Multinational Companies In Travel Agencies And Related Services

The first airline to enter the hotel business was Pan Am, which established Inter-Continental Hotels as a subsidiary in 1946. TWA, United (USA) and several European airlines followed Pan Am's example by owning hotel assets or entering into management contracts with hotels at destinations that were not international investments. Since commercial advantages vary between destinations and airlines, airline-hotel mergers are common, with two or more airlines having regular contact with a hotel group (e.g. Penta) or airlines having contact with several hotel groups. These relationships are called multiple rather than single relationships and result in multinational companies in air transport and accommodation being more interconnected but more loosely linked.

Some airline-hotel relationships follow the “historical” patterns of trade and tourism flows as follows:

Air France - Meridien Hotels worldwide; Canadian Pacific - CP Hotels (in Europe and North America); KLM - Golden Tulip Hotels worldwide; TWA - Hilton International Hotels (until sale); UTA - UTH & Accor (in Africa & the Pacific).

Other contacts have given rise to the need to transport passengers to new tourist destinations as a result of airline route developments such as:

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All Nippon - ANA Hotels in the Pacific region; Japan Air Lines - Nikko Hotels worldwide.

In both cases, the combination of international airline and hotel operations allows the companies to sell complementary products.

complementarities through transactions, control of available supply, and facilitating the application of marketing mix techniques such as frequent flyer programs and accommodation. In countries where deregulation and increased competition have forced airlines to withdraw from the hotel sector and return to their core businesses, airlines maintain agreements and alliances with hotel groups.

To increase additional services, airlines can expand their operations in the field of ground transportation abroad, tourist attractions or restaurants. This business has the same results as the activities of international tour operators (see below).

c. Airlines and travel agents

Many airlines are expanding their monopoly advantages to gain control over product distribution by acquiring travel agents. However, such acquisitions of multinational operations are rare because airlines tend to focus on domestic markets where they have a large market share and not on foreign markets where their market share may be very small. Therefore, multinational companies in the aviation industry are often not very interested in this relationship.

4.2.1.2. Multinational companies in travel agencies and related services

In the field of travel product distribution, multinational business activities are not much for the following reasons:

- Up to now, only a few countries have developed tourism industries on a large scale, so there is not much pressure on the formation of corporations.

- Countries with corporations are mostly separate source markets for visitors, which travel service businesses often have to

specialized to the needs of a particular customer source market and this "production advantage" cannot be easily extended across borders.

- Different legal regulations on business licensing and professional standards often exist between countries, which hinder the transfer of business skills and experience. For example, the IATA 20 ticketing methods , although broad in nature, cannot be applied to all countries.

- Many travel businesses operate as branches of businesses in many other fields domestically, so they are not interested in multinational activities, or those businesses operate under conditions of limited capital, so they are not able to invest in expansion in the future.

Nevertheless, there are a number of multinational companies operating in the travel services sector. The most famous are probably American Express, Thomas Cook and Wagon-List Tourisme. These companies have been around for a long time, and they both operate as travel agencies and provide other services. The development of their complementary services has created multinational businesses. Thomas Cook has grown from a base in England (although now German-owned) to 350 subsidiary (owned) offices in 25 countries, mainly in English-speaking countries. Wagon-List Tourisme, which originated in the luxury train and coach business in Belgium, has established 415 offices in 33 countries, mainly in Europe, Mexico and South America (Wagon-List is now a part of the Accor hotel group). Thomas Cook and Wagon-List have been closely linked for many years and also have many affiliated establishments in other countries.

The rationale for this multinational business is not only primarily related to the retailing of travel products but also to the provision of international or destination services required prior to travel. Most of the 1,000 travel agency offices of American Express

20 International Air Transport Association - International Air Transport Association.

selling travel products to local customers, providing advice to prospective travelers, selling travelers' cheques, handling credit cards and providing tourism services at the destination. Another similar case is where a retail travel agency is only part of the activities of a national tourist office or of the services of a cruise line. Thus, Balkan Travel Agency, Japan Tourist Office, Cunard and CTC are examples of businesses or organizations that own multinational companies that are effective in the travel sector.

As in the airline industry, there is a need for multinational operations in other travel service markets. These include car rental companies, hotel reservation agencies, travel insurance companies, and credit card companies. Multinational operations in these service sectors tend to take the form of equity-based multinationals such as Avis, Hertz, Utell, or Diners Club; or in the form of non-investment management contracts. In both cases, the rationale for multinational operations is that some of the services are provided to customers in one country and some in another, and that countries want to promote their global image. The expansion of economic efficiency on a global scale when using communication systems, information technology, and digital technology also brings about the internationalization of travel information systems of enterprises such as Reed Travel Group, the combination of OAG's services with the Travel Information Group in the US, ABC Guides in the UK, the Utell hotel reservation system and other information and reservation services.

4.2.1.3. Multinational companies in the accommodation sector

When assessing the role and impact of multinational corporations in tourism, people often focus on the accommodation sector more than other sectors. In part because of the high visibility of accommodation groups and in part because international investment flows are larger than in other sectors. An airline

Overseas investment is limited to establishing offices and equipping other basic facilities, or travel service businesses mainly invest in establishing offices (and possibly purchasing additional means of transport), but hotels and resorts mainly have fixed investment needs in land, construction works and equipment.

For many years, most international investment in lodging businesses was U.S.-based and was direct capital investment. This has now changed to a more non-investment management contract-based business and a broader range of sources of capital. The major non-U.S. multinationals in this sector include: Mediterranean Club, Accor and Meridien (France), Forte and Bass (UK), CP Hotels (Canada), Oberoi (India), Melia/Sol (Spain), Nikko, Aoki and ANA (Japan), and New World and Mandarin Oriental (Hong Kong). Major U.S. multinational lodging companies such as Holiday Inn, Westin, ITT Sheraton, Inter-Continental, Hyatt and Hilton account for half of all foreign-owned or joint venture hotels worldwide. However, the growth of non-US-origin businesses and foreign acquisitions of US hotel companies has reduced this ratio. Corporate activities in the accommodation sector are the main cause of the directional effects on the economies of the countries where they are located.

The shift from direct capital investment to non-investment management contracts is partly due to the comparative cost of direct investment with available capital markets and partly due to the fact that the parent company has no need to invest. The main benefits to the parent company are the flow of income from operations rather than ownership and the freedom from interest rates. In practice, then, there will be a hotel in country A owned by a company in country A that is a subsidiary of a holding company in

country B and operated by a multinational company in country C under a management contract. Such a company may in turn be associated with airlines or other companies. Because of the separation of ownership, the company in this model will have the best inputs. These are:

- Land and tourism resources from country A;

- Capital from country B;

- Business skills from country C.

Then, the company in country B grows and becomes a multinational company with equity ownership or indirect development investment but no management in tourism like Japan's Kumagai Gumi or Daikyo; the company operating in country C like Hyatt or ITT Sheraton becomes a more famous multinational hotel business company.

Whether through acquisitions or new developments, multinationals in the hospitality sector have grown faster than any other sector of the tourism industry. For example, the Mediterranean Club started in 1949 in a small village in Majorca and has expanded over the years to now operate 85 major resorts in more than 30 countries. More recently, Japanese, Hong Kong and South Korean conglomerates have grown even faster.

4.2.1.4. Multinational companies in cruise tourism business

The earliest multinational enterprises involved in the tourism industry were cruise lines because it was necessary to develop agents to represent foreign ports on its service routes. This expansion was to meet the needs of:

- Selling trips to residents in the country where the ship calls on the route (and possibly also in countries outside the route);

- Purchase supplies for cruise passengers and refueling at foreign ports;

- Purchase international inputs to optimize production (e.g., use US financing to buy ships built in Finland, registered in Panama, insured in London, use Norwegian commanding officers and a Philippine or Middle Eastern crew).

The crewing of most of the world's cruise ships has not changed these relationships, and the demands outlined above have expanded the cruise tourism business. American, British, Scandinavian, Italian and Greek cruise companies operating in the Caribbean and elsewhere use large ships built in Germany, Finland and France, insured in London, registered and crewed in various countries. Marketing may be concentrated in the United States, Canada, Britain, Germany and other European countries.

Many cruise lines also operate businesses in other areas of the tourism industry, for example P&O-Sitmar, Cunard and Chandris all own hotels or resorts. While these may or may not have a business connection to the cruise line, they represent a geographical extension of the parent multinational.

4.2.1.5. Multinational companies in the travel business

The business of international mass tourism programs has developed mainly from Western European countries and recently from Japan, Korea, and China. Most sending tour companies use existing agents or receiving tour companies to provide services to tourists at the destination. When sending tour companies expand the provision of ground services such as transportation and accommodation at the destination, it can create economies of scale. This expansion often does not involve non-investment management contracts. Thus, it can be seen that the main pressure to integrate service provision in the tour program comes from businesses in the source countries. These businesses have the most potential to gain benefits.

from operating their own businesses at tourist destinations. German, Dutch, Scandinavian and British tour operators often act as resort representatives, directly providing ground services such as transportation and sightseeing tours at the destinations to their customers. This somewhat limits the development of new competitors. If demand is greater, these companies may also own or have non-investment management contracts with hotels. Thus, Dutch tour operators own hotels in Torremolinos (Spain); TUI (Germany) and Thomson Holidays (UK) once owned hotels and even cruise ships in the Mediterranean. Similarly, Japanese tour operators have expanded to popular tourist destinations in East Asia and the Western Pacific.

In reality, the distinction between tour operators with their own bases at destinations and international hotel groups and airlines combined with hotels is only an external manifestation of multinational business activities. Meanwhile, they all provide the same products and services to the same markets and these businesses all have the same needs for business activities in the host country economies.

4.2.2. Impact of multinational corporations

4.2.2.1. Impact on host countries (countries with branches)

Since the early 1980s, there have been many studies on the impact of multinational corporations in tourism on the economies of countries with branches. The host country economy (or branch country) is the economy of a country in which there is an economic presence of a multinational corporation, except for the economy of its own country (the economy of the parent country). There are five basic areas related to the impact of multinational corporations on the host country economy:

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