Overcoming Cultural Differences in International Hotel Development

By Donald R. Boyken Chief Executive Officer , DRB Consulting, LLC | October 28, 2008

With annual spending exceeding $6 billion, tourism is the world's largest industry. Travel and travel-related industries employ over 234 million people worldwide. That's almost 9 percent of the world's population. By 2016, travel and tourism will account for approximately 10 percent of the global economy.

Our success in this rapidly growing and important industry depends on our ability to develop and build high-quality facilities, both domestically and abroad. When considering international expansion, our understanding of cultural differences-whether they be as complex as a tax code or as simple as a personal greeting-is crucial to ensuring future success.

Over the past five years, Boyken International, Inc. has been involved in over $3.0 billion in international hotel development. Having managed projects in over 50 countries on six continents, we have developed some key strategies for managing and overcoming these cultural differences.

Prior to committing to any international project, we research the local economic and political climate. The research of the local labor force will determine if it has the capacity to meet our needs. We ask ourselves: How skilled is the workforce? What is the current level of construction activity in the area? Are there local contracting or sub-contracting firms who can help recruit and manage labor? Then we develop a labor plan to help you manage costs and expectations.

For every project, it is essential we visit the site and visit with local leaders to obtain insight into any potential challenges or threats. From an outsider's perspective, a country's economic and political situation could appear stable; however, a site visit might reveal key information such as labor issues or work practices including rumors of civil unrest. All factors must be considered when selecting a location or involvement in the project.

When visiting a project site in Bermuda we quickly determined that the road access would require smaller trucks for the delivery of materials resulting in more truckloads and people.

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Coming up in October 2018...

Revenue Management: Getting it Right

Revenue Management has evolved into an indispensable area of hotel operations, chiefly responsible for setting forecasting and pricing strategies. Because the profession is relatively new to the hotel and hospitality industries, a clear-cut definition of what exactly Hotel Revenue Management is has only recently emerged - Selling the Right Room to the Right Client at the Right Moment at the Right Price on the Right Distribution Channel with the best commission efficiency. Though the profession can be summed up in a single sentence, that doesn't mean it's easy. In fact, it's an incredibly complicated and complex endeavor, relying on mountains of data from a wide range of sources that must be analyzed and interpreted in order to formulate concrete pricing strategies. To accomplish this, Revenue Managers rely on an array of sophisticated technology systems and software tools that generate a multitude of reports that are central to effective decision-making. As valuable as these current technology systems are, much of the information that's collected is based on past historical trends and performance. What's new is the coming of big, data-driven, predictive software and analytics, which is likely to be a game-changer for Revenue Managers. The software has the capacity to analyze all the relevant data and predict occupancy levels and room rates, maximizing hotel profitability in the process. Another new trend that some larger hotel chains are embracing is an emphasis on Booking Direct. For Revenue Managers, this is another new channel with its own sales and costs that have to be figured into the mix. The October issue of the Hotel Business Review will address these developments and document how some leading hotels are executing their revenue management strategies.