IBGeographySLRevision Notes8. Leisure, Tourism & Sport8.3 Tourism & Sport at an International Scale8.3.2 Transnational Corporations & International Tourism

Transnational Corporations & International Tourism (SL IB Geography)

Revision Note

Briley Habib

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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 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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    Briley Habib

    Author: Briley Habib

    Expertise: Geography Content Creator

    Briley is an experienced Head of Geography. With over 16 years of teaching experience, Briley was awarded a PGCE from the University of Lancaster and has a degree in European Studies and Human Geography. Briley has worked in a range of schools around the world and has experience of teaching at all levels. Briley is a member of the Geographical Association’s special interest group on diversity and inclusion. She has also written articles for the Teaching Geography Journal, a book chapter on Place-Based Education and a report on Decolonising IB Geography.