Tourism and Hospitality Industry

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IMPACT OF GLOBALIZATION ON HOSPITALITY AND/OR TOURISM INDUSTRY

Globalization refers to the increments in the relationships of the people, industries, culture and various activities of economy. The term Globalization refers to the economics and all the global distribution of the production of goods and service which ultimately reduces the barriers of international trade like export fees, import quotas and various other tariffs, Cowen (2003). The Globalization has contributed to the growth of economy in a considerable manner. The globalization have accompanied to economic growth in developed and developing countries through increased specialization and the principle of comparative advantage. Globalization means the transnational change between the ideas, languages, and popular culture of different nations and countries so as to increase the diversity in the economy and enhance the growth of economy. It is argued that the decrease in the inter-cultural contact will increase the possibility of international and intra-national conflict. According to Shoa (2002), the globalization impacts the hospitality industry in prospect to the national as well as international hotel and tourism industry as a new occurrence. Actually, there are many hotels which are dealing with the international players even in the eighties. However, these days, the phenomenon has become so common that some company’s claim fifty percent of their profits will emanate from foreign companies, Pimentel (2008). The major factor behind the higher impact of globalization is that the hospitality sector has attracted international hotels into foreign countries and they are exploring the efficient and cost effective methods of doing business. The economies of scale are not just a theoretical phenomenon. it equally works in the hospitality sector and has considerable impact of globalization on the same. The hotels have realized that the larger they become the lower their production costs and the higher their profit margins. Besides that, the business within the industry will take their business to overseas and they can tap the unexplored markets that would never have been reached in local markets. Another reason that has increased the impact of globalization and has also increased the propensity for globalization within hospitality industry is increasing competition within local markets. Consequently, in order to expand their respective businesses, the hotels and tourism industries have started exploring the untapped markets and therefore, the globalization have started impacting the growth and profitability of the overall hospitality sector. However, it is necessary to look for the new markets as the increasing numbers of players in this industry are increasing the internationalism and competition within the hospitality industry. According to McAlister (2005), it is also likely that there are so many competitors which are now entering into new markets because they will allure the global brands. In contract to local brands, international markets would have to tailor their brands to suite specific conditions in the local market. However, with increasing talk about global brands, now international hotels can market their services to a wide array of consumers who happen to be agents of globalization themselves. Most of the consumers are multicultural in this scenario and always looking for ways to move themselves and their resources easily across various parts of the world, Dreher (2008). In this case, the main concern of study is to get the understanding of the impact of globalization on hospitality and tourism sector industries. For this case, there has to be geographical location on which the whole study can be done and further geographical analysis will be based on the same. The location which is chosen for the case is India which is a country in South Asia, Roger (2004). The economy of India is the ninth-largest economy by nominal GDP in the world and...
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