Foreign direct investment patterns of global hotel chains

Choice of Entry Mode Into the Internationalisation Process by Dominant Spanish Hotel Chains

“…Likewise, their better financial situation makes them more attractive as potential partners and a hotel chain in a good financial situation will be able to take advantage of this in order to operate on an international scale with entry modes which do not require high levels of investment and are thus lower risk. The tendency to opt for entry modes that do not require capital investment, regardless of the availability of resources of the chain or the market situation (Alon et al, 2012, Santos et al, 2016, would appear to be confirmed with regard to these variables in the internationalisation of the major Spanish hotel chains.…”

“…This importance given to the selection of entry modes is not a new development, something which is evident in the extensive research projects carried out in regards to this subject (Contractor & Kundu, 1998;Ramón, 2002;Quer, Claver & Andreu, 2006;Driha & Ramón, 2011;Berbel & Ramírez, 2011;Martorell et al, 2013;García de Soto & Vargas, 2015, Santos et al, 2016Andreu, Claver & Quer, 2017;Kruesi et al, 2017, Berbel, Palacios, & Ramírez, 2017. Therefore, it is important to be aware of what is understood by this decision.…”

“…Traditional views sustain that companies that possess the required resources and seek greater control will opt for capital-based investment modes, opting for contractual modes if they do not possess the required resources or if environmental conditions advise against investment (Andreu et al, 2017). Given that hotel chains currently show a preference for entry modes that do not require capital investment (Contractor & Kundu, 1998a;Martorell & Forteza, 2010;Alon et al, 2012;Santos et al, 2016), With the aim of proposing an explicative model of the selection of the entry mode into an international market for the hotel sector which identifies the variables which ISSN 2174-548X 133 can influence this decision, we carry out a review of the models which have been applied to the sector and identify the existence of three types of variables which condition the entry mode chosen by the hotels: factors regarding the destination country, specific company factors (structural characteristics), strategic and control factors.…”

“…8, No 2 (2018), pp. 128-157 ISSN 2174 In this manner the hotel industry, which is capital intensive, has given rise to capital-free entry modes the likes of administrative contracts that can help circumvent political risk and cultural differences by completely separating ownership from administration (Martorell, Mulet & Otero, 2013;Ramón, 2002) and have become the most popular option for entering foreign markets among international hotel chains (Contractor & Kundu, 1998;Martorell & Forteza, 2010;Alon, Ni & Wang, 2012;Santos Brochado, & Esperança, 2016). Research into determining factors in direct foreign investment (DFI), in particular with regard to global multinational hotel chains, has grown rapidly, as has the number of recent relevant studies, such as those of Assaf, Josiassen & Agbola (2015) and Falk (2016).…”

“…The hotel industry is currently characterised by increasingly global competitiveness, and the larger hotel groups of North America and Europe (in the latter case fundamentally France, the United Kingdom and Spain) have recently been joined by a multitude of other major hotel groups as a result of the economic expansion of Brazil, India, Russia and China. In addition, the growth of worldwide tourist arrivals from 2005 to 2020 has a projected annual rate of 4.48%, which explains the major investments that international hotel chains have been making in an effort to satisfy this growing demand (Santos et al, 2016).…”