Essay on Business and Financial Performance - Intercontinental Hotel

Added on - 21 Jul 2020

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To analysis and evaluation of the business and financialperformance of theIntercontinental hotel Plcover a three yearperiod.
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1Research approach..................................................................................................................4PART 2............................................................................................................................................4Sources of data collection.......................................................................................................5Description of the methods used to gather data set................................................................5Limitations of the information gathered.................................................................................6Ethical issues..........................................................................................................................7Explanation of the accounting techniques used along with their limitations.........................7Business techniques................................................................................................................9PART 3: RESULT, ANALYSIS, CONCLUSION AND RECOMMENDATIONS....................11Financial performance evaluation........................................................................................11Business analysis..................................................................................................................26Conclusion............................................................................................................................31Recommendations................................................................................................................33REFERENCES..............................................................................................................................35APPENDIX....................................................................................................................................371. Financial statements of IHG Plc.......................................................................................372. Financial statements ofMillennium & Copthorne Hotels PLC.......................................393. Ratio analysis of Inter -continental hotel group Plc.........................................................424. Ratio analysis of Millennium & Copthorne Hotels PLC.................................................44
INTRODUCTIONTopic:To analyze and evaluate the business and financial performance of the Intercontinental Hotel Plc over a three-year period.Selection of the topicThe topic which is selected for the preset research is to analyse and evaluate the business and financial performance of theIntercontinental Hotel Plcover a three-year period. The main rationale behind selecting this topic is to get deep information related tofinancial performance of the firm (Perez Arrau, Perez Arrau. and Fathi Easa, 2016.). Along with this it helps in developing theknowledge in the financial area.In the present research an organisation isselected from hospitality industry that is IntercontinentalHotel. The reason for selecting this industry is, it is one of the fastest growing industry and it help in gaining deep information relatedto financial performance of hospitality sector.Objectives of the present research is as follows:To analytical review the financial performance of Intercontinental Hotel Plc by comparing it with its competitor that isMillennium & Copthorne hotels Plc over past 3 years.To determine the key value drivers for an effective performance and organisation issues barrier the good performance.To ascertain the effect of “Economic recession and financial performance of Intercontinental Hotel Plc.To measure the strategic position of Intercontinental Hotel Plc through analysing the performance.To recommend on the basis of analysing the financial performance of Intercontinental Hotel Plc.Research questions1
In order to accomplish the above-mentioned objectives there are following questionsHow competitive Intercontinental hotel Pl performance in past 3 years in term of Market share and Sale growth as compare to itscompetitor Millennium & Copthorne hotels Plc?What are the key value drivers for an effective performance and organisation issues barrier the good performance.What are the effect of “Economic recession and financial performance of Intercontinental Hotel Plc.What the strategic position of Intercontinental Hotel Plc through analyzing the performance.Hospitality industry and market shareHospitality industry is become the most successful and demanding sector of the present time. This is the period in which amajor development is observed in aviation and technological industries that influence people for travelling. Consequent to this, hotelindustry is gaining huge productivity. A broad category of field is included in the hospitality sector such as lodging, event planning,theme parks, cruise line, transportation, etc. Further, the tie-up of the service industry with various airlines and cruises companies hasgenerated the entire holiday packages which are the most demanding product of this era. This field has become the most significantpart of economy of any country of the globe. Further, these companies are the reflection of a nation to the tourists that come to visitthe destinations. Nations with attractive destinations are fortunate in terms of revenue of service industry. It may however berecognised that different countries have variable tax and pricing structure which may impact the profit earned.In context to UK, which is the sixth largest international tourism destination, the role of the service sector is definitely major.The market share of this sector is found to be about 12%. The major entities that accounts in the share are Premier In, Tavelodge,Hilton Hotels, Holiday Inn express, Ibis, Jurys Inn etc. It is the biggest and fastest growing industry of the country. According to theUK tourism statistics of 2016, the revenue collected from the tourists through hospitality industries is £127.4bn. However, it may be2
recognised that the revenue collected for conducing the various domestic events is excluded from the data. With the various programssuch as conferences, music events, outdoor events, etc. the industry earns £142.3bn. In addition to this, the sector is achieving growthrate of around 1% P.A. from past 6 years.Company overviewInter Continental HotelsThe Inter Continental Hotel operates under the hospitality industry which is a conglomerate hotel and located at Denham, UK.It is one of the multinational company which provides its hospitality services to the customers across the world. According to thesurvey of fiscal year 2016, employees providing their services and duties to the company are 28,589 and generated net profit worth of$417 million at the end of financial year 2016. Mission of the Intern Continental Hotel is to create a thriving community for the youngcustomers like below age of 40 years in order to make sure representation in the association. Further, it has mainly three purposesbehind operating in the hospitality sector which are related to growth and development, future of the industry and fosteringcollaboration. Origin of the intern continental hotel is from Brazil on August 19, 1981. Further, it becomes a brand in hospitalityindustry as a specific division of the PanAm. In the year 2003, The group of Inter Continental hotels was split among two businessentities like Mitchells & Bulters. Therefore, when looking at the growth then consistently becoming broad and expanded business inthe world. Further, from the financial perspective also Intern Continental Hotel is growing with the better rate.Millennium & Copthorne hotels PlcThe present project focuses on the competitors company of Inter Continental Hotel which is Millennium & Copthorne Hotels.This selected rivalry entity is a public company as well as one of the leading hospitality management business. Headquarter located ofthe chosen competitor company is located in London UK and having presence across the world. It has lower brand image along withfinancial performance in the hospitality industry as compared to the above stated enterprise. Number of total employees are 10,966and net income is worth of 98 million GBP according to the research of fiscal year 2016.3
Research approachResearch approach is important aspect of the research which provides detail information of the method of collecting theinformation. In the present research, inductive approach is used in which first general information is gathered then focus on specificinformation. Further, investigator in this approach first analyzes the observation through taking the theoretical framework. Along withthis, it provides better outcome at the time when quantitative research is taken into consideration (Heisig, Heisig and Fathi Easa,2016). The present research is based on analysis and evaluation of the business and financial performance of the Intercontinental HotelPlc over a three year period. Therefore, inductive approach is undertaken. The rationale behind selecting this, techniques is that ithelps in carried out study through collecting general information first then focus on specific issues which impact financialperformance of the firm. However, it can be stated that the selected research approach is effective for completing the entire research.PART 24
Sources of data collectionIn the field of research, there are mainly two sources that can be undertaken for the purpose of data such as primary andsecondary. Hence, description of the sources that researcher can undertake for data gathering are enumerated below:Primary data: In research, primary data implies for the one which is gathered by the researcher first time with the motive toresolve specific issue. Hence, there are several methods that can be by undertaken for the purpose of primary data collection such assurvey, observation, focus group, interview etc (Xie and et.al., 2016). Hence, data gathered from such sources are highly effectual andthereby assists in presenting the suitable solution of issue.Secondary data: When researcher undertakes information that has already been collected, evaluated and published by otherscholars known as secondary. Hence, source of secondary data majorly includes books, journals and scholarly articles (Johnston,2017). Besides this, with the help of internet scholar can gather specific information which is required to resolve issue.In the present research, with the motive to assess and evaluate the performance of Intercontinental hotel Plc in against toMillennium & Copthorne hotels Plc data set have been obtained by the researcher from secondary sources. Moreover, financial reportsof the concerned companies furnish appropriate information about their monetary position and performance over others.Description of the methods used to gather data setIn order to evaluate performance of Intercontinental Plc over the years and in against to the competitors like M&C Plc severalsecondary methods have been used for data collection such as:Websites of the company: By accessing the company’s website researcher has gathered information from balance sheet,income as well as cash flow statement. Moreover, for doing ratio analysis and interpreting profitability, liquidity as well assolvency aspect scholar requires information from the financial statements of concerned firms. Hence, with the aim to evaluatethe 3 years performance of IHG plc and its competitor such as M&C Plc annual reports pertaining to the year 2014, 2015 and5
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