the
economy. These are very specific improvements in the economy, broadly speaking,
the increase in the market of tourism would increase global competition of
holiday resorts overall, companies competing would also help boost the economy.
Other than economic benefits, globalization help in technological terms as well
for tourism. Companies competing in this competitive arena would boost their services
such as allowing services like global booking systems online, and standardized
technologies in transport systems. Globalization's linkage to tourism also help
in political terms, the rise in demand for tourism services increase importance
of international tourism organizations. The increased amount of inbound
tourists would also create the necessity for global coordination and regulation
of passenger circulation, all these terms help the government to revise their
political policies. Many of the forces and consequences of globalization will
benefit tourism and the service sector. Overall, technology, information and
the reduction of boundaries have created new forms of service companies, not
only large trans-national corporations, but small companies can also take
advantage of the benefits such as international communications, and marketing
positions.
How the global indicator informs international management in the global context
How terrorism,
diplomatic, economic (...) relations between countries affect the number of
inbound tourists per year and per city
«Tourism […] is often described as a «fragile» industry in that demand for travel is highly susceptible to numerous shocks such as wars, outbreaks of deadly contagious diseases, incidents of terrorism, economic fluctuations, currency instability, energy crises and so on. »[1]
Thus, from one year to another, the number of inbound
tourist arrivals per year and per city can vary a lot. For instance, the
September 11 attacks in United States, more especially in New York City and
Washington DC, made the tourism in New York City plummeted. Few days after the
catastrophe, the hotel occupancy fell below 40% [2].
In addition of the economic effects, the financial markets suffered from the
attacks. Gold prices went up from 215.50$ to 287$, the currency trading of the
United States dollar fell sharply against the other currency.
These
lead to a «crisis in consumer/investor confidence»[3]. The government had to take actions to reassure
the financial system. For instance, « the Federal Reserve entered into or
expanded existing agreements with the European Central Bank, the Bank of
Canada, and the Bank of
England
to swap dollars for foreign currency in order to support foreign financial
institutions
operating in the United States»[4]. In addition, many resources were used to
reinforce the country’s security procedures. For instance, the visa application
procedures for higher risk travelers (Muslims) became more complicated[5]. The number of visas delivered to Iran and Iraq
dropped by 39% and 40% respectively[6]. This highly contributed to the decrease in the
number of inbound tourist arrivals.
How International Organizations affect the
number of inbound tourists per city and per region
«A
tourist destination is a complex of attractions, equipment, infrastructure,
facilities, businesses, resources, and local communities, which combine to
offer tourists products and experiences they seek». [7] NGOs and International Organizations can
influence the number of inbound tourists visiting our 10 cities by promoting
certain aspects. Indeed, in Thailand, the Tour Operators’ Initiative for
Sustainable Tourism Development or TOI (an international alliance of tour
operators engaged in advancing the UN goal of sustainable development) and the
World Wide Fund for Nature or WWF ( support biodiversity conservation in areas
of high-volume tourism) «are focusing on improving waste water treatment,
training hotel and resort staff, and ensuring that fragile areas and endangered
species (like turtles) are protected [8]». Another example is the list of the UNESCO World Heritage Sites contributing
a lot in attracting tourist in certain areas, such as The Palace and Park of
Versailles, a suburb of Paris[9].
How strategic partnerships influence the number of
inbound tourists per city and per region. What are the impacts of this
influence?
What also explain
the magnetism of our ten cities are undoubtedly the creation of strategic
partnerships that greatly influence the development and attractiveness of some
destinations. A strategic alliance, which may take on various forms
(franchising, management contracts, joint ventures and acquisition[10]), is defined as
“an agreement between two or more individuals or entities stating that the
involved parties will act in a certain way in order to achieve a common goal.”[11] The strength of strategic partnerships lies in
the fact that they can rapidly take advantage of the brand recognition of
several multinational firms.
Concretely,
largest hotel companies, tour operators and the air
travel industry collaborate to offer a touristic “product” that is aimed to be
the most complete and consistent possible in order to satisfy tourists. For
those companies, the possibility of profits and gains is huge: for instance, in
most all-inclusive package tours, about 80% of travellers'
expenditures go to the airlines, hotels and other international companies.
No lone
participant can pretend to take the entire charge of looking after visitors and
organizing the touristic development of a destination in an integrated way.
Moreover, all big lead firms, whether they are hotels, tour operators or air
companies, have a very important coverage in our top ten destinations. Thus, we
assume that this pooling of actions proves to be essential, in a context of
globalization, for destinations to be boosted.
For hotels
alliances, Knowles (2001) mentions Four Seasons Hotels, which used the
strategic partnerships with Regent International Hotels Ltd. (the group of most
important luxury hotels in Asia) to take over the management of hotels in
Bangkok, Hong Kong, Kuala Lumpur, Melbourne and Sydney. In this way they
obtained the results, which would have taken them far more time without the
partners.
How the private sector is involved? What is hidden in
the involving of the governments and the relationships they have with the lead
corporations?
Tourism is a big
business for the private sector and for governments alike. Given the fact that
“any country with still-pristine areas of forests, beaches, mountains, and
parklands or with ethnic tribes and other unique rural cultures” has something
to market in the global economy, it becomes clear that even the public sector
of a country can influence on the number of inbound tourists per year per city.
The first case scenario is when governments decide by themselves to create “lax trade environments” in order to attract the tourism industry, lifting restrictions that are applied to other industries and offering many incentives.
As Alexander Goldsmith explains that “Free Trade Zones (FTZs) are regions that have been fiscally or juridically redefined by their ‘host country’ to give them a comparative advantage over neighboring regions and countries in luring transnational corporate activity. Indeed, most of the FTZs share the following characteristics: lax social, environmental, and employment regulations; a ready source of cheap labour; fiscal and financial incentives that can take a huge variety of forms, although they generally consist of the lifting of customs duties, the removal of foreign exchange controls, tax holidays, and free land or reduced rents.]”
So far, the travel industry benefits greatly from these FTZs. The concerned cities have seen their tourist flow increase consequently. For instance, among our top 10 most visited cities, some of them belong to a FTZ.
For instance,
Jebel Ali Free Zone in Dubai, a free economic zone located in the Jebel Ali
area at the far western end of Dubai, United Arab Emirates, near Abu Dhabi. Another
good example of that is the entire city-state of Singapore, which is located on
the heavily trafficked Straits of Malacca, and essentially made its entire
territory into a free trade zone early on in its independence.
The tricky part appears when it becomes clear that wealthier organizations in the tourism network often have political influence. This is the second case scenario possible.
In fact, when a well-established foreign firm chooses a site or area to develop business activities, it may influence not only the operations of local firms but also the local or regional authorities in different ways. For example, a large investor may oblige the authorities in a potential area of the investment to comply with certain conditions or even change local law before going ahead with the development. Or else, developers may want the government to improve the airport, roads and other infrastructure, and possibly to provide tax breaks and other financial advantages, which are costly activities for the government.
As a consequence, “corporations might have become dominant governing institutions, often exceeding governments in size and power”.
Concrete
examples for our top 10 cities are challenging to find, but most of our
findings revealed that this situation of corporations overstepping governments
mostly occurs in countries that depend the most of the tourism; in Asia for
instance.
[6]http://marquette.academia.edu/LouiseCainkar/Papers/555496/Post_9_11_domestic_policies_affecting_US_Arabs_and_Muslims_A_brief_review
[11] http://www.investorwords.com/4772/strategic_alliance.html
Knowles, T., Diamantis, D., El-Mourhabi, J. B. 2001, «The Globalization of Tourism and Hospitality: A Strategic Perspective. London: Continuum»
Evans, N. 2001. «Alliances in the International Travel Industry: Sustainable Strategic Options? International Journal of Hospitality & Tourism Administration 2 ».
McLaren D., June 2003, « Rethinking Tourism and Ecotravel », Second Edition, Kumarian Press, Inc., Bloomfield.
Knowles, T., Diamantis, D., El-Mourhabi, J. B. 2001, «The Globalization of Tourism and Hospitality: A Strategic Perspective. London: Continuum»
Evans, N. 2001. «Alliances in the International Travel Industry: Sustainable Strategic Options? International Journal of Hospitality & Tourism Administration 2 ».
McLaren D., June 2003, « Rethinking Tourism and Ecotravel », Second Edition, Kumarian Press, Inc., Bloomfield.
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