Hospitality Business Strategy

This report focuses on the business strategy of Choice Hotels International, a hospitality provider and franchisor. It analyzes the impact of the macro environment on the organization, evaluates its internal environment and capabilities, and assesses the competitive forces in the market sector. The report also includes a SWOT analysis and applies Porter's Five Forces model.

Hospitality Business
Strategy

Table of Content
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
P1. Applying appropriate frameworks, analyse the impact and influence of the macro
environment on a given hospitality organisation and its strategies.............................................1
TASK 2............................................................................................................................................4
P2. Analyse the internal environment and capabilities of a given hospitality organisation using
appropriate frameworks...............................................................................................................4
TASK 3............................................................................................................................................6
P3. Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation.............................................................................................6
TASK 4............................................................................................................................................8
P4. Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given hospitality organisation.............................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Business strategy is defined and understood as the set of actions and decisions made by the
entrepreneurs and management of businesses for achieving specific strategic objectives. Business
strategy is considered as a master plan that the management and higher authorities of the
organisation develops and implements in order to secure a competitive position in the
marketplace by carrying out their operations and keeps the customer attracted for achieving their
desired goals (González-Rodríguez and et. al., 2018). The current report is developed on Choice
Hotels International hospitality provider and franchisor based in Maryland, United States
founded in 1939. Current report acknowledges and focuses over the macro and micro
environmental elements which exist and affects the business strategy of Choice Hotels
International. Moving further, porter's five forces model is implemented for understanding the
competitive position of organisation in the industry and specifically in United Kingdom. At the
end of the report a business strategy is adopted and a strategic plan is developed highlighting the
goals of the organisation.
TASK 1
P1. Applying appropriate frameworks, analyse the impact and influence of the macro
environment on a given hospitality organisation and its strategies.
Choice hotels International is 1 is the largest Hotel chain in the world owning seven Hotel brands
ranging from different segments starting from upscale to the economy. The companies serves its
hospitality Services and offerings to worldwide customers by providing them the most
memorable and curated hospitality experience. This factor exposes the business to several
environment according to the separate geographical locations and scenarios. Therefore, in order
to analyse the Macro environment of Choice Hotels International PESTEL framework is utilised.
This is a macro environmental analysis tool allowing businesses to understand the external
environment in which they are operating (Cheon and Cheon, 2016). For this report external
environment of Choice Hotels International is evaluated specifically for United Kingdom market.
A thorough analysis and evaluation is as follows:
 Political
The political factor plays a significant role in identifying those elements which are
influential on decision making of Choice Hotels International on their long-term
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profitability in particular country or region or market. The company is operating in
lodging services and hold operation in more than dozen of countries which exposes it to
several different political environment and system risk. The United Kingdom is facing
issues in flexibility and stability in political environment which is one of the most
important features of lodging sector in the country’s economy.
 Economic
The Macro environmental factors such as saving rate, inflation rate, interest rate,
exchange rate and economic cycle identify the aggregate demand and investment in an
economy (Lopes, 2016). These are few economic elements which can be used by choice
hotels International for their growth and success in the particular market. The United
Kingdom is severely being affected by the execution of BREXIT deal that recently took
place. due to its execution several businesses and industries are negatively affected
because of the unbalance and unstabilized economic conditions. New two laws and other
macro environmental factors are introduced by the government which are not at all
flexible causing distress for several businesses and mostly for international organisations
like Choice Hotels International.
 Social
Society culture and separate ways they adopt for doing things and making their purchase
Decision impacts the culture of an organisation in the particular environment. Basically
social trends that are currently being flowing in the particular region and marketplace are
the factors that are needed to be considered in social element of macro environment. The
social trends of United Kingdom are in favour of choice hotels International because of
one factor that the people identify themselves as in loyal customers and this still are more
attracted towards quality and royalty of services rather than focusing over other factors
such as financial related to pricing. Therefore the Goodwill of choice Hotel International
in United Kingdom is high serving as a benefit for the organisation as people and Royal
towards it and existing customer base is still maintained (Turner and et. al., 2017).
 Technological
Technology is evolving and with a very fast pace drinking huge opportunities and threats
for several organisations belonging to separate industries and sectors. Technological
advancement and updated devices are taking please in every business playing a vital role.
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technology includes several factors which are beneficial and the favourable for
businesses but sometimes can negatively affects as well. In case of Choice hot Hotels
International recent technological development and changes undertaken by their
competitors is a negative impact on their business. As well as on the same time if Choice
Hotels International make use of such technologies which helps the organisation in
reducing their cost and making them more productive it is beneficial for the business.
Therefore technological changes and influences have both positive and negative impacts
on hospitality provider their product offering and productivity. The company needs to be
focused and aware about any new changes taking place in technologies for keeping up
with the evolving trends and revolution taking place in hospitality world (Kim, Lee and
Fairhurst, 2017).
 Legal
Choice hotels International is a organisation that is established its operation into
worldwide locations and study their business in several different countries. The legal
factors depends upon the number of legal framework organisation needs to cities over
increase in number of countries will directly increase the number of legal framework and
institution and their laws bringing complication for the organisation as it needs to be
flexible enough to adopt such changes. Currently the legal laws of United Kingdom are
very fluctuating and unfavourable for businesses especially for international
organisations and therefore this macro environmental element is not in favour of choice
hotels International and its business. This is because the company has to focus over both
United Kingdom legal laws and European Union legal laws as well while running their
operations as a result of execution of BREXIT deal.
 Environmental
Different marketplaces and countries have different environmental norms and standards
that are impacting on the basis of operations and profitability of organisation belonging to
the particular marketplace. This macro factors is recently being identified and recognised
after the severe effect of businesses have been seen on the mother nature and increasing
level of global warming (SALEHIPUR, 2018). Choice hotels International have to make
sure that they are fulfilling their corporate social responsibilities and conducting their
operations with sustainable means. Nowadays people are more attracted towards
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offerings and brands who are working with appropriate sustainable means and
contributing their path towards the society from whom they are taking numerous
resources.
TASK 2
P2. Analyse the internal environment and capabilities of a given hospitality organisation using
appropriate frameworks.
SWOT is an acronym for strengths, weaknesses, opportunities and threats and this is a model
that enables organisation to understand their internal capabilities and external opportunities
available according to them by also informing them appropriate threats existing in the market.
SWOT analysis aims to examine the strength and weaknesses of Choice Hotels International as a
company is present in more than 40 countries around the globe with almost 8,000 hotels and
regularly updating product portfolio. SWOT analysis table of Choice Hotels International is as
follows:
Strengths Weaknesses
 Leadership is one factor which brings
the best out of the organization and
focus is over providing the most
beneficial services and products to the
customers. One of the biggest strengths
of Choice Hotels International is its
leadership and Management as the
higher authority adopts charismatic and
inspirational leadership styles for
keeping the staff motivated and
inspired enough to perform their best
and in the best interest of hospitality
provider (Kandampully, Zhang and
Jaakkola, 2018).
 Brand image of choice hotel is also its
 The Choice Hotels International has a
wide portfolio operating in numerous
countries and regions but it's biggest
weakness is the bad customer review.
This is a huge issue and difficulty for
the hospitality organization and to
which it needs to bring about
significant and prominent changes by
moving towards improvements.
Customers are the most important for a
service sector entity and their bad
reviews for experiences can severely
hinder the objectives and operations of
company.
 Another weakness of Choice Hotels
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strength as the company has a diverse
portfolio already and is frequently
spreading it further. the group has
developed a strong brand image in
National and overseas markets by
conducting appropriate and potential
marketing practices.
International is the increasing
aggressiveness of its sales team with
other local businesses. The company is
very efficient and potential in building
relations and integrating that asks with
other smaller businesses existing in the
region but recently it has been
identified that sales team is becoming
aggressive and losing the interest of
others in the hospitality company and
its exercise.
Opportunities Threats
 The opportunity that are available to
Choice Hotels International is of
product development as there are
several complaints from the customers
and there you are also bad about the
experiences they have with the hotels.
Therefore the organization has an
opportunity to evolve and develop new
product offerings that are unique and
very satisfactory for the potentially
consumers and also for the existing
customers.
 Another opportunity that is available in
front of Choice Hotels International is
to move in new geographic markets by
using strategic alliances technique.
Rather than opening in India highly
new operation into a new market
without any knowledge it is best for
 The threats that are associated with
Choice Hotels International and which
is most impacting it is the increasing
competition and regular updating in the
market. There are several competitors
existing in the hospitality industry that
is a huge which is constantly moving
with the organization and still exist in
the marketplace.
 Another very severe and potential
threat that are existing in the external
environment of choice hotels
International is recently took place and
executed BREXIT deal which has
brought several potential changes in
the economic legal and political
environment of the organization
impacting it in negative manner
(Konovalova and et. al., 2018).
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the company to make alliance with
other existing businesses so that their
strength can be used and the
appropriate resources can be beneficial
for the operation in the new
marketplace.
VRIO Analysis
RESOURCES VALUEABLE RARE INIMITABLE ORGANISED
Technologies Technologies - - -
Brand Image Brand Image Brand Image - -
Supply Chain Supply Chain Supply Chain Supply Chain -
Human
Resource
Human
Resource
Human
Resource
Human
Resource
Human
Resource
TASK 3
P3. Applying Porter’s Five Forces model, evaluate the competitive forces of a given market
sector for a hospitality organisation.
Porter's five forces model established by Michael porter which analyses and observes the five
forces that have significantly and prominently impact on a business and profitability of an
organisation and also holds future impacts as well. this porter's five forces model is a holistic
strategy framework that helps businesses in developing strategic decisions and work
appropriately in current and future environment by knowing their competitive advantage and
sustainable criteria’s (Kuo, Chen and Tseng, 2017). The five aspects of forces model are as
follows which are elaborated in context of Choice Hotels International underneath:
 Threat of news entrant
This is the first force that is been analysed and identified in the model that focuses over
the new entrant in the industry and business sector. Hospitality business and industry is
already overpopulated as if a large amount of competitors is present in the industry on
both National and international level. New entrant in hospitality industry brings
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innovation and unique ways of doing things that means providing unique services to the
customers which automatically imposes a pressure on Choice Hotel International and
reduces the pricing strategy of the company. the power of this force is low over Choice
Hotels International because of two factors that is the cost involved in establishing such
business is huge becoming a barrier in front of small all business entrepreneur. Also the
hospitality provider are existing in the marketplace from very long time holding huge
goodwill and brand image which is not easy to be affected.
 Threat of substitute goods
The next force is of threat of substitute goods which is interlinked with the above force of
new entrant as under this when a new product or service is provided to customers and
which meets there similar requirement and designers in different way it becomes a threat
for the organisation already existing. Therefore, the threat of substitute goods is moderate
over Choice Hotels International because of its wide ranged product portfolio and its
present in several different markets.
 Bargaining power of suppliers
The third force focuses over the bargaining power of suppliers that means the power
external stakeholders specifically supplier hold over the organisation. the bargaining
power of suppliers in case of Choice Hotels International is low because of companies
policy of not depending on one particular supplier. This strategy is useful because first
the hospitality provider is available in several different marketplaces belonging to
different regions which allow it to improve its supplier’s portfolio along with it numerous
suppliers through which the hospitality provider operates rather than settling with only
one or two (Njoroge, Anderson and Mbura, 2019).
 Bargaining Power of customers
The second last competitive force that exist in the external environment of all different
business organisations and in this case the hospitality industry is of the bargaining power
of customers. Choice hotels International deals in a service oriented industry and
hospitality sector which means the customers are the ultimate and the most important
resource of the organisation. This automatically highlights and determine that bargaining
power of customers in case of Choice Hotels International is high because of the
importance of customers and their loyalty towards the brand and its offerings.
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 Existing rivalry
Last but not the least competitive force is existing library that means the competitors who
already exist in hospitality industry and in external environment of the particular
hospitality organisation. Choice Hotels International is dealing in highly competitive
market there are numerous competitors are present belonging to several ratings from
economy to upscale rendering potential competition to the organisation because of the
new innovative offerings they are bringing in the market. Therefore the existing rivalry
holds high power as they are aggressively becoming more and more competitive and
efficient putting pressure on Choice Hotels International m
TASK 4
P4. Applying a range of theories, concepts and models, interpret and devise strategic planning
for a given hospitality organisation.
EXECUTIVE SUMMARY
The business strategy is a told that hold specific actions and strategies through which company
fulfil their strategic objectives and goals that are established by the higher authority belonging to
the management level. This business strategy plan is developed for Choice Hotels International
where appropriate theories concept and models are interpreted for revising the best hospitality
plan. Choice Hotels International is a hospitality business organisation that is dealing in
worldwide locations and existing in market from 1939 (Bratton and Watson, 2018). The hotel
chain is considered as the largest in the United States. current plan is developed with the help of
above macro and micro environmental analysis conducted for hotels by understanding the
competitive force that exist in the marketplace.
VISION
The vision statement of Choice hot Hotels International highlights their objective “ Connecting
the world through the power of hospitality”.
MISSION
The mission statement states that hospitality business bring together the people, brands and
technology which enables their success and others as well. Also the mission statement highlights
that Choice Hotels International welcomes every guest, every partner and every individual.
OBJECTIVES
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 To increase sales and revenue by 10% in next 12 months or one year.
 To improve collaboration and developing international alliances in next 6 months.
 For improvising profitability by 8% in next 12 months or one year.
 For enhancing Customer base by 5% and reducing their bad review number in next 8-10
months.
ANSOFF MATRIX
The Ansoff matrix is a strategic tool holding four specific strategies which can be adopted by
organisations according to their potentials and other external factors which are affecting their
businesses. The four strategies are as follows:
 Market Penetration
The first and foremost strategy that is suggested in the growth matrix is of market
penetration which states that The entity should remain in the same market with their
similar offerings but focus over there marketing activities. That means it is suggested to
business for improving the distribution channels and conducting efficient Marketing by
adopting current tools and techniques in order to retain the existing customers and
attracting new customers from the same market and for the same product. Risk involved
in such strategy is very low as all elements are same except a change taking place in
marketing policies.
 Product Development
The Product development strategy is similar to its name that means it suggest the
business enterprise should develop new product offerings for or their existing customer
base and by sticking to the existing marketplace. This is a potential strategy for choice
hotels International as it is an opportunity in front of it for gaining a competitive edge
from its competitors and becoming powerful but changing its weakness into strength
introducing customer’s bad reviews (Yoon, Jang and Lee, 2016).
 Market Development
The third competitive strategy that is of market development concerns about the company
and its movement into new international marketplaces. This strategy suggests that choice
hotels International should move into new market with their existing offerings and
portfolio. Market development strategy is also efficient for choice Hotel International
because it is another opportunity available in front of it which can be exploited by
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developing alliances with international businesses and making use of their resources and
knowledge for establishing their presence in the new market.
 Diversification
The last competitive strategy is of diversification suggesting that the organisation should
move into an entirely new market place with developing a entirely new product for
targeted audience for fulfilling their requirements and needs. The diversification strategy
is the most risky and beneficial one bringing better results and profitability if successful
but very dangerous and then even cause to dysfunctioning of business if impacts
negatively (Jogaratnam, 2017).
STRATEGY
According to the above macro and micro environmental analysis conducted it has been identified
that political legal and economic factors of United Kingdom are not in favour of the hotel chain
but its strengths are specifically identifying that the company should develop new products and
alliances with international businesses. It states that according to its strengths and opportunities
available in front of choice hotels International it is very significant that company should talk to
new product development and market development strategy in order to fulfil its strategic
objectives. Therefore these two competitive strategies are suggested to the hospitality
organisation.
RECOMMENDATION
By all the analysis conducted, data collection and interpretation of appropriate strategies the
selected competitive strategy are of market and product development. That means Choice Hotels
International will be developing new products for their existing customer base in order to provide
them better services and experiences and improving their reviews. Along with it company will
also develop alliances with other international markets and move geography Kelly by spreading
its operation in more and more areas on the globe (Okumus and et. al., 2019). The only
recommendation that is appropriate for the business entity is company should talk to cost
leadership focus and differentiation focus strategy in order to be effectively implement the above
chosen strategies. The cost leadership focus policy will allow Choice Hotels International to
efficiently develop their presence in new market places and differentiation focus strategy will
allow the business entity to provide new and innovative offerings to the customers who fulfil
their desires and also provide them curated and the best hospitality experience.
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CONCLUSION
The above report controls that business strategy development and all the aspects that are related
to it are very important and essential for organisation to analyse in order to be effective and
potentially complete their goals and objectives that are developed by the top level management.
the report analyses the Macro environment of the hospitality organisation with the help of
PESTLE framework along with utilising SWOT analysis model for identifying internal
capabilities. Moreover porter's five forces model is also applied in order to understand the
competitive forces and their power which influences the business and profitability of the entity.
At the end finally a strategic plan is developed through which product development and market
development strategy is adopted by the organisation and cost leadership focus and differentiation
leadership focus is suggested to it for becoming and executing there plan efficiently.
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REFERENCES
Books and Journals
Bratton, J. and Watson, S., 2018. Talent management, emotional labour and the role of line
managers in the Scottish hospitality industry. Worldwide Hospitality and Tourism
Themes.
Cheon, G. and Cheon, Y., 2016. A Study of the Relationships among Hospitality, Corporate
Social Responsibility, Quality & Price Value, and Customer Satisfaction: Focused on
the Five Star Hotel. International Journal of u-and e-Service, Science and
Technology. 9(10). pp.209-222.
González-Rodríguez, M. R. and et. al., 2018. Revisiting the link between business strategy and
performance: Evidence from hotels. International Journal of Hospitality Management.
72. pp.21-31.
Jogaratnam, G., 2017. How organizational culture influences market orientation and business
performance in the restaurant industry. Journal of Hospitality and Tourism
Management. 31. pp.211-219.
Kandampully, J., Zhang, T. C. and Jaakkola, E., 2018. Customer experience management in
hospitality. International Journal of Contemporary Hospitality Management.
Kim, S. H., Lee, K. and Fairhurst, A., 2017. The review of “green” research in hospitality, 2000-
2014. International Journal of Contemporary Hospitality Management.
Konovalova, E. E. and et. al., 2018. Forming approaches to strategic management and
development of tourism and hospitality industry in the regions. Journal of
Environmental Management & Tourism. 9(2 (26)). pp.241-247.
Kuo, C. M., Chen, L. C. and Tseng, C. Y., 2017. Investigating an innovative service with
hospitality robots. International Journal of Contemporary Hospitality Management.
Lopes, M., 2016. The hospitality industry (Doctoral dissertation).
Njoroge, M., Anderson, W. and Mbura, O., 2019. Innovation strategy and economic
sustainability in the hospitality industry. The Bottom Line.
Okumus, F. and et. al., 2019. Strategic management for hospitality and tourism. Routledge.
SALEHIPUR, M., 2018. BUSINESS STRATEGY FORMULATION OF HOSPITALITY
INDUSTRY AGENCIES BY SWOT APPROACH A CASE STUDY OF MEHR
CHAIN HOTELS.
Turner, M. J. and et. al., 2017. Hotel property performance: The role of strategic management
accounting. International Journal of Hospitality Management. 63. pp.33-43.
Yoon, D., Jang, J. and Lee, J. J., 2016. Environmental management strategy and organizational
citizenship behaviors in the hotel industry. International journal of Contemporary
hospitality Management.
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