The announcement last month about the reset of US-Cuba relations was big news here in the US. Many agree with President Obama that, after 50 years, the US trade embargo against Cuba was not working and that it is time for a change. Others opine that we should have pressed Cuba harder to democratize its political system and address its human rights concerns before agreeing to loosen trade restrictions between our two countries.
Only time will tell whose position is right. But, one thing is certain: while, for many, the US remains the world’s only shining beacon of freedom, much of what we value here in the US simply can’t be replicated elsewhere at this time. It’s foolhardy to insist that others must embrace our approach before we engage meaningfully with them.
The world is full of countries with which we have amicable, supportive and economically productive relations but whose political systems and approach to human rights values don’t necessarily line up with ours. Think Singapore, Thailand and the United Arab Emirates (UAE) as stellar examples. There are many, many others.
For its part, Singapore can be thought of as a hybrid. Its system of government is functionally a democracy even though there is little public participation in government and its People’s Action Party has won every election since Singapore became an independent city-state in 1965. Yet, its physical beauty and high standard of living is envied throughout the world, and it ranks as the world’s ninth best city to live in, visit and do business in, tying with Los Angeles.
Consider Thailand. It’s a constitutional monarchy existing under a parliamentary democracy since 1932. Yet its democratic system remains weak and the country has been ruled by a succession of military rulers in recent years. Nevertheless, Bangkok, its capital, ranks as the top tourist destination in Asia with 11.5 million visitors annually. The country is among the largest economies in Asia and it has positioned itself to become the logistical hub in ASEAN.
Then there’s the UAE. It can be categorized as a federal presidential elected monarchy since its president is elected among the seven absolute monarchs who rule each of the seven emirates that comprise the UAE. The country has elements of a democracy including a constitution and legislative and judicial branches. And who can deny the incredible economic and educational progress achieved by the Emirati people since becoming fully independent in 1971. Even so, today when the citizens of the UAE look across their borders to many of their Middle Eastern neighbors who earlier this decade embraced the Arab Spring, many wonder if democracy is an ideal form of government. They question if democracy fits different cultures and ask themselves if their regional culture has the discipline and patience for democracy to succeed.
For democracy to flourish, certain assets must be in place, including citizen discipline and patience. These include an educated citizenry that values democratic procedures, a national commitment to the free flow of information and association, a strong cultural support for a limit to the state’s powers and holding the state accountable for its actions, an involved and economically-strong middle class, a national spirit of tolerance, and an elaborate system of local self government where future leaders can gain experience.
This doesn’t mean that we shouldn’t speak up for freedom and human dignity at every opportunity. But, we also need to recognize that countries and their citizenry need to build their own roads to a democratic ideal.
An example is the contrasting paths taken over the past 25 years by Russia and China, both former major communist states. Russia rapidly embraced a form of democracy after the disintegration of the former USSR. Eventually, it devolved into a “gangland” which has been compared to the lawlessness that gripped Chicago during Prohibition and beyond. Today, Russia is a democratic dictatorship under President Putin with only a handful of its citizenry truly enjoying prosperity. Contrast this experience with that of China. During roughly the same time frame, China made monumental strides in creating a strong middle class while catapulting itself into becoming the world’s largest economy, even as it remains today a communist dictatorship.
Consider Tunisia. Its uprising in 2011 against an autocratic leadership inspired the Arab Spring across North Africa and the Middle East. This past autumn, Tunisia took its final step in a four-year transition to democracy by holding its first free national presidential election. The point here is that the Tunisian people took those first steps on their journey to democracy by themselves. Will they be successful? Only time will tell.
Now compare Tunisia’s experience with that of Egypt, Libya, Syria and Iraq. Since the Arab Spring, Egypt has reverted to military rule, Libya is struggling to survive as a country, Syria is disintegrating, and what can I say about Iraq that hasn’t already been said.
Bottom line – Managing a democracy like ours in the US is serious business. It may not be for everyone today, but it can be an ideal and an aspiration. We in the US owe it to those who would emulate our approach one day to ensure we protect and nurture Lady Liberty and the vision of our founders so that we do remain freedom’s shining beacon.
Recently, I came across a study of frequent international business travelers in which about a third of the respondents indicated that their personal security ranks among their primary concerns while traveling. So, to help address this concern, I asked my former colleague Alan Orlob at Marriott International, Inc. to share his thoughts on this subject. Alan currently is Vice President for Global Safety and Security at Marriott International and serves as chairman of the Orange County Homeland Security Council here in Southern California. He has served as a consultant to the US State Department’s Anti-Terrorism Assistance Program on Hotel Security and has testified before the US Congress on this subject. A frequent speaker on terrorism in venues across the world, he was named one of Security Magazine’s “Most Influential People in Security” in 2013. I believe you’ll find his perspective invaluable.
Ed Fuller, president, Laguna Strategic Advisors, LLC.
By: Alan Orlob, Vice President, Global Safety & Security, Marriott International, Inc.
In 2009, I was traveling though Asia. After spending a few days in Hong Kong, I made a short visit to Jakarta, Indonesia with my regional director to review the security at our hotels. We arrived in Jakarta in the afternoon of July 16th and met that evening with the general managers of our two hotels in the city—the Ritz-Carlton and the JW Marriott. These hotels are located across from each other in the Mega Kuningan area of Jakarta.
As we chatted, we had a general discussion of the security situation in the city. Indonesia had been rocked by terror attacks in the early part of the decade, beginning with attacks in Bali in 2002, followed by a suicide bombing at the JW Marriott Hotel Jakarta in 2003, the Australian Embassy bombing in 2004 and further bombings in Bali in 2005.
These attacks were perpetrated by a terrorist organization known in Indonesia as Jemaah Islamiyah or JI. However, for the 4 years prior to 2009, there had been no significant attacks and most of the security analysts felt that JI did not have the operational capability to launch another major attack. We went to bed that night, feeling confident that the authorities were dealing successfully with the terrorism threat in the country.
The next morning, I woke early, still dealing with the effects of jet lag. I was in the gym by 5:30 am for a work out, spent some time checking emails, then jumped into the shower. As I stepped out of the shower around 7:30 am, I heard the unmistakable sound of an explosion outside. As I looked from my window at the Ritz-Carlton, my view was of the front entrance of the JW Marriott Hotel. I could see smoke coming out of the back of the hotel and people running. As I quickly dressed, I heard another explosion, this one in the Ritz-Carlton.
The scene that met my eyes that morning, both in the restaurant where a suicide bomber had detonated his explosives in the Ritz-Carlton and in a meeting room across the street at the JW Marriott Hotel was utter devastation. Two people died in the Ritz-Carlton’s restaurant and another 9 lost their lives in a meeting room at the JW Marriott. As tragic as that was, it could have been much worse if we didn’t have the security precautions in place that we did.
Hotel security has taken on an entirely new meaning since the terror attacks in New York and Washington, DC, on Sept. 11, 2001. Prior to that, hotel security tended to focus on thefts from rooms and preventing slip and fall accidents. We still work diligently to prevent these types of incidents, but a large measure of what we focus on now is anti-terrorism. Twenty years ago, I felt comfortable as an American strolling down the streets of most countries in the world. Not now. When we go to Pakistan today, we travel with a security detail. We avoid certain areas in Egypt where demonstrations are still ongoing since their “revolution.”
We opened a beautiful JW Marriott Hotel in Tripoli, Libya two weeks before the Arab Spring started and found ourselves, several weeks later, faced with the task of evacuating all of our staff in the country and did so with a chartered jet. The security situation has still not stabilized in Libya; in fact, it has deteriorated. The US Embassy was closed 2 months ago and there have been recent attacks on the Egyptian and UAE embassies there. We don’t know if our hotel in Tripoli will ever reopen.
In the mid-90s, at Ed Fuller’s direction, who was President of International Lodging for Marriott at the time, we embarked on a program to enhance security to address the worldwide threats. We developed a crisis management plan that was distributed to all our hotel general managers. Contained in the plan were color-tiered “threat conditions” with specific procedures to be followed at each level. At the highest level, “threat condition Red,” we required bomb sniffing dogs to check every vehicle, walk through metal detectors and x-ray machines at every entrance.
Today, with over 4,000 hotels and 18 lodging brandings operating in 74 countries, the job is immense. The threat of terrorism continues to evolve and our procedures need to stay dynamic. We now have intelligence analysts, based in Washington and Dubai, that advise us on the threats they are seeing around the world. We have a training manager who ensures our security officers know how to properly inspect a vehicle and recognize images on x-ray machines that screen luggage.
After the attacks in Mumbai in November 2008, I testified before the US Senate Committee on Homeland Security. I advised them that security intelligence should not be left up to hotel general managers with no security experience and with no intelligence resources. Instead, security needs to be assessed by professionals who are looking at threats and terrorist organizations around the clock, around the world, everyday.
The terrorist organization that attacked the hotels in Mumbai in 2008 came from Pakistan. The threat of terrorism tends to be transnational in nature so having a local focus isn’t enough. In the past several weeks, our analysts have been watching the continuing threat from ISIS, the Islamic State in Syria. The entire intelligence community today is concerned by the number of foreign fighters going to Syria and worrying about the result when they return to their home countries with new skills and networks.
While today we put a lot of focus on anti-terrorism, other threats confront our guests and associates. In 2002, we were dealing with the threat of SARS in our hotels. Today, we are concerned by the threat of Ebola. Soon after the Ebola threat manifested itself, we had a team working on protocols to advise our hotels. One can only imagine what could happen if a guest checked into one of our hotels and found himself sick with the Ebola virus. Particularly, if he had been staying at the hotel for a few days, availing himself of its fitness center, restaurants, swimming pool and other amenities.
Natural disasters can wreak more havoc than any bomb could. We have dealt with destructive hurricanes in New Orleans and Cancun as well as tsunamis that caused hundreds of deaths in Thailand and Japan.
By chance, I was in our Marriott Hotel Moscone Center in San Francisco on October 17, 1989, when a 6.9 magnitude earthquake struck. I saw firsthand the effects of a strong earthquake; but more importantly, I realized that in any type of major catastrophe, we can’t rely solely on local authorities for assistance. We need to be self-sufficient. There are not enough first responders, communications are down and roads are closed. The hotel’s emergency plans need to account for all these eventualities. Our crisis plans give us a broad overview of how to deal with emergencies like these, but every crisis has its own nuances. Training is key.
The military spends a lot of time training soldiers so that when confronted by the enemy, they don’t need to think. They react to the training they received. We try to do the same with our managers by creating various scenarios into tabletop exercises and then train to the scenario. We see managers reacting in these types of exercises just as they would in a real world situation. Oftentimes, they are exhausted at the end.
The world has changed since 9/11. Prior to that time, travelers could wander around most cities of the world unhindered with little worries. The events of 9/11, the subsequent wars in Iraq and Afghanistan and now the threats from ISIS have changed all that for those traveling abroad. The world watched in horror as armed gunmen invaded the two Mumbai hotels in 2008. The hotel industry responded by monitoring worldwide threats and putting in security measures to meet the increased risk. In some countries, going into a hotel today is like going through an airport. Metal detectors, x-ray machines and bomb sniffing dogs are the norm.
We regularly study incidents involving hotels around the world. The attacks on the two Mumbai hotels provided good lessons for travelers venturing into high threat areas. Among these are:
- Understand that the world has changed and take more personal responsibility as you travel. This means planning ahead.
- Consult the US State Department’s OSAC website (www.osac.gov) for information on the country you plan to visit. This website shows traveler warnings issued by the State Department.
- If you decide to travel to potentially hazardous areas, have a good understanding of the area and its potential risks.
- Leave the flashy jewelry, clothes and luggage home. Keep a low profile.
- On arrival at your hotel, walk around it to familiarize yourself with the layout, including possible exit points.
- Travel with a small flashlight and keep it on your nightstand at night.
- When outside the hotel, be aware of what is going on around you. We call this situational awareness. If approached by people you don’t know, walk away. Keep your valuables close to your person.
- If there is a serious incident in the hotel, the best advice is to stay in your room, throw the dead bolt, close the night latch and stay put. Don’t answer the door for anyone. Call the operator for advice and let the operator know that you are in the room.
- If the fire alarm goes off, unless you can smell the fire, don’t automatically evacuate your room. Call the operator for advice.
- Consult with your travel agent for a list of security companies that can provide further information.
I don’t think I’ve seen a period in my lifetime where the world has seemed more unstable than it is today. Those of us , who work in hotel security, work hard to be forward thinking and evaluate the myriad threats that could impact us. We owe to you, our guests, our fellow associates, our hotel owners and the communities we serve.
Earlier this year, I blogged about the excitement in China generated by the news that its Dalian Wanda Group planned to invest $1.09bn to build and operate a luxury hotel in London. At the time of their announcement (made in the summer of 2013), it was the first luxury hotel venture announced by a Chinese firm outside of China. Since then, Dalian Wanda has added a luxury hotel project in Madrid and, just this past summer, they advised Chicagoans they will open a $900mn skyscraper, the city’s 3rd-tallest building, on Lakeshore Drive East housing a 240-room luxury, 5-star hotel, luxury apartments and retail space in 2018. Additional US markets targeted by Dalian Wanda include NY, Los Angeles and San Francisco.
This is just the beginning. Recently, Anbang, China’s 8th largest insurance conglomerate stunned the hospitality community with its $1.95bn acquisition of the iconic Waldorf-Astoria—the highest price ever paid for an existing hotel in the US. Not to be outdone, in October, China’s Sunshine Insurance Group Corp. invested AUS$463mn (about $399mn) in Sydney’s high-profile Sheraton on the Park, paying roughly $716,000 per room; and in November, Shanghai-based Jin Jiang International Holdings Co. purchased European-based Louvre Hotel Group for around $1.2bn.
Hotels are not the only targets as Chinese investors explore investment opportunities abroad. Last year, the US food industry was abuzz by Shu Anhui’s purchase of Smithfield Foods for $4.76bn and, this past June, folks in Virginia took note that China’s Tranlin Paper Co. had invested around $2bn in a paper and fertilizer plant that is expected to create 2,000 local jobs by 2020.
Over the past few years, Chinese money has flowed into the US, up from $58mn in 2000 to $14bn in 2013. Overall, Chinese investment in the US now totals nearly $40bn, and according to Deloitte, and Chinese investors are now the 2nd largest foreign investor group, after Canada, in US commercial real estate with an 8% share of the total cross-border investment. As the South China Morning Post recently commented, Chinese investment in the US now exceeds American investment in China.
Propelling Chinese investment here and in other countries are forces that are nearly identical with those that lured Japanese investment overseas three decades ago. Fortune Magazine reports China now has excess saving ($4tr in foreign exchange reserves), making valuation of US and European assets attractive because to Chinese private investors, foreign assets deliver exceptional returns.
At the same time, Chinese consumers are interested in acquiring everything American. They also feel their assets are better protected in the US. Today, these consumers represent more than 85% of investors who have applied for US EB5 visas that go to foreigners who invest more than $500,000 each in the US. CNBC reports these folks mostly put their money into the asset they consider the safest: US real estate.
So, given this backdrop, what can we expect for the hospitality industry? Simply this: Transformative change is coming here in the US and abroad. Keep in mind that 100 million Chinese are now traveling outside of China and industry leaders expect this number to grow to 200 million in the next 5 years or less. Chinese hospitality companies like Dalian Wanda expect their countrymen to provide a solid customer base from which they can draw as they expand abroad—just as the US and European travelers provided the foundation and impetus for the massive global expansion of their home-grown, powerhouse brands like Hilton, Sheraton, Accor, Marriott and others several decades ago.
In today’s world, while other markets such as Russia, Korea and Japan are growing, only China has the resources and volume of travelers to follow the US growth model. Already, one of its brands, Home Inns, ranks in the world’s top 10 global hotel brands in terms of rooms. Others will soon follow suit.
The bottom line is clear. Globally and in the US, Chinese brands and investors are going to grow significantly. This trend is important not only for industry students, educators and company strategists to heed, but also for local communities and the traveling public at large.
The facts tell the story. Since 2000 the rise of the world’s emerging markets has been one of the defining, but relatively little reported, features of the global economy.
Consider this: In the next ten years McKinsey & Co. predicts that the annual buying power of people living in just the world’s emerging markets will reach $30 trillion a year. Twenty years ago less than 20% of the world’s population earned enough money to afford little more than the basic necessities of life.
Over the past two decades, thanks to global urbanization, a rapidly expanding middle class, removal of trade barriers, leap-frogging technology, and other positive developments, the world’s consumer class has doubled to about 2.4 billion people. McKinsey predicts that by 2025, this number will double again to 4.2 billion out of a global population of 7.9 billion, and that for the first time in history, there will be more people in the consuming class than those who are still struggling to get by, and that the emerging markets will become the dominant force in the global economy, accounting for 70% of global economic growth. Today they are well on their way to dominance by claiming 50% of the world’s GDP in purchasing power.
We’re already seeing the impact. China is now the world’s largest automobile consumer. Recently its largest e-commerce company, Alibaba Group Holding Ltd., launched a share offering in New York that attracted global attention, becoming the largest stock debut in history. Sort of like a combination of Amazon and eBay, Alibaba is transforming life in China, where 80% of all on-line sales pass through one of its sites. Alibaba now focuses its business in China, but following its splashy September debut on the world’s financial stage, their strategic direction likely will broaden. Meanwhile, in another five years more than half of all Chinese households will be solidly in the middle class, up from 6% in 2010.
Leading the global transformation taking place before our eyes in the emerging markets is a generation of consumers who are now in their 20s and 30s. Last year these markets were home to 85% of the world’s population, 90% of which were under the age of 30. This number is expected to grow at three times the rate of the developed economies now through 2020. And while the BRICs (Brazil, Russia, India and China) are home to almost half of the world’s emerging market population, 1.3 billion other folks live in non-BRIC emerging markets -combining for a population considerably greater than all those living in the developed countries. It may be hard to believe but five non-BRIC emerging markets have populations of more than 100 million each – Indonesia, Pakistan, Nigeria, Bangladesh and Mexico.
So what does all this mean? This economic transformation carries with it a lot of pent-up demand – for a better education for their off-spring, for better food and health care and for the finer things in life, especially to see and experience the world beyond their national borders. For its part, Boeing sees a 5% increase in demand over the next two decades for more than 36,000 new aircraft.
As businesspeople, we need to begin developing a deep knowledge of these markets, their people, their customs and their current and ancient history so as to better understand them and communicate more effectively with them. We need to design our products so that they appeal locally – city by city. When crafting your needs/benefits message, think lifestyle. And finally, start now to carefully build your relationships by finding the right local partners.
I spent the last half of my 40-year career with Marriott International traveling the globe as president and managing director of the company’s offshore lodging division. During those years, I visited China at least 5 times a year. I was impressed, at the time, to find the nature of the Chinese people was always welcoming and hospitable. I also learned that their culture and value system was vastly different from ours.
Some of you may be wondering why you should care about this. You should because, in the not too distant future, vast numbers of Chinese visitors will very likely be coming to a town near you and they will have a huge impact on the world around you. Consider this: China’s tourists today are the largest group of travelers of any country. Last year, more than 100mn Chinese people from the mainland traveled abroad, nearly a million of them came to California. By the end of this decade, this number is expected to double. So, it makes a lot of sense to begin preparing the red carpet to ensure these visitors have an enjoyable experience in our communities.
Not only are these folks big-time travelers, but they also have enormous purchasing power. Last year, they overtook the US and Germany as the world’s biggest travel spenders by forking out more than $100bn. And the volume of their travel and the amount they spend when on the road are growing annually by double digits.
If you’re wondering why the Chinese people have suddenly begun traveling in such huge volumes, it’s because over the past 30 years China has transformed itself from a basically agrarian society into a global economic powerhouse. This has given birth to its rapidly expanding middle class. Coupled with the recent easing of the Chinese mainlander’s ability to get visas to visit other countries, the floodgates have opened wide. There’s now a huge pent-up demand in Chinese society to see the world. In fact, about 60% of today’s Chinese tourists are traveling abroad for the first time.
But, make no mistake about it. These are sophisticated tourists. They’re not much interested in seeing how many famous sites they can cram into a 14-day itinerary. They pay a lot of attention to the quality of their travel experience and they do their homework on the Internet before leaving home. More than 600 million Chinese citizens are Internet users, including the more than 53mn who logged on for the first time last year.
What makes the Chinese people culturally different from ours? Basically, their culture is rooted in the three pillars of Group Harmony, Respectful Communications and Relationships and Networks. These pillars date back several millennia and are based in Confucianism—a humanistic, ethical and philosophical belief system that values ethical conduct and the practical order of things.
As a result, unlike western cultures that put a lot of emphasis on “me, mine, my company, my house” and so forth, Chinese people talk in collective terms such as “us, we and our partnership.” So, when you interact with our Chinese guests, or try to forge a relationship avoid a “us versus you” posture. Speak with a Chinese person as though he or she is a partner, even if the relationship is just starting.
Respect, or what is sometimes referred to as Face, is almost everything to a Chinese person. And communication is one interaction where respect is shown. Early on, Chinese youngsters are taught to be humble and courteous. Thus, when a Chinese guest, customer or potential business partner doesn’t overly respond to your compliments, he or she inwardly very much appreciates them, but doesn’t overtly show his or her appreciation. On the other hand, when they say that one of your requests or ideas is “under consideration” or “being discussed,” indirectly this may be their polite way of saying “no.”
Relationship is EVERYTHING to a Chinese person and it is not forged overnight. Thus, if you want to do some serious business with someone from China, start with building the relationship first.
Here are some basic social tips to help you get started.
Take the long view in all your dealings with our Chinese visitors—they appreciate patience and the long-term goal.
Gift Exchanges – Everyone likes to receive gifts and none more so than the Chinese. But there’s a strict protocol to getting the gift-exchange right. Not only is the choice of the gift important, but so is how you wrap it, how you present it and to whom. When deciding on what to give, be thoughtful and considerate and avoid giving something over the top or overly lavish because it could be considered a bribe. Keep in mind that it’s the thoughtfulness behind the gift that’s paramount, not necessarily the cost. Plan to give the most senior person present the most expensive gift and never give the same gift to persons of different rank. And if you’re given a gift, don’t open it immediately.
Titles – As a general rule, refer to your Chinese guests by their professional titles such as Professor Wong, President Wu, Doctor So or Manager Chou or at the very least Mr. or Mrs. And, omit any defining words such as “deputy” or “assistant.”
Business Cards – Exchanging business cards is a big deal and there are some dos and don’ts associated with the exchange. Chinese people normally use both hands to present or receive the card to show respect. All cards should be carefully read. Never put the card into your back pocket or leave it on the table and never write on it.
Body Language – For Chinese people, overly exuberant smiles, using your index finger to show direction, excessive body language and departing before your guests do are all considered disrespectful.
Tipping – When dining out, one participant pays the bill for the table to show generosity and friendship; the western custom of “going Dutch” is frowned upon.
You’ll find no more appreciative guests than those from the mainland of China. Let’s work together to ensure that the hospitality we extend and the guest experience we deliver is positive and leaves a lasting impression that our country is a great place to visit and maybe to invest in.
Everywhere we look these days, it seems, everything appears to be falling apart. New, politically explosive global trouble spots emerge daily while lingering ones become more demanding and complex. Barbaric atrocities have become a staple on the evening news while many of our global leaders seem feckless and perplexed about how to respond to the challenges before them.
Here closer to home in the US, thousands of youngsters from abroad have been tragically dumped on our borders and communities across the country are asked to make room in their local budgets to care for them. Thousands of our citizens are being dropped from their preferred health care plan and are now facing astronomical rate increases to maintain their current coverage levels—even though they were promised they would be able to keep their current plan if they wanted it. And the examples go on and on whether here or abroad.
We all have our ideas about why things seem to be going terribly wrong at this time and what to do about it. For my part, it seems that much of it comes down to a lack of Respect—for individuals; for the ideas, beliefs and traditions of others; for the rule of law and; sadly, for common decency.
Meanwhile, our US President is an excellent example of eloquently speaking the words but not following up on what he has said or being careful to modify his statements so he can’t be held accountable—no matter the outcome of his policies or statements.
The examples are too numerous but the lesson is there as we look at how we, as company executives, provide leadership in a global world. My several decades of working in a global environment with Marriott International taught me that Respect is critical and Perception is reality—both of which are often viewed through a cultural screen. The one constant is that words must be followed by actions to gain credibility.
One example comes to mind involving the building and branding of one of our hotels in China. We had reached an agreement with one of China’s wealthiest real-estate investors. He would build a spectacular, full-service hotel in a major Chinese city and we would manage it for him. In time, it became clear that the owner’s contractors were cutting corners. The building materials were second-rate and the workmanship was slipshod. In a series of meetings, we delivered the same message: we had high standards and this particular property was not up to par. The owner refused to change his approach and we never wavered—“Build the hotel the right way, or we won’t accept it.” He nicely responded, “Yes, you will.”
A competing hotel had recently opened a substandard property and our prospective owner thought we would follow suit. We refused. He held out for two years, somehow managing to withstand the financial pressure to move ahead. Finally, the stalemate was broken when he realized that his contractors were letting him down and costing him a good deal of money by not doing the job right the first time.
Later he told us, “I hate what you people did, but I respect you for doing it.” We eventually opened his hotel and it has been successful. When the dust settled, other owners of Marriott properties in the city told us they approved of our stand. What they did not say—though it was clearly understood on all sides—was that if we had yielded to him, they would have looked foolish for agreeing to maintain our standards in the hotels they had previously built.
To be sure, the building and opening of a hotel is small potatoes compared with many of the problems we’re facing today across the world. But, the principle is the same. Respect is paramount and you have to not only mean what you say, but to follow through on what you say. It’s time those in leadership positions understand that words have meaning and require action.
Later this month, on September 27, people around the world will mark World Tourism Day as they have every year since 1980. That’s the day the United Nations designated as the one on which we recognize the positive contributions that global tourism makes each day to the world’s economic, cultural, political and social life.
Tourism today is a trillion-dollar industry involving the movement of more than one billion tourists across borders and another five to six billion travelers domestically every year.
As we currently experience serious global uncertainties on many fronts, tourism has the ability to help make things better. It generates socio-economic opportunities that help narrow the gap between rich and poor and gives rise to a robust middle class that benefits everyone. By promoting interaction between the tourist and host community, it provides a wonderful opportunity to sample a different way of life. We taste new foods, hear new music and explore the world’s cultural and historic heritage when we go abroad. By enabling these experiences, tourism lays the foundations and builds the bridges that lead to tolerance and understanding.
Ask any beauty contestant what they most wish for and the reply almost certainly will be “World Peace”. In fact, the majority of the world’s citizens want peace because we know we all can do so much more once we have peace. Yet, sustained peace is probably the one eternal desire among all mankind that has been out of reach since time began.
In my opinion, the very best catalyst toward our achieving our cherished goal of living in a peaceful world is Tourism.
We live today in a world of misconceptions and miscommunications. Many in our global community believe that what they see on TV or in movies are meant merely to entertain, not to inform. The lines between the news and editorial sections of our daily print media have become blurred. Social media bombards us daily with disparate bits of information—rarely in a context that makes it meaningful. Time was when folks were confident that pictures don’t lie; but now almost everyone knows that pictures can be photo-shopped. Often, all we know about an event is a 15-second sound bite caught on the run or what an acquaintance said they heard somewhere. Many of our fellow citizens around the world grow up in environments peppered with propaganda often spread by governments or organizations eager to influence their beliefs and opinions and, ultimately, actions. It’s hard for anyone anywhere to know what to believe anymore.
Nevertheless, we all form our opinions and prejudices and develop animosity based on this misinformation. None of this is new, but the warp speed of today’s global media and the quest to be “first in the know” almost always ensures that the first headline is not the “whole story”.
As a result, we all have a view of the people around us, but we seldom have all the facts. Although 25% of US citizens now carry a passport, almost a third of those that do venture abroad stay in North America, visiting Canada, Mexico and the Caribbean. A relatively small percentage visits any of the emerging countries like the BRICS (Brazil, Russia, India & China), and Korea, the UAE or any of the other emerging countries—all of which are having a profound effect on the world and the global economy.
Just consider this: combined, consumer spending in the emerging countries has outpaced that of the developed ones every year since 2000 and is expected to continue on its rapid growth trajectory for years to come. The emerging countries now account for more than 50% of the global GDP in purchasing power and, in less than 10 years, the BRICs will add a combined $3.3 trillion to their consumer spending—a figure that equals adding another France and Germany combined to the marketplace.
The emerging countries are home to 85% of the world’s population and 90% of these people are under the age of 30. The total population of these countries is expected to grow at three times the rate of the developed economies now through the end of this decade. These projections are mind-boggling and we all need to sit up and take notice because the world as we all know it today will certainly be a far different place a decade or so from now.
This is where Global Tourism can play a huge role. We don’t really know what we haven’t seen and personally experienced. The world is out there for anyone of us who wants to learn and explore.
Everyone agrees that there is no better way to learn about a new culture than to experience it first-hand. And when you truly learn about other people by investing the time to meet them face-to-face and learn about their history and about what they cherish the most, you come away a far better, more informed and discerning person. You will be able to put what you hear from others into the context of your own life experience and make your own, informed opinion. Bolstered by your empathy and understanding of the world—as you have experienced it, you will become an advocate for how best to resolve the inevitable political and economic conflicts that arise. Most of all—you will have your own ideas on how best to achieve peace rather sitting in your arm chair, simply reacting to what others tell you.
No two ways about it: Tourism is our best bet for a peaceful, bountiful future. So, let’s all celebrate the many contributions Global Tourism has already made. More importantly, let’s all go out into the world and explore, learn and enjoy yourself!
When I joined Marriott Corporation in 1972, the company’s portfolio consisted of 22 properties—three franchises, one managed property and 18 company-owned hotels. As a business model, Ownership was easily understood. The Marriott corporate culture and values applied. Capital decisions and development were in Bill Marriott’s hands. We were growing, so considerable focus was placed on developing our associates. The company had clear objectives and direction.
At the same time, similar experiences were being replicated at Hilton, Sheraton, Western International and the other early giants of the U.S. hospitality industry. Most started with a focus on Ownership; while others, like Holiday Inn, focused on Franchising.
During the 1980s, in a quest for more rapid expansion, many of the Ownership companies began their transition to Management contracts while others moved into Franchising as their preferred growth strategy. By the 1990s, major branded chains had reduced their Ownership portfolio to a minimum and continued to operate with a combination of Franchising (Hilton, Wyndham, Quality Inn and others) and Management contracts. They started to create and acquire brands and aggressively applied the Franchise model in the economy and select service categories.
Today, the Management model is fast giving way to Franchised operations in the United States, Europe and parts of Latin America as all the major branded hotel companies pursue aggressive growth strategies and move into new markets abroad. Franchising has become a proven route to successful expansion and now accounts for turnover of US$300 billion in Europe, US$850 billion in the U.S. and US$130 billion in Australia. This trend will continue into the remaining global markets when local market conditions are right.
While Franchising allows the brand companies to attract strong local investors and local market insight and know-how, it takes the management of the brand culture, fulfillment of the brand promise, consistency of product and quality control of assets out of their direct control and places them in the hands of a mixture of operators with divided loyalties and priorities.
So, as Franchising becomes the dominant business model in the industry, who will win and who will miss the mark?
Winners will be:
1. Brand companies like Marriott who have a strong culture and are able to integrate their culture into the operating teams by reinforcing the culture at every turn.
2. Brand companies that focus on training for their franchisees and develop specific training programs that encourage brand loyalty and by conducting annual conferences for executive management and senior operators (general managers).
3. Brand companies that maintain strong, clear, effective and motivating communications between themselves and the operating companies, that use the rule of “selling,” not “telling,” and ensure that their message reaches all levels of the operating hotels.
4. Brand companies that differentiate their brands to the point that they are clear to the brands staff, the operators and the consumer.
5. Brand companies that enforce customer and brand standard audits. Underperforming operations reflect poorly on the entire portfolio.
6. Brand companies that focus all their efforts on reaching individuals who serve the customer so that they understand and can deliver on the brand promise.
The transition to Franchising is impacting almost all major brand companies and it will take several years to reach every corner of the world. But, the trend is accelerating faster than expected.
Whether you are a brand associate, brand company executive or operating company manager, the winner will need to excel at all these attributes.
The world has become increasingly global and interconnected in the past 10-15 years. And while people have been on the move since time began, welcomed immigration has tended to move in step with economic conditions—rising when the local economy is strong enough to accommodate the influx of new people and dropping when it is weaker.
Today, it is estimated that more than 200 million people globally live outside their home countries, a number that has increased by more than 40% in the past decade, according to the United Nations. Immigrants now comprise 3.1% of the world’s population, up from 2.9% in 1990. No one knows for sure how many of the global immigrant population is illegal, but the International Organization for Migration in Geneva estimates the number to be between 15% and 20%.
Here, in the U.S., which at 42 million has more immigrants, legal and illegal, than any other nation, the media reports bits and pieces of the situation, but doesn’t seem to look at the big picture. Congress seems not to want to make the hard decisions and choices in an election year that are needed to address the issue and our President, well, he just doesn’t seem to want to deal with real issues except to orate or to use his “phone and pen.”
Today, across the globe, while the nationalities of the migrants may be different, governments in developed nations are facing huge local public pressure to increase border enforcement and security, even as they welcome legal immigrants to help combat a shortage of skilled labor, such as in Canada, or to back-fill a rapidly declining population, as in Japan.
Over the years, America has prospered through legal immigration. My relatives were German and my wife is Italian. Past legal immigrants to the U.S. and their families have helped make this country great. Recently, I read an article in the Los Angeles Times that described the positive impact Asian immigrants from Korea and Japan to Bangladesh have had on Orange County where I live. They noted that in a county of 3 million residents, today nearly 600,000 Asian Americans make their homes here, up more than 40% since 2000. They discussed the resulting diversity of restaurants, shopping malls, languages spoken and the transformation of sleepy communities into bustling commercial centers as all positive developments.
No matter where you live, positive legal immigration refreshes the community. The problem we face today is illegal immigration that has no true regulation and generally invites immigrants who often include the criminal element trying to escape from the pursuit of the authorities back home. Several years ago, I served on a Federal Grand Jury in Orange County. About 30% to 40% of our time was focused on deportation cases of illegal immigrants who had committed crimes in the U.S.
Many of our citizens see the negative impact of illegal immigration on the infrastructure of our country. It’s a fact that schools, medical facilities, police, related local services and other community resources are stretched well beyond capacity today even without the added burdens of illegal immigration.
When immigrants are legally living and working in the community they too look on the current situation with dismay. A friend of mine, June Farrell, told me the following story:
”My housekeeper is a citizen and a native of the Dominican Republic. She recently asked me what I thought about what’s happening on the border. She is totally perplexed. She came here legally, earned her citizenship, reared a fabulous 21-year-old son on her own as a single parent and now feels threatened by this onslaught. I told her the kids involved are pawns and regrettably must go home because they are here illegally and that maybe we can help them in their own country. I was thinking maybe we could devise something like a Marshall Plan. She asked how and where these kids are getting the money to come here in the first place if they’re so poor…and I asked her what mother sends a child on such a journey in the first place. She asked how we can stop this. I told her we have an election in November and we must ensure that the Congress is Republican so that maybe we can fence in our current President. She agreed. She’s worried about her own son’s chances in this country if we don’t stem the tide of illegals.”
The fact is illegal immigration needs to be stopped and stopped now. The White House can take immediate action to seal the border as Texas has tried by mobilizing its National Guard to assist the border patrol. If we are going to be global, we need legal immigration; but, first and foremost, we need immigration that’s legal, measured and that meets our country’s long-term needs and strategic priorities.
For more than three centuries now, noted philosophers, historians and politicos of the day from Edmund Burke to George Santayana to Jesse Ventura have all told us to know the history of a place or a people or “be doomed to repeat it.” Seems like simple enough advice. Yet a quick look through recent global headlines, particularly those related to events now unfolding in the Middle East, and it makes one wonder if anyone is paying attention.
Less than 25% of all Americans have passports that enable them to travel abroad to explore other cultures. Most of our children are exposed to very little history in their schools. Our universities tend to not include history in their required curriculum. Our national leaders seem to not focus on, or think about, the history of a people when making strategic decisions that are consequential long into the future. Nor do they seem to invest time in understanding the culture of the countries with which they want to ally or even to go to war.
In my lifetime, I’ve seen Hitler fail to learn from Napoleon. Both not only attempted a two-front war but were so foolish as to allow their armies to become bogged down deep in Russian territory as the brutal Russian winter set in. Like Napoleon a century earlier, Hitler’s armies also went down to defeat.
After World War II, America had an opportunity to ally itself with Mao Tse Tung but chose the wrong Chinese leader. In Vietnam, our leaders underestimated the radicalized passion of Ho Chi Minh, who, inspired by the U.S. Declaration of Independence, was among a group of Vietnamese nationals who unsuccessfully petitioned the Versailles Conference to help his country shed French colonialism following the First World War, 50 years earlier. Soon thereafter, Ho embraced communism and the rest is “history.”
In recent days, a lot of global media attention has centered on the 100th anniversary of the start of the First World War and its aftermath. Nowhere were its repercussions more keenly felt than in the Middle East, where the dismemberment of the Ottoman Empire following the war caused national borders in the region to be arbitrarily redrawn with little to no regard for local tribal, religious or cultural sensitivities.
William Faulkner once wrote, “the past is not dead; it’s not even the past.” So, today we reap a whirlwind born out of decades of simmering tensions and tribal and sectarian hatreds. It often seems like our national leaders have not studied the Middle East or taken the time to understand its culture. Of course, brilliant historians and leaders abound, they have counseled wisely. But, our leaders, including our current President and our most recent State Department Secretaries, have not heeded their advice or simply have chosen to ignore the realities.
We’ve all read or heard that the root of today’s problems in the Middle East can be traced to the sectarian bad blood between the Sunni and Shi’ite factions of the Muslin faith. The tensions date back more than 1,400 years when the Muslim community had to decide who would lead after the Prophet Mohammed passed away. Some supported the idea that succession should run directly within his family (the Shi’ites) but other Muslims believed a pious individual who would follow the Prophet’s customs was acceptable (the Sunnis). Today, Sunnis represent 85%-90% of the global Muslim population.
But others, today, believe there is more to the story than a one-to-one correlation between these doctrinal differences and what is happening now in the region. They suggest the fighting now is more a fight for power than the variations in beliefs held by the Sunnis and Shi’ites, and the dwindling presence of the U.S. in the region means there isn’t anyone who can broker a deal or keep the tensions in check.
Thus, the region is in turmoil today. Our allies wonder if our words have any meaning anymore, and we, as a nation, seem to be floundering on the world’s stage, chasing after straws blowing in the wind.
As subsequent events have proven, the Arab Spring turned out to be far more complex than first reported and portrayed.
Today, in Iraq, the U.S. installed and still supports a Shi’ite majority government, while the country’s Sunni minority population, which ruled the country since the end of World War I until Saddam Hussein was toppled and now fears a Shi’ite backlash, seethes. Over in Afghanistan, one has to wonder what those in that country, who cooperated with us over the past decade, are thinking as we prepare to exit that theater too.
The Tunisian revolution, meanwhile, was economic, not political. Egypt’s revolution (I was in Cairo as it unfolded) began as an economic protest and evolved into an effort by the Muslim conservatives to gain power.
Syria’s conflict began as an attempt to overthrow a Shi’ite minority government by a Sunni majority population. The U.S. considered supporting the Sunni insurgents, but didn’t follow through. Now, this conflict has erupted into something much more menacing as the ISIS insurgents try to establish a caliphate throughout the region.
And the examples continue to grow. We supported Saudi Arabia when it moved its troops into Bahrain as the country’s majority Shi’ite population challenged its Sunni minority government. In Libya, we supported the overthrow of the dictator in what was an internal tribal conflict.
Today, there is a Leadership vacuum in the Middle East due in part to our government’s failure to understand and to be sensitive to the region’s history, culture and people. We appear inept and feckless when dealing with the new/old regional power brokers of Saudi Arabia/Qatar and Iran. All this is enough to make one’s head spin. It’s like listening to that classic Abbott & Costello comedic skit, “Who’s on First.”
You’re probably wondering why I’ve devoted an entire column to events now unfolding in the Middle East. It’s because we must learn from others’ and our own mistakes. However complex the events may seem, what’s happening now in the Middle East will have far-reaching global consequences if we don’t get it culturally and historically right this time.
Closer to home, cultural understanding can play a key role in your personal and business life as well. It can improve your relationships with your employees, partners and customers. And if you work for an overseas company, either in the U.S. or abroad, it will serve you well to make the effort to learn its culture and heritage. So do your homework, be realistic about what you learn, use what you learn to your advantage and be flexible as long as you’re not violating your own basic values or breaking any laws.