Hospitality Industry and IHG: SWOT Analysis and Emerging Markets

This report provides an overview of the hospitality industry, with a focus on InterContinental hotel group (IHG). It includes a SWOT analysis of IHG, highlighting its strengths, weaknesses, opportunities, and threats. The report also explores the potential of emerging markets, specifically Kuala Lumpur, for IHG's business expansion. The hospitality industry in the UK is highly fragmented, with significant growth opportunities. IHG is a British multinational hospitality company with a strong presence in the global market. It operates in mature markets like Europe and the Americas, using a franchise model, and in China, using a managed model. The company's strengths include its distribution and reach, effective recruitment strategy, and strong financials. However, it faces challenges such as being perceived as a premium hotel chain, slipping in market position, and weak IT security. The report also discusses the opportunities for IHG, such as expanding into new geographical areas and leveraging technology for booking. It also highlights the threats faced by the company, including unprecedented events, changing buyer behavior, and the impact of COVID-19. Kuala Lumpur, the capital of Malaysia, is identified as an emerging market with high tourist footfall and growth potential for IHG.

ASSESSMENT

Table of Contents
INTRODUCTION ..........................................................................................................................3
MAIN BODY ..................................................................................................................................3
Background on Hospitality Industry...........................................................................................3
Background to IHG.....................................................................................................................4
SWOT analysis of IHG...............................................................................................................4
Background to Emerging markets...............................................................................................8
PEST of selected emerging market.............................................................................................8
Porter's Generic Model................................................................................................................9
Ansoff Matrix............................................................................................................................10
Nykiel's Fourteen Strategy........................................................................................................11
CONCLUSION .............................................................................................................................12
REFERENCES .............................................................................................................................13

INTRODUCTION
Industry of hospitality is defined as providers of such services which are associated with
lodging, food and beverages services, services related to event planning and many more. In the
current time hospitality industry is considered as one of the biggest industry in which high
customers are catered and they are acknowledged by that industry (Anandhwanlert and
Wattanasan, 2017). This service industry is associated with providing services to their clients so
as to make their stay remarkable. In order to understand dimensions of hospitality industry this
report is prepared with the background of InterContinental hotel group. InterContinental hotel
group is a hotel brand which was founded in the year of 1946 and in the current time they have
more than 213 hotel locations around the globe. This report includes PEST analysis of
InterContinental hotel group along with SWOT so as to understand their internal and external
business capabilities. Similarly in order to understand appropriate strategies for the business
Ansoff growth matrix and porter generic strategies has been used within this report.
MAIN BODY
Background on Hospitality Industry
The industry of tourism and hospitality UK is highly fragmented in nature and huge
number of small to huge businesses are associated with this industry. In the recent years high
growth within this sector has been seen as so many businesses are adding in this industry and this
is resulting in unprecedented growth in this sector. There are different investors those are prone
to invest their money in hospitality industry as UK is promising for high returns in order to
attract high investments (Bavik, 2016). In the industry of hospitality there are various dimensions
that are emerged in this such as food and beverages, accommodation services and many more.
This industry is contributing 3.6% of overall GDP of UK. High funds are provided by UK
government to this industry which leads them to feel assisted. There are near about 22000 hotel,
motels and other accommodation provider in UK which is generating 1.5 million job within UK.
On the other hand government is taking several initiatives in order to broaden this sector so that
high tourist can be attracted and make their stay remarkable. In order to manage a hotel intensive
knowledge is required to be held which is associated with various principles and management
strategies. In the current time digital technologies are preferred by customer that means
hospitality businesses are involved in taking booking and understand customer preferences via

using online methods. Hospitality in UK is considered as one of the fastest growing sector in UK
and by using immense promotional channels they are promoted at national and international
levels.
Background to IHG
InterContinental hotel group is a British multinational hospitality company which is
headquartered in Buckinghamshire, UK. InterContinental hotel group is having 842749 guest
rooms and 5895 hotels across 100 countries. InterContinental hotel group is owing various
brands of hotels such as InterContinental, Regent Hotels, Holiday Inn and many more.
InterContinental hotel group is considering global economic demands and they are driven by
growth of economy. The major aim of InterContinental hotel group is to use asset light strategy
in which they are earning high revenues in order to satisfy global demand in prominent manner.
InterContinental hotel group is having 400000 talented employees in which their businesses are
run with optimal efficacy (Chon and Hao, 2020). The company is working in three different
fields such as as a franchisor, as a manager and on the basis of owned and leases. These all
segments are dependent on market maturity and on the preferences of owner. The company is
having their business in mature market such as Europe, and Americas. Their franchise model is
used in Europe and America whereas managed model is utilised in China. The major strength of
InterContinental hotel group is their biggest strengths. On the other hand in order to earn high
revenue the company is using their resources to optimal manner and this is proven as the main
reason of their global prominence. As the business of InterContinental hotel group is centralised
on asset light business so these are supported by disciplined long term approach in order to
allocate capital and to supply surplus to their shareholders.
SWOT analysis of IHG
SWOT analysis is defined as an approach in which internal capabilities so that these can
be used by businesses in order to meet their expansion plan and compete with their rivals. This
approach is aimed towards finding out those strengths which can be used in order to minimise
threats. On the other hand with the help of several opportunities weaknesses of the business can
be minimised. In this context SWOT analysis is performed for InterContinental hotel group and
this is elaborated as under:

Strength
The company is having various strengths by which they are able to survive in the market
in appropriate manner. Strengths are the aspects in which distinctiveness can be received by
InterContinental hotel group in the marketplace so as to remain unique. Strengths are helpful for
InterContinental hotel group to compete with their competitors in effective manner. Some of the
strengths of InterContinental hotel group are elaborated as under:
 Distribution and reach: InterContinental hotel group is having high presence in global
market and on the other hand their distribution of services are easily distributed within
marketplace (Dzhandzhugazova and et. al., 2016). The company make sure that their
services are easily available in the marketplace and for this they have prepared very
robust distribution system through which their customers are catered in effective manner.
 Effective recruitment strategy: InterContinental hotel group is having effective
recruitment strategy in which the company is using such system of recruitment in which
they are reducing unnecessary delays. For example their payroll functions are executed
by payroll department and this is providing additional edge of providing high satisfaction
to their customers.
 Strong financials and profitability: InterContinental hotel group is having high
financials in which the company is earning high profits and this is the reason that the
company is enjoying sustainability within marketplace. Due to high existence in premium
market they are possessed with high customer base and earning huge yield in order to
retain for longer period of time (RAFTOPOULOS, 2016).
Weaknesses
Weaknesses are defined as the aspect which are termed as those dimensions by which
complexities can be created and this leads to lacking behind of business. In the context of
InterContinental hotel group there weaknesses are elaborated as under:
 Not known as economic hotel: As InterContinental hotel group is a premium sector
hotel chain which limits their customer. Due to high prices the company is keeping their
market as premium rather than economic. This is the reason that InterContinental hotel
group is having prominence in a particular market which lead them in restricting their
market presence.

 Slipped to third position: As market is having high competitors and this is imperative
that these are dealt by InterContinental hotel group in prominent manner. Due to this
reason InterContinental hotel group has lost their position and slipped to number three.
This is giving negative image to the company and due to which the company is loosing
their market image and loyal customer as well (Jasonos and McCormick, 2017). On the
other hand as the company is loosing their market position which resultantly providing
gap for new entrants to get entry and unleash markets.
 Weak IT security: InterContinental hotel group gets infected by stealing of personal
details by attacking of malware. This is providing weakness to InterContinental hotel
group in order to place their services within marketplace. As in current personal data is
highly important for customer and for this high security are kept by hospitality
businesses, but at the same time when in breach of security name of InterContinental
hotel group has appeared this leads them to face negative times. This is leading them to
loose their loyal customers due to which negative market publicity is appeared as well.
Opportunities
Opportunities are defined as those dimensions by which market opportunities can be
exhaled by business in order to sustain and to enhance their market size. These are the
upbringings by which new loyal customer can be proposed by business in order to inculcate their
market option and to provide value to their customer. There are some aspects in which
InterContinental hotel group can get market opportunities which are elaborated as under:
 New geographical areas: As InterContinental hotel group is making partnership with
various groups in order to enhance their presence within marketplace. Company is
planning to enhance their market within UK and they are adopting various strategies so as
to place their services at prominent level within marketplace. On the other hand company
is analysing market demand of various market segment and altering their services in such
as manner to meet their level of expectations. This is the major reason that
InterContinental hotel group is known as one of the prominent company within this
sector (Peric and Vitezic, 2016).
 Increased interest of tourists: In the current market situation tourists are having high
inclination towards hospitality services. This is providing immense opportunities to
InterContinental hotel group for enhance their market share and customer as well. In the

current market tourist are prone to use innovative services and InterContinental hotel
group is winning place at this area. So by gaining high interest of their consumers
InterContinental hotel group is attaining high opportunities in order to sustain their
services within marketplace.
 Technology facilitating booking: InterContinental hotel group is having high use of
new technology and this is giving them specific edge within marketplace. In current era
new technologies are providing ease to customer to use services in the manner according
to themselves and by inculcating advanced technology in their business InterContinental
hotel group is trying to make robust base of their customers (Jones, Hillier and Comfort,
2016).
Threats
Threats are defined as the aspect in which businesses are bound to use their capabilities in
some extent. Some of the threat which are associated with InterContinental hotel group are
elaborated as under:
 Unprecedented events: Hospitality industry is containing unprecedented events in which
lack of planning can be seen which is creating threat to InterContinental hotel group. As
every event is having different type of dimensions and due to its unprecedented timings
this may damage image of InterContinental hotel group in the absence of planning. So
this is termed as the biggest threat for InterContinental hotel group in order to upkeep
their services within marketplace (Pasanen, 2019).
 Changing in buyer behaviour: In current time needs of customer are dynamic in nature
due to which threats are imposed to hospitality business as they are required to alter their
services in time to time manner which is not possible for every business. For
InterContinental hotel group as the market is highly reactive in nature which is creating
high complexities for them in running business.
 Impact of COVID 19: Due to Pandemic COVID 19 the hospitality sector is facing its
worse manner. This sector is facing high fall in consumer and their profitability is
lowering in negative manner. The pandemic is hampering profitability and customer
recall in negative manner which is negatively effecting their sustainability.

Background to Emerging markets
In current time UK is the market in which high possibility of growth is seen as in Kuala
Lumpur people are prone to use new services and innovations. InterContinental hotel group is
looking for market expansion and market development for which they are looking for exploring
new markets (Jung, Sharma and Mattila, 2020). For this the company have selected markets of
Kuala Lumpur so as to enhance their market share and to unleash new markets.
Due to high numbers of tourists within Kuala Lumpur this place has become centre of
attraction for hospitality businesses. This place is famous for twin tower which is world's tallest
twin skyscraper, Batu cave which is more than 400 million years old., these are the tourist
attraction of capital of Malaysia called Kuala Lumpur. This place is being divided into various
districts and their main hub is called The Golden Triangle, this is having so many recognisable
landmarks. Kuala Lumpur is laced with so many shopping malls which are known in all over the
world and these markets are labelled within global periphery and providing identity to the city
(Shokoohi and Nikitas, 2017).
Kuala Lumpur is the largest city in Malaysia which is covering 243 KM square area and
renowned as one of the city in the world which is growing in prominent speed within South-east
Area in the context of economic development. The transport system of the city is very
fascinating by which least problems are faced by the tourist in roaming within city. Kuala
Lumpur has been ranked as number 70 by Economic Intelligence Unit's Global Liveability
Ranking. On the other hand the city has been named as World Book Capital by UNESCO for the
year 2020 (Mansouri and Ujang, 2016).
Kuala Lumpur is having major service sector as hospitality which is rendering 8.3% of
overall employment to the population. The major reason for InterContinental hotel group to
select Kuala Lumpur as their location of business expansion is that this place is having high
footfall of tourist which open up opportunities for them to excel them and sustain within
marketplace. On the other hand this market is having immense opportunities for the business to
place their services in the manner by which distinct image can be made by InterContinental hotel
group. With the help of scope given within the market InterContinental hotel group can stabilise
their market prominence in which they can sustain within marketplace in new market segment of
Kuala Lumpur (Ram and Hall, 2018).

PEST of selected emerging market
PEST analysis is defined as defining opportunities for the business by exhaling various
factors of external markets.
Political factors: Government of Kuala Lumpur is stable in nature and education and
health facilities are prominently used over there. Kuala Lumpur is one of the prominent place in
which high tourist are coming every year. Their government is highly active in providing
assistance to their tourist in order to enhance customer fall. This factor is providing high
opportunities for InterContinental hotel group in order to explore new market segments.
Economic factors: These factors are associated with GDP rate, Inflation rate and many
other dimensions those are related with economy of the country. Kuala Lumpur is having high
economy as in a year huge tourists are coming to the place to visit the same. This is giving high
revenue to the company in order to explore their new markets. People of Kuala Lumpur
possessed with high employment which is resulting in high purchasing power of residents. This
factor is giving high opportunities for InterContinental hotel group to place their services in the
markets of Kuala Lumpur as the company is engaged in providing services which is premium
and due to high purchasing power they are able to earn high revenues as well (Nair and
Choudhary, 2018).
Social factors: These factors are associated with preferences and demands of customers.
As Kuala Lumpur is a place where tourists are visiting in a very high manner so needs and
demands within this sector is dynamic. Visitors are prone to use services which are luxurious and
premium as they are willing to make their holiday and stay remarkable. So under this factor
InterContinental hotel group are having high opportunities to undertake this factor and alter their
services as per needs of their customers.
Technological factors: These factors are associated with usage of latest technology in
business in order to satisfy needs of customers. In Kuala Lumpur their populations are prone to
use new technology as this place is hub of tourists. So by using new technology in business of
InterContinental hotel group they can flourish their business so as to satisfy needs of their
customers in prominent manner (Mishra, 2020)
Porter's Generic Model
To determine the available opportunities in the market so that the business can ensure its
growth and expansion certain strategies may be adopted by the business which will give them a

edge over other competitors. These are the following strategies which may be used by
Intercontinental Hotel Group:
Cost Leadership: This is that strategy which is generally adopted by those companies
which covers the large market share. It is a proven fact that a company which is covering a large
market can reduce its cost with the help of adopting new technologies. In this strategy the
business organisations deliver their products or services in low cost. This strategy is
implemented for the purpose to increase the revenue by providing the product or services which
are best but cost efficient as compared to other existing competitors. For Intercontinental Hotel
Group this strategy will help if they upgrade the status of their hotel and provide more services
as compared to other hotel groups in the cost efficient way (Sanjeev and Birdie, 2019).
Differentiation: In this strategy the company will focus upon enhancing the sale of their
products or services by making them unique as compared to the other competitors. There must be
a certain distinctive feature in the product of the business so that it can get an upper hand over
other competitors. For Intercontinental Hotel Group adopting this strategy will help in attracting
their customers. This strategy can be adopted by IHG by introducing organising various
entertainment and adventure activities for the people staying in their hotel.
Cost Focus: This strategy is used by the business by aiming a specific market by which
the products and services will be offered in the lower cost which will help the company in
attracting more customers in the targetted market. By adopting this strategy IHG can target a
market like any market of Asia such as Kuala Lumpur and as IHG is such a big name in
hospitality industry, it can give services at lower cost in that targeted market.
Differentiation Focus: By adopting this strategy the business will focus strategy
impairing it with the differentiation strategy. In this the focus will be based upon a certain market
and the product and services which will be given would be having certain speciality in their
product. If the IHG adopts this strategy it will help them in targetting a segment of market and in
that segment of market providing unique types of services. This uniqueness in their service can
be influenced by the need of the customers of the market which has been aimed.
For Intercontinental Hotel Groups the best strategy which should be adopted is that of
cost leadership as it will help it in increasing the number of customers which will eventually lead
in the increase of their revenue as it is the basic mentality of people to adopt for those products

and services which are cost efficient. If the IHG will provide best services in lower cost it will
lead in the growth and expansion of their business (Su and Chen, 2020).
Ansoff Matrix
Ansoff matrix is the combination of various available strategies which any business can
adopt to monitor and make an analysis of their growth strategies. These Strategies are used so
that a business organisation can grow and can also access all the risks associated if these
strategies will be applied in the business. The following are the four strategies of Ansoff Matrix:
Market Penetration: While adopting this strategy upon the business in order to expand
it, the products are modified as per the needs and taste of the customer. This strategy will be
helpful in increasing the satisfaction of customers by providing best quality of products or
services in a cost efficient manner. As IHG is working in the hospitality industry, by adopting
this market penetration the IHG will enhance their goodwill in the eyes of the customers who
will be staying at their hotel in a lower price. It will also lead to IHG in covering more market
share as customers will be increased by adopting this strategy. The risks associated with this is
that people can think that because they are giving services in lower amount as compared to other
hotels the services are of cheap quality.
Market Development: Market development basically means entering a fresh market
with the existing products or services. It will help the business in expanding their business
globally. For IHG it will lead in attracting the new customers by entering into the market of
which will expand their business. But there is a risk that there will be many competitors already
in the market and it will be difficult for IHG to compete with them.
Product Development: By implementing this strategy the business to ensure its growth
will introduce innovations in its products and services. Innovation can also be done to the
products which are there in the existing market. It will be beneficial for Intercontinental Hotel
Group as customers will be very curious to use their new and innovative services. This will also
give a boost to the brand image of IHG as people will be more interested to use their hotels
because of unique features. As every customer has a separate taste and need there may be a
possibility that new products will not be appreciated by all the customers.
Product Diversification: Here in this strategy a new product or services will be
introduced in the market for enhancing the base of the customers. If this strategy is being
implemented by IHG it will help them in attracting more customers. IHG can introduce new

packages for people who are willing to stay and they can develop new rooms also based upon
different themes. The risk associated with this is that for IHG it will be challenging to introduce
new services and it will be a time consuming process and also lot of investment will be required.
With the help of the above discussion the best market expansion strategy which should be
adopted by Intercontinental Hotel Group is that of market development. With the help of this it
can enter the new market of Kuala lumpur which will lead in establishing it as a global brand.
They can introduce their services as per the need of the people of Malaysia in a cost efficient
manner so that brand value of IHG will be increased.
Nykiel's Fourteen Strategy
These following are the fourteen strategies which will help IHG in expanding their
business:
Horizontal Expansion: For IHG this will help them to enter from one field of hospitality
service to another field.
Geographic Expansion: IHG will try to establish their business in the new market of
Kuala lumpur.
Product Hybridization: IHG will be going to expand the range of providing the services
by entering into the market of Malaysia.
Specialisation: IHG should be focussing upon providing the services which are special in
nature to the customers of Kuala lumpur.
Product Tiering: IHG has to deal with various factors such as economic, population and
demographic.(Tarasionak and Dziadok, 2019)
Product Rebranding: Various new services has to be introduced by IHG while entering
in the market of Malaysia.
Franchising: IHG have to follow the strategies of hospital industry adopted by other
competitors while entering the new market.
Non Franchising: IHG will be monitoring its services and quality of services in the new
market of Kuala lumpur.
Management Contracts: The IHG will be focussing upon managing hotels for owners in
order to enter new market.
Singleness: IHG will be focussing upon a single service of full ownership and control
over the management while entering into the market of Kuala lumpur.

Value Related Products and Services: IHG must launch various new services and
packages for the customers to satisfy the needs of the customers of Kuala lumpur.
Global Positioning: IHG have to consider the thing that they have to position their brand
globally by taking consideration of all the opportunities and risks associated.
Justification of strategy
For IHG the most beneficial strategy would be market development in Ansoff growth
development as IHG is willing to initiate their another hotel chain in Kuala Lumpur so this is
going to help them to achieve their prominent objective of attaining high customer and market as
well. IHG is planning to establish their new hotel chain at Kuala Lumpur so this is beneficial for
the company to sustain in the market and gain distinctive competitive advantage. After 5-10
years due to high competition intensity over market will increase but at the same time ICH can
sustain in market place because of global presence. Practically market development is a strategy
which is having high benefits also after passage of long time as when IHG is having high market
presence this would be easier for them to maintain effective and robust customer base.
Strategic plan for the next 5 years
Mission IHG is focusing on enhancing their market presence and market
image so that to place their brand at prominent point.
Vision IHG is making strategies for attaining high customer satisfaction and
brand recall in the market.
Objectives  The major objective of IHG for next 5 to 10 years is to
intensify their customer base so that to enhance market
prominence.
 Besides this the company is making plans for develop their
market size and capture new segments of market within next
5 to 10 years period.

Internal analysis IHG is having prominent position in the marketplace which is
providing major benefits to the company. On the other hand the
company is involved in giving leisure time to their customer and for
this they are prominently hearing regarding needs of their customers.
On the other side due to high existence of rivals IHG is facing
intense competition within market place. In the current time IHG is
planning to initiate their services in Kuala Lumpur so this has
emerged as an opportunity for them to place their services in
effective manner in new segments of market.
Target market In the current time the company is making plans to initiate their
services at Kuala Lumpur and this is their step to move ahead in the
market place.
Competitive analysis IHG is facing intense competition from their rivals such as Marriott
hotels, Hilton hotels and many more. These hotel groups are having
their operations at global level and prominently known at global
periphery. These hotels are involved in providing executive and
premium services to their customer by which they are able to receive
distinct competitive edge in the marketplace.
Financial forecast

CONCLUSION
From the above report this can be concluded that hospitality industry is having high
existence in market as this is known as one of the most prominent industry which is catering
customers in direct manner. With the help of SWOT analysis their internal capabilities can be
found out on the other hand with the help of PEST analysis external market capabilities can be
understand. By understanding market development strategies business can reframe their
marketing tactics in order to place their services within marketplace.

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