Term Paper on "Hotels and Hospitality"

Term Paper 15 pages (4678 words) Sources: 3

[EXCERPT] . . . .

Hotel and Hospitality Industry: Catering to the Affluent Middle East Today and in the Future

Some of the fastest growing travel and tourism destinations that have emerged in recent years are the Middle East in general and Abu Dhabi, capital of the United Arab Emirates, in particular. Despite the potential of external threats in the region, the hotel and hospitality industry has enjoyed a booming business as hoteliers, restaurateurs and others seek to capitalize on this growing industry in an increasingly affluent region of the world. While there are a number of constraints to doing business in the United Arab Emirates, all signs point to continued growth and many international chains have already heavily invested in Abu Dhabi in an attempt to gain market share while the getting is good. Clearly, time is of the essence, but it is important to identify the characteristics of the market and what can be reasonably expected from a venture capital investment in the hotel and hospitality industry in the United Arab Emirates today. To this end, this paper provides an overview of the international hotel and hospitality industry and the travel and tourism industry that accounts for the lion's share of its revenues, followed by an assessment of initiatives underway in the region that are reflective of current trends in the region. A summary of the research, salient findings and recommendations are presented in the concluding chapter.

Review and Discussion

Background and Overview.

Given its enormous economic impact, it is little wonder that the hotel and hospitality industry has attracted a growing amount of interest from both researchers and practitioners alike; nevertheless, the harsh realities of real-world management in this industry frequently elude academicians and the need for more research in this area is clear. In this regard, Montgomery, Lip*****z and Brehmer (2005) emphasize that, "In general, research enquiry about the hotel and hospitality industry and its participants is steadily accruing, although in a fairly haphazard fashion. Its development has often been reported as being hindered by a lack of understanding and communication between academics and practitioners. Gaining access to key participants within organizations is problematic, and using methodologies that are deemed useful for hotel practitioners are seen to be of key importance" (p. 343).

There are also some recent trends in the hotel and hospitality industry that suggest targeting a specific market has assumed new relevance and importance in recent years, with more and more hotels and restaurants assuming a "one-size-fits-all" approach to their service deliver. For instance, in their book, Tourism and Postcolonialism: Contested Discourses, Identities and Representations, Hall and Tucker (2004) report that the same forces that are driving globalization are having a homogenizing effect on the hotel and hospitality industry today: "Global culture may be comforting for the contrast avoider tourists but for the contrast seeker tourists it is experientially unexciting. Beachfront resorts, shopping arcades of chain stores, international airports, urban waterfront developments, hotels and restaurants are all essentially replications of each other, part of an international, corporate hotel and hospitality industry, and a standardized architecture and urban planning" (p. 176). In many cases, this is what some customers may want during a business trip or even a pleasure trip, but it is clear that standing out from the mainstream crowd in this environment has become especially difficult but more important than ever. For example, as these authors emphasize, "This is global culture masquerading as local culture. Attempts to create difference - with theme parks, waterfront redevelopments, landmark public buildings designed by celebrity architects - become but further reminders of global culture and of the futility of repetitive attempts at differentiation" (Hall & Tucker, 2004, p. 176). The "McDonaldization" of the hotel and hospitality industry, though, has not been without some advantages for international travelers, with English being widely spoken around the world and familiar fast-food eateries available as well, but an increasing number of Western and Arab travelers alike are seeking something much different, even if it costs a little more.

Travel and Tourism in the Middle East.

According to statistics announced at the 2006 at the annual World Travel Market, Middle Eastern tourism continues to be one of the most dynamic sectors with a growth of 18%, compared to the Americas (+11%) Africa (+8%) and Europe (+5%) (cited in Wells, 2006). These respective rates are shown in Figure 1 below.

Figure 1. Growth in travel and tourism destinations.

Source: Based on data in Wells, 2006 at p. 48.

In her recent study, "Middle East Destinations Lead the Field," Wells (2006) reports that the international travel and tourism industry enjoyed continuing growth, following a growth pattern that began in 2004. In fact, 2005 represented the best year ever for the industry, and the results of an analysis released by the United Nations specialist agency, the World Tourism Organisation (UNWTO), noted that the number of international tourist arrivals recorded worldwide grew by 5.5% to exceed 800 million travellers for the first time. The WTO's estimate of 808 million international tourist arrivals worldwide in 2005 represents an increase from 766 million in 2004, corresponding to an impressive annual increase of 5.5% as well as a consolidation of the spectacular growth of 10% recorded in 2004 (Wells, 2006). According to this author, in spite of the turbulent nature of some parts of the Middle East, the vast majority of international travelers are not dissuaded from visiting the UAE, Egypt, Lebanon and so forth. "In terms of consumer behavior," Wells reports, "it is evident that travellers to the Middle East have been undeterred by external threats, such as the bomb attacks in Turkey (Kusadasi, Istanbul and Ankara), Egypt (Cairo and Sharm El-Sheikh) and Jordan, possibly reckoning that they are, on balance, probably as much at risk at home as they are abroad. At the global level the impact of these isolated events has been negligible. They may have led to temporary shifts in travel flows, but they have not stopped people travelling" (2006, p. 48). Although there have been some downturns in tourism experienced at the local level, Wells suggests that in most cases, these downturns have been relatively brief in duration. As WTO secretary-general Francesco Frangialli observed recently, "The tourism sector has gained substantially in resilience over the past years. In spite of the turbulent environment we live in nowadays, destinations worldwide added some 100 million international arrivals between 2002 and 2005" (quoted in Wells, 2006 at p. 48).

The Middle East travel and tourism industry is estimated to have generated $108.5 billion of economic activity in 2004 and is forecast to grow to $193 billion by 2014 (Wells, 2006). The industry is expected to enjoy continuing healthy growth of approximately 4% a year in real terms between 2005 and 2014 (Wells, 2006). According to this author, "The support of most governments, the permanent development of tourism infrastructures and significant public and private sector investment in tourism has paid off. Additionally, the low-cost airline phenomenon and the increasing cooperation regarding border facilities among countries in the region all serve to reinforce intra-regional as well as domestic traffic" (Wells, 2006, p. 48).

Moreover, there are plans for continuing investment as well. In this regard, capital investment in the Middle East tourism industry was estimated at $19.7 billion in 2005 and is expected to reach $33.9 billion by 2015, representing a 2.7% addition to regional gross domestic product (GDP) in 2005 (Wells, 2006). An important initiative that has been launched recently in support of the travel and tourism industry was the creation of an Arab tourism bank, wholly dedicated to the sector. According to Wells, "The International Tourism Bank (ITB), based in Bahrain with a paid-up capital of $1 billion and issued capital of $2bn, due to start operating in 2006, will be the first-ever bank dedicated to the tourism sector. The Bahrain-based Investors Bank is involved in the formation of ITB" (Wells, 2006, p. 48). It is the expectation of the bank's founders that ITB will provide a new dimension to tourism in the region by helping develop individual projects or by assisting in the consolidation of the tourism sector of the Arab region by providing investments, services and technical support to tourism companies (Wells, 2006).

Based on projected growth in arrivals of 18% to a total of over 35 million, the region has become the fourth most visited in the world, surpassing for the first time the volume of tourists to Africa (estimated to have received 33 million arrivals in 2004) (Wells, 2006). According to this analyst, "Morocco, Tunisia and in particular Egypt are now considered a competitive threat to the more mature tourist destinations in the euro zone, including London, Paris, Venice and Rome" (Wells, 2006, p. 48).

All Middle East countries with data available show positive results, without exception. The biggest increase in absolute terms was recorded by Egypt, which saw visitor arrivals increase by more than 2m (+34%) to over 8m (including some 5% of same-day visitors). The country benefited, like other sun-and-sea destinations in North Africa and… READ MORE

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