Overcoming Cultural Differences in International Hotel Development – Featured by Hotel Executive

Mr. Boyken was asked by Hotel Executive to be a guest writer for their online news edition. Because of Mr. Boyken’s extensive knowledge of the construction economy, Hotel Executive asked him to write about his responsibilities as CEO and how he grew his program management firm to one of the largest in the country. The following article will look into the future, anticipate trends and expand on how to place your company in a position to capitalize on those trends. [Click Here to View Article on Hotel Executive]

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With annual spending exceeding $6 Billion, tourism is the world’s largest industry. Travel and travel-related industries employ over 234 Million people worldwide. That’s almost 9% of the world’s population. By 2016, travel and tourism will account for approximately 10% of the global economy.

Our success in this rapidly growing and important industry depends on our ability to develop and build high-quality facilities, both domestically and abroad. When considering international expansion, our understanding of cultural differences-whether they be as complex as a tax code or as simple as a personal greeting-is crucial to ensuring future success.

Over the past 5 years, Boyken International, Inc. has been involved in over $3 Billion in international hotel development. Having managed projects in over 50 countries on 6 continents, we have developed some key strategies for managing and overcoming these cultural differences.

Prior to committing to any international project, we research the local economic and political climate. The research of the local labor force will determine if it has the capacity to meet our needs. We ask ourselves: How skilled is the workforce? What is the current level of construction activity in the area? Are there local contracting or sub-contracting firms who can help recruit and manage labor? Then we develop a labor plan to help you manage costs and expectations.

For every project, it is essential we visit the site and visit with local leaders to obtain insight into any potential challenges or threats. From an outsider’s perspective, a country’s economic and political situation could appear stable; however, a site visit might reveal key information such as labor issues or work practices including rumors of civil unrest. All factors must be considered when selecting a location or involvement in the project.

When visiting a project site in Bermuda we quickly determined that the road access would require smaller trucks for the delivery of materials resulting in more truckloads and people.

We also identify key government and economic officials who can help guide us through the process, whether it is negotiating a labor contract, explaining the nuances of the local culture or alerting us of new tax laws.

Once we determine that a locality’s economic and political climate are conducive to completing a project, we need to become familiar with local laws and regulations. We contact the local agencies regarding work permits, development requirements, immigration, time constraints, authority concessions and import/export regulations, as laws vary from country to country and change quite frequently. The contacts made on initial visits often prove essential in helping us navigate the local landscape.

We also have found it very helpful to meet with a local tax expert and gain a better understanding of local laws, particularly local business registration, corporate tax structure, direction taxation through tax sales and labor taxes. Creating a team of local team of advisors will help you understand and manage local labor laws, customs, employment law, and construction codes.

Discussion of contract terms is also essential. Many international construction projects use contracts that are rarely used in the United States. For example, the FIDIC (F’ed’eration International Des Ing’enierus-Conseils) contract, which is widely used in Europe, is heavily influenced by continental civil law and varies from standard American contracts.

It’s also crucial to determine which country’s law will govern the contract. New York law is most commonly used in the western hemisphere, while English law is used more frequently in the Middle and Far East.

Perhaps the most important factor in determining success in international ventures is the understanding of the local culture. While the initial and subsequent site visits provide us with insight into local nuances and customs, we also spend time studying the history and culture of the area. Project teams need to include professionals fluent in local languages. Learn key phrases and customs. For example, in Japan, one is greeted and should return the greeting with a bow, while in Mexico, I’ll more than likely be embraced in a bear-hug like exchange called an “abrazo.”

There are other nuances to be aware of when meeting with clients from other countries. In Asia, women need to dress as conservatively as possible–skirt suits, minimal jewelry and low-heeled shoes. But this same attire in South America would be interpreted as stiff and formal. Women should be fully covered in conservative Muslim countries, and men should never remove their jacket or tie when dealing with the French.

Some commonly used American gestures such as the “okay” sign the thumbs up or the “V” for victory sign, is highly offensive in other cultures. Talking with hands is considered offensive in most Asian countries, while crossing legs is a no-no in predominately Muslim countries. Other strong gestures-such as crossing your arms, pointing your finger or putting your hands on your hips or in your pockets-should be avoided. Eye contact is an essential part of some cultures, such as the French, while highly offensive in others, such as the Japanese.

Asians, North Americans and most Northern Europeans prefer to keep some distance between themselves and others, while Middle Easterners, Latin Americans and Southern Europeans tend to be more “up close and personal”. The Japanese are very punctual for business meetings, but tend to arrive fashionable late for social occasions. In Latin American, time is fairly relative, and people are generally late for both business and social functions, while in New Zealand, punctually is highly regarded.

It may seem basic, but remember not everyone speaks English. Learn a few words and phrases commonly used in social and business situations. When speaking English, it’s important to remember to speak clearly and simply. Avoid using jargon, slang or overly complex sentence structures. Remember that words can have different meanings, even in the same language. For example, the British only use the word “exciting” when referring to children’s activities.

Smoking while eating is common in Russia, but it is considered rude in France, as it desensitizes the taste buds. Wines should only be served from the left hand in Chile, while the left hand is considered unclean in most Middle Eastern countries.

In conclusion, when in doubt, use common sense. Take the lead from those around you and mimic their behavior. Address people with their appropriate title and full name, ask if unsure, and avoid controversial topics like religion and politics.

While I have listed some specific strategies, the common thread uniting them all is communication. Talk to people who have previously done business in these areas to gain insight into local business practices and customs. Enlist the aid of local experts to help you understand local laws and regulations, your potential workforce and contractual issues. Ask your local leaders to help you navigate everyday social and business situations. Do not be afraid to ask questions to help you better understand those you will be working with.

International construction is big business, and understanding and appreciating cultural differences can mean the difference between success and failure.

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Hotel Business Review-Don Boyken

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