Top 10 companies operating by management contract
3.8.2 The Restaurants system
good business envi
investment in infrastructure; the m
for it. Sometimes, management is so poor that it becomes costly
(see also World Trade Center and Sofitel Bucharest). It is an eloquent example of globalization and global interest which respect all the conditions mentioned at the beginning of the paper. The technocrats which lead these chains have their own interests. And owners can not and have no interest to do it as long as a promised dividend is assured.
Globalization in hotels has deep roots, ever since 1880 - 1890131 following a series of steps: ethno-centered, great chains within the same country, ethno-centrism, great chains with external expansion as an “appendix”, as well as polycentrism, based on national management on a
“state to state” basis, region-centrism, focusing on a region, geo-centrism, the quasi-modal expansion based on the functioning of the product, its stability and standardization
depletion. In parallel, there follows the evolution of the product strategy, from the offer of rooms, to conferences, to health centers, which we find today in all hotels of a major chain.
The value of the chain concept includes: housing acquisitions, construction facilities, design, franchise, operational management, human resource management, marketing and sales, reservations and information, administration control, client services.
It is obvious that most of American capital influences this whole activity. However, we must underline that this phenomenon basically ended in the hotel business in the sixth decade of the past century, while in other branches we talk about it only from the 7th – 8th decade. Aside from its precursor role,
where future actions were settled and established. And nobody protested against the globalization of hotels: many profited from it, using their spare time as tourists for the profit of global structures.
We emphasize on another aspect which reveals the importance of the global decision and the way in which it comes into effect. Until the war, Europeans were treating themselves in famous resorts. Observing that great hotel chains did not have significant establishments in resorts came as an explanation of the American system. American medicine is considered business.
Treatment is a cost, a loss. So, the medical act must e p
3, the sal first 400 restaurant chains in the
from 200 any c t was y to o ew u o
its. The ers” s emain
t year d 34. o
(c ed by I as snacks/coffee) has the largest growth as relative
6.9% It inclu ncept t food s
131 see also Go, M., Pine, R. - Globalization strategy in the hotel industry – Routledge, London 1995 96
restaurants rem trong: the 0 acco 85% of sales and 81% of total units. The first top 10 chains had a 99.1 billion dollars incom 002, meaning 47% of total incom .
The “consolidation” restructures the food industry. The first top 10 (McDonalds’s Corp., Yum! Brand, C, W s International, Darden Restaurants, Allied Domecq Quick Service Resta Brinker I ational Restau Outb Steakho se and AFC Enterprises) estimate sales of illion meanin % of inc Outtakes are numerous: O’Charley’s took the 99 Restaurant and Pub chain, Burger King took Diageo PLC – hich “exited” the top – Consolidated Restaurant Operation took over Chevy’s Fresh Mex, Rio Bravo Fresh Mex, El Chico Café, etc.132 which indicate monopolization in the USA. This is
reflected troug xpans cha rl e being found on all
other continen
Statist oes not allow for a eviden how m f rest ales are for tourism, especially because in ed es goin e restaurant is a well-known custom.
And the first who profit are great restaurant chains. Yet, they are the first suppliers for tourists, except hotel r as they are preferred by mass or the stability of of red services.
Anyway, the ization p non is obvious. In Europe, although
restaurants (and hotels) are mo ren becau ts pr aller units. till, the bulk of clients (and
Th f the hot ts sec
ain s top 10 unt for
e in 2 e
Diageo PL endy’
urants, ntern , CKE rants, ack u
107.5 b USD, g 51.8 total omes.
w
h the e ion of ins throughout the wo d, all thes names ts.
ical data d clear ce of uch o aurants s
develop countri g to th
estaurants, tourism f fe
global henome a similar situation,
re diffe tiated, se clien efer sm S income) belongs to large hotel chains.
e size o el and restauran tor in Europe133
Units (classified only)
country hotels restaurants Cofee shops Mess halls mixed
Belgium 1930 21057 29724
Danmark 481 7866 2441 2802
Finland 1100 3800 6900 1700
France 28698 81313 49239
Germany 40041 108677 69068 6399
Italy 4000 3 90000 150000
Spain 26388 58886 213987
GBR 0000 4 100000 80000 16000
Hungary 2002 9932 41310
Norway 1274 231 604 3316
Switzerland 25000
Ireland 1072 2571 8694
Holland 2895 19181 19396 2866
179881 503283 670990 30371 28316
Total 1412841
personal
country hotels restaurants Coffee shops Mess halls Mixed
Belgium 12242 46601 17344
Denmark 11831 22088
Finland 14700 18200 12200 10400
France 186456 376598 90308
Germany 301000 527000 209000 26000
Italy 245000 450000 300000
132 after Scott Hume R&I Managing Editor - Back to the Future – www.rimag.com 133 www.wttc.org-statistics
97
Spain 158536 461300
GBR 330000 320000 350000 120000
Hungary 27000 82000 105000
Norway 16400 1600 1500 16700
Switzerland 170000
Ireland 32520 40667 76239
Holland 20000 271000
1335685 1861066 1161691 177900 941088
5477430
Labor force in tourism in several countries 1999: (thousands)
country Total employees Of which women % Of total, with contracts
Egypt 227,0 12 162,5
Source: HOTREC / Confed Nat otels, Restaurants, Café and Similar Establishments within the European Union a n
In numbers, the hotel sector, restaurants, cafes count r 6% of E.U. GDP, the strongest sector of the tourism industry, me 50% nco , 50% ourism employees, accounting for 6.000.000 people w , m g 4% he
entrepreneurs, 40% of total worl el ca , 6 he fi
destinations, 60% of international tourist arrivals, 4% annual growth prediction until 2010. The sector includes 1.500.000 enterpri 9.95 sm l or medium dimension and 95% use less than 10 workers, 50% of personnel are wom rca 20% are individual authorized workers, 54%
of employees have a basic education, being the sector with the highest degree of “social insertion”.
urist market: the E.U. Actually, the headquarters of several large hotel chains is in Europe, and large number of
orking eanin of t labor force, and over 1.5000.000 individual d hot pacity of t rst 10 countries in the top tourist
ses, 9 % of al en, ci
Trough this “negative” example, we notice that 50% of incomes are created by 0.05% of the enterprises, so giant enterprises which control the second largest tourist quota on the world to
the “brand” idea is also of European origins.
A common issue for this sector is the compulsory need to comply with a
laws and regulations. In Great Britain, these surpass 200.134 Things are the same in the E.U.
Several steps have been made to diminish this; the HOTREC published a compendium of 200 European measures affecting hotels, restaurants and coffee shops, thus opening discussions on E.U. forums for a real uniformity of rules.
Taxes are another means against the modern means of transportation. Facilities are immediately followed by new taxes. The WTTC calculated that fiscal measures increased between 1994 an 1999, in 42 of the 52 countries of the study. There are also encouraging measures: a low VAT in the E.U. (the reduction of the quota in Ireland meant 30000 new jobs). A faulty politics
134 Tackling the impact of increasing regulation – a case study of hotels and restaurant – Better Regulation Task Force 2000
98
may put suppliers of tourism in the impossibility of aligning themselves to competition prices or may lead to the degrading of the material basis.
Applying the legislation and the tax system is most of the times annihilated by big tourism structures trough pressure made on political factors to grant them exceptions or by “balancing”
funds at the chain level towards more understanding countries, hiw le small actors must conform, ccepting terms which are clearly unfavorable in the competition.
.8.3 The aviation sector
age distance in tourism is 5 miles, more connected to the car, the usage of transportation in international tourism is varied.
The distribution of tourist arrivals on means of transportation, in several countries.
a 3
Although transportation means are diversified, although the aver 6
Source: OECD, Tourism Policy and International Tourism in OECD Countries, Paris 1996, p.173 preluat după Rodica Minciu, Economia Turismului 2000
For most countries, which we have also found at the top of the tourist destinations, the dependence on aerial transport is obvious. Business tourism emphasizes on this.
In the aviation sector, interest groups have used a lobby to involve the state. International aviation transport is impossible without an international law that functions even in terms of cold war or conflict. Production capabilities are strictly localized: most industrial states which also have a saying in international organizations. These are two of the causes for which international accords, such as IATA135 appeared. The liberalization of international aerial transport, controlled by industrialized or recently industrialized countries plays a key role in the development of tourism. In developing countries, 80% of international tourist arrivals are made in such ways, e of the tourist activities. In 1998, 28.000.000 people were d, for 2010 the number of tourists er 31.000.000.136 The liberalization of aerial transport ecame
which also has effects on the net incom
employed in this sector. In spite of all negative shocks conceive s estimated at 2.3 billion and employees ov
i
b the object of the GATT. Since 1997, negotiation of multilateral accords regarding open skies between the USA and the EU covers 70% of traffic. Aerial company alliances, a new fact, have transformed in new structures, with a huge financial force. So, international organizations and the state itself were used in the interest of global structures.
IATA quota in international passenger transport – km; 2002
135 IATA – International Air Transport Association, est. 1945
136 IATA – The economic benefit of air transport – document elaborated in 2002 by ATAG (The Air Transport Action Group)
IATA quota in international Passenger transport - km in 2002
99
2 8 %
6 4 % 8 %
e d i s t r i b u t i o n b y p s t y p e i n I A T A î n 2 0 0
T h l a n e
2
L o n g c u r r i e r p l a n e s M e d i u m c u r r i e r p l a n e s o t h e r s
Source: World Air Transport Statistic – IATA 2003
IATA had, on December 31st, 2003, 273 members in 143 states which had 11338 planes of which 10455 were jet propelled. It is obvious that this association dominates the industry severely and imperatively.
Until the 8th decade a small number of companies were not state owned or did not have the state as a major stock holder. Government subsidies allowed a conversion of the war fleet a modernization of the civil fleet and the maintaining of the employed labor force. At this time, the number of state-owned aerial companies is decreasing.
Major changes occurred with September 11th, 2001, but not only. The SARS epidemic in Asia had even more disastrous effects, as one can observe by studying financial results. This was due to the distribution of major line routes in the world, as well as the percentage of charter flights.137
The most crowded routes in liner traffic in the world138
Thousand offered places Number of flights Number of companies
London - Paris 492 2987 8
Hong Kong - Taipei 465 1473 7
Jakarta - Singapore 351 1616 15
Bangkok – Hong Kong 322 1049 10
London – New York 320 1119 8
Honolulu - Tokyo 278 643 6
137 Even if IATA statistics are unavailable due to high costs, the permanent consulting of the information bulletins of IATA and other structures allow us to affirm that changes are not essential as to those presented below.
138 Resabook Transportateurs, 1998 preluat după Cristiana Cristureanu – Economia imaterialului: tranzacţiile internaţionale cu servicii – Ed. ALL Beck 1999
100
Amsterdam - London 274 1995 8
Number of planes and income for the first 10 companies139
Company (no Hierarchization) Number of planes Income MIL. USD
AMERICAN 672 15816
UNITED 536 14511
DELTA 551 12295
NORTHWREST 359 8649
CONTINENTAL 319 5775
BRITISH AIRWAYS 229 9550
US AIR 445 7083
AIR FRANCE 220 9728
JAPAN AIRLINES 103 9160
LUFTHANSA 219 10746
Although data has changed, the conclusion remains: the abundance of American companies. Statistics reveal that we have profitable companies, but also companies with losses.
Yet, even a simple analysis reveals that we can not cover flight costs, especially when talking about charter flights. This aspect was overcome by global groups with state help and at the initiative of developed states, the IATA system. The international system of tariffs follows certain.
Unitarian rules and gives way for free competition. But it also includes a feedback and several services which substantially decrease costs: a free usage of tracking and guidance systems, symbolic taxes for airport usage, etc. So, an acceptable price can be reached for almost everybody.
But the most important part is directed towards certain groups.
As the aerial fleet is concentrated in the propriety of 20-30 companies and the main airports are located in developed countries, where aerial traffic is intense and almost continuous.
Main airports according to passenger and cargo – 1999
Airport Number of
Source: ICAO, Airport Council International Report, 2000 after Rodica Minciu, Economia Turismului
Note: Otopeni Airport is placed 279 with 1, 7 mil. Passengers Geographical distribution of the first 100 aerial companies
Area Number of Source: Airline Business, 1995 (passenger number) after Rodica Minciu, Economia Turismului
139 IATA 1998
101
A tendency in the last few years is the “consolidation”, the fusion of aerial companies. The most known such companies are Alianz (which groups Austrian Airlines, Lufthansa and Tyroleum) and recently the fusion of Air France and KLM140 which sends them to third place, after American Airlines and Delta. Remarkable is the fact that the French state will continue to own 44% of the total stocks of the group. Fusions are compulsory, on this market where the const of individual investments grew dramatically, so that, in order to have more kicking power, companies are bound to unite. This is even more important as great aerial companies, the technocrats bounded to them, which are numerous, influential and financially motivated must face strong pressures to overcome the period of economic difficulty which followed September 11th, 2001.
P r o f i t i n a v i a t i o n i n d u s t r y
2 0
Source: World Travel Organization (WTO);
Experience and the general trend of economic evolution, known by anybody who has taken a look on the overall global situation, makes us state that the situation between 2001 and 2003 was a great opportunity for modernization and restructuring of the aerial fleet, with public acceptance.
ire costs (meals, free unlimited drinks, etc.) but rather promoting existing equipment for
s clear that the
zing situation. Corroborating Annexes 4 and 9 which show the provenience A fresh mouth of oxygen for the economy. Amounts are huge: for antiterrorist measures, for increasing flight security, to form new customs in flying. Research indicates that American businessmen which are forced to use planes due to distances, adapted to the new rules: they are 1.5 hours present before the flight, increased from 20 minutes, they adapted their clothing and shoes for easy controls, they use easily accessible hand luggage, they gave up objects which require detailed controls, (avoiding “bizarre” shaped objects, certain mascaras which set alarms off, etc.).
At the same time, the battle between companies is no longer on the field of on board services, which requ
the increase of comfort and agreement. Furthermore, there are talks in different acknowledged circles about the promotion of long currier flights: new types of aircraft of large capacity, with increased independence and lower costs which already begin to exit constructing plants – few in number, basically the same as at the end of the war – reducing to half the duration of a transoceanic trip. Meanwhile, short distance flights are being discouraged, both by prices and by cancellation of flight in order to make way for substitution transport means. It i
aviation industry will know several profound mutations already announced by large capital concentrations in the last few years and in closer perspective.
The analysis may continue in the fields of automotive industry, naval industry, etc. we will find the same globali
and destination of most international tourists we clearly see qui prodest.
140 Air France took over Dutch operator KLM, in a transaction estimated at around 784 million euro, thus forming the third largest transporter in the world and the new leader on the European market, dethroning British Airways. The
sion be
fu tween Air France and KLM – the second, and the fourth European operators respectively, represents the first major transaction in the European industry. KLM shareholders will control 19% of the capital of the new group, while the French state will reduce its participation from 54% to 44%. The rest of the stocks (37%) will be controlled by Air France shareholders. Alitalia announced recently that it to will begin negotiations to join the new company.
- 2 019 19 19 19 199 19 19 19 20 20 20
- 1 0 1 0
92 93 94 95 6 97 98 99 00 01 02
0
o p e r a t i n g p r o f i t n e t p r o f i t
102