The impact of hotel management contracting on IHRM practices

Abstract

Purpose The international hotel industry's growth has been achieved via the simultaneous divestment of real estate portfolios and adoption of low risk or “asset light” market entry modes such as management contracting. The management implications of these market entry mode decisions have however been poorly explored in the literature and the purpose of this paper is to address these omissions. Design/methodology/approach Research was undertaken with senior human resource executives and their teams across eight international hotel companies (IHCs). Data were collected by means of semi‐structured interviews, observations and the collection of company documentation. Findings The findings demonstrate that management contracts as “asset light” options for international market entry not only provide valuable equity and strategic opportunities but also limit IHCs' chances of developing and sustaining human resource competitive advantage. Only where companies leverage their specific market entry expertise and develop mutually supportive relationships with their property‐owning partners can the challenges of managing human resources in these complex and diversely owned arrangements be surmounted. Research limitations/implications A limitation of this paper is the focus on the human resource specialists' perspectives of the impact of internationalization through asset light market entry modes. Originality/value This paper presents important insights into the tensions, practices and implications of management contracts as market entry modes which create complex inter‐organisational relationships subsequently shaping international human resource management strategies, practices and competitive advantage.