The term of globalization describes a number of processes by which products, people, companies, money and information are able to move freely and quickly around, unimpeded by national borders or other territorial limitations (Morrison, 2002). Benefited from that, multinational organizations are booming in the world market.
Globalization opens up new opportunities for multinational corporations, but it also creates new risks and something uncertainties. The aim of this paper is to examine the internationalization process of Holiday Inn hotel chain, one of the famous multinational corporations in budget hotel industry, with the framework of Porter’s Diamond and transnational management typology.
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A budget hotel is described as a hotel that is economical, as well as being clean and comfortable. “Generally, budget hotels only provide bed and breakfast. They are as good as three-star hotels, but have no resplendent lobby, no conference rooms or entertainment centers. Some don’t even have dining halls. The budget hotel sector exists as a hotel business as part of to the traditional full service hotel business that offers standard facilities and services.” (Xinhua Daily, retrieved 2007) After the Second World War, the prosperity of America’s economy led to the development of domestic tourism, which resulted in a great demand for inexpensive accommodation; furthermore, the building of an inter-city expressway network led to the motels becoming popular.
For instance, in 1952, the Holiday Inn chain of hotels was founded by Kemmons Wilson to provide inexpensive family accommodation for travelers within the USA. From the late 1980s to the late 1990s, Large hotel groups preferred merger and acquisition of existing brands to create new brands. Since entering the 21st century, the budget hotel sector has started a new rapid growth. The main manifestation of this stage is the development of budget hotels in developing countries. The famous budget hotel brands, such as Ibis, Formula 1, Super 8, Days Inn, and Holiday Inn Express, have been entered into the Asian market (green).
Due to Luxury hotels were considered as not economical, and inexpensive hotels were neither sanitary nor practical, the growth of budget hotels is increasing fast. According to statistical data collected by AHLA (American Hotel & Lodging Association) in 2006, the number of budget hotels in the US is about 60,000 and the average occupied rate approximately 70 percent of the U.S. hotel market. Meanwhile, a survey of oversea tourism shows the proportion of revenue of budget hotels is 64% in the US hotel industry.
Holiday Inn hotel is one of typical international budget hotels chains. It was founded in 1952 in the USA to provide inexpensive family accommodation for travelers within the USA.
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