Question

Let us look at investments in international hotels that open business in several countries. With respect to decision making related to the national hotel building and import of key supplies for assembly line, what is the structure of decisions? What are the domestic and international factors that need to reviewed to avoid bad investment?

Answer 1

Solution -

International Hotels indulge into an expansion strategy to increase btheir revenues and bottom-lines. The major reason for such expansion apart from the revenue pressure is also to build up a chain that can allow the customers travelling to find the same brand hotel in different locations. This increases the brand image of the Hotels and also assist in establishing their market standard. When an international hotel is making a decision on the national building and supplies during their expansion, they follow a pattern for the decision making process -

• There is an agreement within the management on the long-term and short-term strategy.
• The location is selected basis the already established market expectations of the hotel and hence the building or the construction plans are finalized.
• The budgets are also a metric that is considered.
• Evaluation of local and international vendors is taken into consideration.
• The hotel also looks at the offering value that they wish to provide in the new international market.
• Target customers and their concentration are also taken into account.

After taking the decision on the above the organization gets into the acquisition and construction of the property in the new market. The other international and domestic factors that the hotel also takes into consideration are as below -

1. Influence on tourism by the local government and the variables involved.

2. International relations and the flow of international customers

3. Costs involved in operations and local regulations.

4. Domestic Culture and their conflicts with the international brand and the organization culture.

5. Availability of local resources

The above factors are extensively reviewed during the expansion and establishment of the international hotels in new locations.