Hospitality Business Strategy

The report highlights the business operations of Premier Inn, a hotel chain based in the UK. It analyzes the micro and macro environment and its impact on the organization through SWOT analysis, PESTLE analysis, Porter's five forces analysis, and VRIO framework. The report suggests strategies like cost leadership, differentiation, market development, and focus strategies to maintain a competitive edge in the market. The strategic planning process is also discussed to achieve the goals and objectives of the organization.

Hospitality business strategy

Table of Contents
INTRODUCTION...........................................................................................................................3
Part-A...............................................................................................................................................3
S.W.O.T. Analysis of Premier Inn...............................................................................................3
Pestle analysis..............................................................................................................................5
VRIO framework of Premier Inn.................................................................................................6
Internal assessment of Premier INN ...........................................................................................7
Porter's five forces model on Premier Inn...................................................................................7
Part-B...............................................................................................................................................8
Porter's Generic Strategies...........................................................................................................8
Market development strategy.......................................................................................................9
Strategic planning process.........................................................................................................10
Blue ocean Strategy...................................................................................................................11
Strategic directions to maintain competitive edge.....................................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
The plans made by the management which focuses on increasing profitability, customer
base, customer satisfaction rate and eliminating competition is called business strategy. The
hospitality sector follows branding and franchising strategy to serve their customer in different
locations that helps them to reach higher customer base and gain maximum profit from the
different regions. Focus of the sector is on the region with higher tourism growth.
The following report will be highlighting the business operations of Premier inn. It is a
hotel chain based in UK and operating in Germany, U.S., Republic of Ireland and Qatar. The
company offers budget friendly accommodation facilities to their customers. Micro and macro
environment and its impact on the organization will be analysed and discussed through swot
analysis tool, pestle analysis, porters 5 forces analysis etc. the strategies to tackle the hurdles and
eliminate competition are also suggested.
Part-A
S.W.O.T. Analysis of Premier Inn
Strengths
 Occupancy rate
 Strong hold in UK
 Locations
 Brand image
Weaknesses
 Limited presence globally
 Refund problems
 Hygiene issues
Opportunities
 New markets
 Further growth in Germany
 New décor
Threats
 Competitors
 Legal threats
 Pandemic
Strengths
Occupancy rate- it has an average occupancy rate of more than 75% because of the
higher preferences of the customer for a medium budget hotel.

Strong hold in UK- the company operates with more than 700 hotels that serves a
customer base around five million in a month in UK itself. The tourism rate of UK in good, this
is the major strength of the firm.
Locations- most of the hotels are located near airports and tourism attraction spots which
provides the customers to stay where they will mostly desire.
Brand image- by providing the customers with kids and bike friendly environment and
giving access to free Wi-Fi anytime the organization has built a great brand image over the years.
The hotel chain company has won many awards that impacted their reputation positively.
Weaknesses
Limited global presence- the company doesn't operate in many countries across the
world(Kumar and et.al., 2021). This limited presence weakens them in comparison to its
competitors who operate globally. This weakness may lead to the setback of the company.
Refund issues- many customers who booked the hotel and faced rejection while
demanding refunds due to pandemic accused the brand of fraud as the company didn't issue the
refunding amount. This effected their reputation and the customer satisfaction rate was also
impacted.
Hygiene issues- in an incident where an undercover operation was held to determine the
hygiene quality of Premier Inn the organization was found guilty as their working staff was
caught using the same guest towels to clean the restrooms. This incident harmed the
organization's reputation.
Opportunities
New markets- with experience the organization can establish in the new countries with
higher tourism rates. The increasing globalization strategy can be followed by the organization to
operate worldwide.
Further growth in Germany- Premier Inn has 28 established hotels in Germany but it can
grow numerously as the country have a very high tourism rate. Bigger markets in the country can
be captured by premier Inn.
New decor- Innovation of design and style in interior of its hotel will attract the
customers because many budget hotels don't provide a good internal view to the customers.

Threats
Competitors- competitor of Premier Inn are giants in the same segment of budget hotels
are Easy hotel, LBIS and Marriott. Some of the small and independent hotel can also be counted
as a threat to the organization.
Legal threats- legal actions can be faced by the organization if the hygiene issues will not
be resolved and if the quality is not maintained. Regulatory bodies may cancel their licence if
same practices are continued.
Pandemic- Covid-19 pandemic is a threat to the whole hospitality industry which forces
the organizations to maintain extra quality and precautions. Travelling restrictions during
pandemic has affected the industry negatively and whole industry faced high losses.
Pestle analysis
Political factors
Political changes in the country impacts the operations of the industries in the region.
Some of the factors that effects hospitality sector are change in foreign trade policy, taxation
policies, Brexit deal etc. change in these factors leads to change in organizational functioning,
policy and profitability. The Brexit deal resulted in loss of employees of premium inn because of
the changes in certain laws.
Economic factors
Economic stability plays a vital role in the growth of the organization in both positive and
negative ways. Decreasing GDP of UK will affect the organization negatively but during this
period Inn will not be impacted harshly as they operate in budget segment in the industry. In
comparison with other luxury hotels like Marriott, premier inn has faced lesser issues.
Social factors
Reliability of hospitality sector is heavily based upon tourism industry and its growth in
the region. More tourism rate will lead to higher demand of hotels and lodges. Incline in the
graph of tourism can be seen during the holidays. This social factors impact the profitability
directly. The organization will be benefiting in summer season as there is increase in tourism rate
after the Covid-19 restriction had ended. This is the peak period of the growth in the hospitality
sector.

Technological factors
The growing awareness and use of digital platforms has impacted the organization
positively. The use of mobile apps for the specifications and booking hotel is in trend (HeGo).
Major customer base pre-book hotels online instead of physically approaching the hotel. This
technique has enabled the power of hospitality sector to easily reach their customer across the
globe.
Legal factors
Legal factors impacts the policy and decision-making of the organization as a result the
overall functioning is effected. Factors which impacts hospitality sector are food licencing,
labour law and land laws (Konovalova and et.al., 2018.). The organization has to obtain certain
licence from the authorities who ensures whether the quality and methods followed by the
organization is authentic or not. The labour law affects the organizations operating cost and
profitability of the firm as they operate in the budget hotel segment.
Environmental factors
Environmental factor is one of the important part in hospitality sector as the seasonal
change effects the tourism rate. Depending upon the region and its environmental conditions the
organization has to enter the region. In summer season the business of Premier Inn and other
hotels are expected to grow rapidly.
Analysis of macro environment of Premier Inn
Referring to the Pestle analysis the factors that effect the organization majorly are
environmental, social and technological. The organization has focused on these factors and
planned their strategies accordingly. The strategy that has been used by organization to sustain in
long run and tackle these barriers is cost leadership strategy. Following this strategy the company
is able to provide good quality services with lower cost and it results in increased occupancy rate
and higher profits.
VRIO framework of Premier Inn
Value

Gaining customer satisfaction with the budget segment hotels is the biggest resource and
U.S.P. of the organization (Olson, and et.al., 2021). The organization provides its customers with
good services and hygienic rooms to increase their customer retention rate.
Rarity
Offers provided by premiere in are very rare and not many hotels are able to provide
these kinds of deals to customer.
Imitable
The concept of providing the best customer experience with reasonable prices is not easy
to imitate by the competitors as it will impact their profitability.
Organisation
Company regularly monitors its day to day activities and their staff is being trained to
serve customers in the best way possible (Kitsios and Kamariotou, 2018). All the activities of the
employees are also monitored. The maintenance of hygiene is always kept in mind through daily
cleanliness process . This regularly monoprint features helps the organization to develop a
competitive edge over their competitors.
Internal assessment of Premier INN
The internal capability of the organization is the environment that is being provided to
their customer. The organization has a very skilled workforce that is deployed to provide the
customers with satisfactory services. Internal weakness of the organization being assessed is the
inability of the hotels to target the customer with higher spending power. Hotels don't match the
luxurious level of other hotels such as Marriott and fails to satisfy upper class of the society.
Porter's five forces model on Premier Inn
Existing competitors
Environment of hospitality sector is very competitive because of the low cost of product
differentiation. Post-pandemic period has shown a rapid increase in tourism this has caused in
increasing rivalry in the industry (Bruijl, 2018.). Premier Inn has to face the giants like Hilton,
Hyatt, Marriott etc. the organization cannot ignore the collective competition given by the small
scale hotels and lodges in the sector.
Threat of new entrants

Concern for new competition in the sector is very low because the new companies aiming
to enter this sector will need high capital investment as the large area of land is needed to operate
in the industry (Son and et.al., 2021). It is not easy for the entrepreneurs to enter the market.
High capital investment will be a barrier for the new entrants.
Power of suppliers
Bargaining power of supplier is very low in the sector because suppliers doesn't play a
vital role in this industry as the sector is more based upon skilled workforce to offer best services
to its customer. The essentials needed by the organization is provided by the wide rang of
suppliers so the organization don't have to worry about this factor.
Power of customer
Customer satisfaction rate is the backbone of the organization as the industry is based
upon the services being provided to the customer. The customer posses high bargaining power
because of the large availability of hotels (Farrukh and et.al., 2020). Bargaining power of the
customers are comparatively low in holidays and weekends. The company benefits as they
provide budget accommodation with good services and facilities.
Threat of substitute goods
Threat of substitute goods is very low in the industry as there are only few substitutes of
hotels like cottages. This threat is not a matter of concern as the cottages are very costly and
hotels offer the rooms in very low prices in comparison with the cottages.
Strategies to develop competitive edge and market position
Outcomes of the application of five forces shows that Premier Inn hotels posses threat
from existing competitors. To develop a competitive edge over the rivals the company can use
market development strategy. This strategy will help the organization establish themselves in the
new markets of different countries. One of the strategy that the company can follow is to provide
appropriate premises at preferred locations for destination wedding. This will open a different
door of success and will help the organization to target the customer of this particular preference.
Part-B
Porter's Generic Strategies
Cost Leadership Strategy

This strategy focuses on reducing the cost of product and services offered to the customer
so that higher customer base can be reached with cheaper prices. Lowering the cost leads to more
sales and the company focuses on the collective profit instead of per sales profit. Premier Inn
follows this strategy to pursue the market and attains a good occupancy rate.
Differentiation strategy
The focus of this strategy is mainly on the Innovation and uniqueness in the products or
services so that it can look different in the segment from its rival offerings. The company uses
this strategy to stand out from the crowd and the concept attracts the customer (Ilmudeen and
Bao, 2020). Premier Inn can differentiate in the premises of the hotel depending upon the region.
The organization can mould their hotels in a way that it can reflect the culture of the region
where the hotels are established.
Cost Focus Strategy
The companies who follow this strategy focuses on the niche market segment rather than
targetting the bigger market. The strategy focuses on fulfilling the preferences of particular
segment to achieve incompetence in the particular segment. The company can offer luxury suites
to the customers with high spending capacity.
Differentiation Focus Strategy
Approach by which a company eliminates its competition by focusing on product
Innovation and making it a superior product even if the prices are higher the target audience will
purchase it (Rutherford, 2021.). To target a niche market the company can establish their hotels
in the cities which are majorly preferred for destination wedding. The interior and the structure
of such hotels should be designed specially for wedding purpose. These hotels will benefit the
organization to become specialized in the field.
Market development strategy
When a company introduce their existing products into new markets to target different
segment of the population then the strategy used by the company is market development strategy
(Benzaghta and et.al., 2021). This strategy ensures that the products which are already well-
known in one market can enter new market and grow with the help of the established image of
the product.

To expand and flourish in new markets the organization can use market development
strategy. Implementing this strategy the company can focus on the international markets and
expand in different location with high tourism rate (Henschel and et.al., 2018). Premier Inn
already have a good reputation in the market as it is the largest hotel chain of UK that will be
benefiting the organization to create awareness about their expansion in the region. Organization
knows how to serve customers and what should be the key points to keep in mind for better
customer satisfaction. The market will be new for them but the field is same.
Strategic planning process
To determine a strategy that focuses on increasing profitability and growth of a business a
process should be followed. This strategic process includes:
Determining existing strategy position
Before making new business plans the management has to see whether the existing plans
have meet the objectives or not and the new plans are developed accordingly.
Prioritizing objective
Setting up objectives directs the organization to the way of growth. Objectives that are
determined has to be practical and achievable. Deadline has to be fixed to achieve the respective
goals.
Developing strategic plan
Management has to decide a way that has to be followed for achieving the target goals in
the time limit. Different pans should be developed to achieve a goal (Njoroge and et.al.,
2019).The best way of achieving the goal has to be pursued.
Executing the plan
Implementing the determined strategies in an effective way after analysing different
factors that will help the plan to succeed or the factors which will act as a barrier in the
succession of the plan.
Revising the plan
Implemented strategies has to be monitored and modified time to time so that it can
succeed in different existing situation (Aladag and et.al., 2020). The plans and strategies should
be moulded according to the situation so that it can give expected results in any situation.

Blue ocean Strategy.
Premier inn hotels are providing hospitality services majorly in 2 countries UK and
Germany. The organization can focus on the global expansion and set the goals accordingly.
Globalization can help the organization to achieve maximum customer base across the globe.
They can use blue ocean strategy to pursue this goal. Implementing this strategy the company
will be needed to enter an uncompetitive market and that can be achieved if the organization can
develop innovation in their structure and services. One of the innovation can be developing their
structure and services in accordance to the region in which the hotel is located. Hotels across the
globe has to be designed in a cultural representative way and the services provided by the
company should also match the tradition (Uğurlu, 2020.). The overall ambience of the hotels can
give a glance of the region and its history to the tourists. This way of operating will lead to
eliminate major competition as the company is entering innovative segment which is not pursued
by other rivals. Following the blue ocean strategy the company can focus on meeting the demand
and expand more and more. To maintain uncompetitiveness in the field the company can
regularly align their operations for achieving low operating cost and offering reasonable prices to
their customer.
Strategic directions to maintain competitive edge
Rivalry in the sector is growing regularly as tourism is increasing day by day. The
competition of premier inn is with big companies like Hyatt which offers wide range of variety
of services to the upper class and operates globally. Premier inn can use differentiation focus
strategy to give tough competition to others. Company can focus on the customer base with
higher spending capacity and provide them with the best accommodation facilities like large
suites etc. This will allow the brand to create a premium image in the market and it can demean
demands according to their wants.

CONCLUSION
The above report has concluded that the organization has a good hold in some parts of the
country, but they need to cope up with the increasing globalization which will increase their
operating area and profitability. Customer reach has to be increased by the company to compete
with the rivals. The idea of providing budget friendly accommodation is good but the customer
purchasing power is increasing in some parts of the globe so the hotel prices should be
maintained accordingly. Company should use its strengths to take advantage of the opportunities
that are present in the market. Premier in has to maintain its reputation and goodwill that is being
harmed due to some factor. Base of the industry that is customer services should be regularly
maintained so that the firm can attain good customer retention rate.

REFERENCES
Books and journals
Aladag, O. F. and et.al., 2020. Strategy implementation research in hospitality and tourism:
Current status and future potential. International Journal of Hospitality Management.
88. p.102556.
Benzaghta, M. A. and et.al., 2021. SWOT analysis applications: An integrative literature review.
Journal of Global Business Insights. 6(1). pp.55-73.
Bruijl, G. H .T., 2018. The relevance of Porter's five forces in today's innovative and changing
business environment. Available at SSRN 3192207.
Farrukh, M. and et.al., 2020. Twenty‐eight years of business strategy and the environment
research: A bibliometric analysis. Business Strategy and the Environment. 29(6).
pp.2572-2582.
HeGo, B., PESTLE Analysis.
Henschel, U. K. and et.al., 2018. Hotelmanagement. In Hotelmanagement. De Gruyter
Oldenbourg.
Ilmudeen, A. and Bao, Y., 2020. IT strategy and business strategy mediate the effect of
managing IT on firm performance: empirical analysis. Journal of Enterprise
Information Management. 33(6). pp.1357-1378.
Kitsios, F. and Kamariotou, M., 2018. Business strategy modelling based on enterprise
architecture: A state of the art review. Business Process Management Journal.
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.
Kumar, S. and et.al., 2021. What do we know about business strategy and environmental
research? Insights from Business Strategy and the Environment. Business Strategy and
the Environment.30(8). pp.3454-3469.
Njoroge, M. and et.al., 2019. Innovation strategy and economic sustainability in the hospitality
industry. The Bottom Line.
Olson, E. M. and et.al., 2021. Business strategy and the management of digital marketing.
Business horizons. 64(2). pp.285-293.
Rutherford, D. G., 2021. Hotel management and operations.
Son, I. S. and et.al., 2021. Realising the goals of event leveraging: The tourism and hospitality
SME perspective. Journal of Hospitality and Tourism Management. 49. pp.253-259.
Uğurlu, K., 2020. Integrated Marketing Approach in Hotel Management. In The Emerald
Handbook of ICT in Tourism and Hospitality. Emerald Publishing Limited.

14