Transnational Corporations & International Tourism (DP IB Geography): Revision Note
The Role of Transnational Corporations in Tourism
In many Lower Income Countries (LICs) tourism is used to stimulate economic growth
Tourism contributed $9.5 trillion to the global GDP in 2023
Many LICS have primary resources:
Beaches
Wildlife
Mountains
Heritage
Indigenous people
Rainforests
Secondary resources, such as hotels and other built tourist facilities, are also available
For some LIC destinations, it is difficult for individual tourists to book a holiday independently and therefore they rely on tour companies
Infrastructure is not complete in LICs. This means that the LIC then relies on transnational corporations (TNCs) to develop the tourist industry
A transnational corporation is a company which operates in at least two countries
TNC headquarters are usually in HICs
The eight largest hotel chains in the world are all US-based companies
TNCs invest in both
Primary resources such as theme parks or water parks
Secondary resources including hotels, restaurants, airlines etc…
TNCs have led to cheaper international travel
Transnational corporations
Hilton Hotels is one of the largest hotel chains in the world:
Conrad Hilton opened the first hotel in Texas in 1925
Hilton Worldwide Holdings Inc. had approximately 1.12 million hotel rooms worldwide in 2022
Hilton has sponsored the McLaren Formula 1 team for the last 18 years
Hilton built the first airport hotel in 1949
Employs 159,000 people globally
Thomas Cook is a British company founded in 1841:
Passengers were transported to various cities in England
In 1855, the first tours to Europe took place
In 1865, the first tours to the USA took place
Thomas Cook was the first organisation to offer a traveller's cheque in 1974
The company offered package holidays later than other companies
In the UK, the company offers many different types of holidays, including rail, airlines and cruises
The company employs 21,000 people worldwide
Thomas Cook Airlines collapsed in 2019, leaving over 600,000 people stranded abroad
A stakeholder is someone with an interest in a particular area
In tourism, stakeholders can be individuals, groups and organisations such as TNCs
There are five main areas of TNC involvement in the tourism industry:
Cruise lines
Airlines
Tour operators
Hotels
Travel agents
Costs & Benefits of Transnational Corporations
Cost and benefits of Transnational Corporations (TNCs)
Stakeholder | Benefits of TNC involvement | Costs of TNC involvement |
|---|---|---|
Tourists | Tourists can choose a branded hotel that they will be familiar with such as the Marriott Hotel company which can be found in over 7642 properties globally The Marriott Hotels are similar in style around the world which means that people may want to choose a hotel or service they recognise | Lack of choice because large hotel chains now have spread into countries around the world Hotel prices can increase because people are willing to pay more for a recognised brand |
Tourism employees at the destination | People who are employed may receive regular income and employment benefits Development of employee skills TNCs often franchise their hotels which means that people or companies can purchase the name of a well-known hotel company increasing brand awareness | If a TNC withdraws from the country employees will be left without work Companies who franchise do not necessarily treat employees as well as if they were working for the company directly Leakage - money goes to TNC home country not the destination |
Local people at the destination | Taxes generated are used to create new infrastructure which benefits the local people as they have better access to improved roads and hospitals Increase in foreign direct investment (FDI) | Some would argue that when Western tourists visit new destinations then the locals may lose their culture, and language and be influenced by foreign foods and architecture |
Employees based at the head office | TNCs such as Booking.com (opens in a new tab) have shown their interest in social responsibility initiatives and focused their work on gender equality | Women’s positions in the company do not match that of men and only 30% of the top positions are held by women |
Environmentalists | Marriott International (TNC) have used the UN Sustainable Development Goals as part of its environmental responsibility Increased airport availability has meant that some companies have invested in state infrastructure such as mass transit which anyone can use | TNCs spend millions on marketing each year encouraging tourists to fly to many destinations increasing carbon emissions Airports are increasingly being built outside of major cities to deal with tourist demand Tourist activities may lead to an increase in environmental pollution |
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