Hospitality Business Strategy - SWOT, PESTEL, VRIO, Porter's Five Forces, Ansoff Matrix

This report explores the concept of business strategies in the context of UK's largest hotel chain - Premier Inn. It includes SWOT analysis, PESTEL analysis, VRIO framework, Porter's Five Forces model, and Ansoff Matrix to evaluate the competitive forces of the hotel sector and recommend suitable growth strategies. The report also analyzes the impact of internal and external factors affecting the hotel followed by a critical analysis of the organization using an appropriate framework.

HOSPITALITY BUSINESS
STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
PART A............................................................................................................................................4
1. SWOT Analysis of Premier Inn...............................................................................................4
2. PESTEL Analysis of Premier Inn............................................................................................5
3. External environment analysis in the strategic management of Premier Inn...........................7
4. Internal analysis of Premier Inn using VRIO framework........................................................7
5. Evaluation of the competitive forces using Porter's Five Forces model..................................8
PART B...........................................................................................................................................9
1. Evaluating strategic directions using Porter's Generic Strategies............................................9
2. Recommending appropriate growth platform and strategies using Ansoff Matrix................10
3. Strategic Planning Management Process...............................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES................................................................................................................................1
Books and Journals......................................................................................................................1

INTRODUCTION
Business strategy refers to the course of action or a set of objevtive goals that helps
secure a successful market position for any concern. The hospitality business sector is one of the
fastest expanding service industry in the global business environment. The following report will
explore and demonstrate the concept of business strategies in the context of UK's largest hotel
chain – Premier Inn (Mitchell, 2020).
Premier Inn is one of the largest hotel chains in UK under the Whitbread Plc. This report
will analyze the impact of internal and external factors affecting the hotel fololowed by a critical
analysis of the organization using an appropriate framework. It will further study and assess the
competitive forces of the hotel sector and how they can be strategically managed by
recommending suitable growth strategies which will help in interpreting reasonable business
management plans in the context of the Premier Inn hotel concern.
PART A
1. SWOT Analysis of Premier Inn
SWOT is an acronym which stands for Strengths, Weaknesses, Opportunities, and Threats and is
used as an evaluative framework of the company's strategic position.
STRENGTHS
Premier Inn has super luxury environment allowing guest to relax and enjoy professional
service. The hotel focuses on elite customer type and has more than 50,000 rooms in 600 plus
hotels around the UK. It was awarded 'Best UK economy hotel brand' at Travel Awards 2017. It
advertises its promotional events with the support of famous personalities and has many good
will symbols that helps create a good position for the hotel in the market (Benzaghta and et.al.,

2021).
WEAKNESSES
The hotel chain can improve upon certain weak aspects such as thin profit margins
originating from its unmanageable hotel operations. It will be sound for Premier Inn's business to
set aside its internal conflicts by cutting down its outlet groups to a bare few so that revenue
flows profitably. Another of its weak point is that the hotel has an extremely capital intensive
approach with high costs that makes it less favourable for the non-elites.
OPPORTUNITIES
Premier Inn has a very good opportunity of establishing itself in the northern Ireland
region of UK by gaining a brand new market entry. This alludes to a good enough chance for the
business to initiate its hotel dealings on a contractual basis of floor renewal and wall tiling. Such
operational experiences have also spreaded out in the Asian and Middle East regions. This has
provided the hotel with several business mergers and hotel acquisitions.
THREATS
There are a lot of possible threats surrounding the hotel chain such as shortage of skilled
labour and downhill economic trends. It also faces certain legislative risks in the form of trade
union heads and health security controllers which pose the problems of legal proceedings due to
future negligent handling. Technological and communication issues keep surfacing that affects
the customers' travel and stay experiences. Another downturn can be seen in its poor training and
development.
2. PESTEL Analysis of Premier Inn
PESTEL stands for the Political, Economic, Sociological, Technological, Environmental,
and Legal factors that externally affect an organization.
Political Factors
The hotel industry is heavily monitored by government agencies as its revenue generation
from travel and hospitality directly impact the political stakeholders. Premier Inn has a good

success rate in UK but curren recession phases have a negative impact on the hoteliers. The
governemnt has substantially reduced the high interest rates thereby increasing unemployment in
the sector (Martinez-Contreras and et.al., 2022).
Economic Factors
The UK budget regarding its hotel market such as Premier Inn has considerably
witnessed growth in its supply volume. People love to travel and elite/rich people more so which
has marked a profitable market dominance. Economic stagnation sometimes slow down the
purchasing behaviour of customers in travel spending in the hotel sector.
Social Factors
Understanding consumer needs and purchasing power majorly impacts the hotel industry.
In this case the Premier hotel's biggest competition is Airbnb as it offers multiple range of room
availability at significantly lower costs. This highly affects the hotel in context because if its elite
consumer base. It needs to commit to their end users in a better way.
Technological Factors
The use of technologically innovative methods and systems affects almost every business
segment. The hotel businesses like Premier Inn also utilizes its technology based potential to
maintain hassle free communication with their customers (Bharwani and Mathews, 2021). This
includes an interactive website, online reservation amenities, database system, and the use of
mobile platforms for advertisement campaigns.
Environmental Factors
It is important for businesses to conduct their operations in an eco friendly manner as the
environmental sustainability concern looms large over everyone. In this context the UK based
hotel has incorporated several ecological programs in its organization such as 'The Good
Together' project for decreasing wastage and installing energy saving lighting, etc (Elkhwesky,
2022).
Legal Factors
Changes in the legal system enormously influences the hotel busineses such as Premier
Inn. UK government's 'Low Pay Commission Report National Minimum Wage' act (2009)

implies that the budget operations of hotels should be increased which clashes with its customer
friendly prices. In response to this the hotel developed a Responsible Sourcing Policy.
3. External environment analysis in the strategic management of Premier Inn
The macro environement (extrenal factors) of the hospitality sector is fairly affected by
several management decisions such as those mentioned in the above PESTEL analysis of the
Premier Inn hotel. All the discussed factors influence the hotel's strategic organization and that is
the main reason for the planning and execution of the framework in this context.
The hotel's Pestel analysis critically provides an inclusive understanding various extrinsic
aspects. For instance, it can be surmised that the Premier Inn hotel has manageable fiscal issues
and that it has majorly contributed in the environmental sustainabilities. On the same side the
hotel needs to take into account the political factors by maintaining satisfactory terms with the
government bodies (Aladag and et.al., 2020).
4. Internal analysis of Premier Inn using VRIO framework
VRIO is an acronym that stands for Value, Rarity, Imitability, and Organization. It is used
for an internal assessment of an organization's sustainable resources and capabilities such as can
be seen in the context of hotel Premier Inn (Chatzoglou and et.al., 2018).
VALUE
Hospitality industry is one of those sectors which get impacted due to economic and any
other crisis. Instability in this industry can be seen because hospitality is connected with market
flow and demand. In this respect Premier Inn makes the best use of its human potential for an
effective capital and labour management which helps in retention of valuable resources.
RARITY
If there is economic crisis then no tourist will desire to spend their income on travelling.
These are superficial factors that play a major role in business instability and strategy process. In

instances like these companies need to have a rare and innovative solution at hand such as
Premier's employee management method based on data driven format.
IMITABILITY
Businesses in hospitality industry need to have crisis management strategy allowing them
to become stable in tough time some of which may include competent employee base. The hotel
chain can also make use of it by employing effective HR strategies.
ORGANIZATION
The hotel businesses like any other industry requires an efficient organization at work to
increase its internal stronghold of employee performance. Premier Inn with its adequate resource
availability at the right time, budget and saving of the company needs to develop strategic plans
to survive at the time of internal crisis (Amaya and et.al., 2022).
5. Evaluation of the competitive forces using Porter's Five Forces model
The competitive analysis of Porter's Five Forces in context of Premier Inn is as follows:
Competition in the industry
Hotel chains like Premier Inn undoubtedly have a lucrative business environment but they
also have certain big rivals in the industry in the form of exotic local enterprises. The hotel is
known to attract most of the elite customers but so does the Middle Eastern hotels with their
luxurious offerings.
Potential threat of new entrants
In the context of the big scale hotel firms the threat of new entry of competitors in this
market is minimal to zero. This is due to the fact that big corporations like Premier Inn require a
big budget of financial inputs including substantial quantities of branding, sales and advertising
supplies (Bruijl, 2018).
Threat of substitutes
As per the 2010 Mintel report the two main factors that rank high up on the list of hotel

choosing criteria by customers are the price factor and a favourable location setting. If any hotel
fulfils these criteria among other possible analytics trends, then it manages to gain quite a
handful of clients.
Power of suppliers
The suppliers of large hotel chains like that of Premier Inn's have quite a less amount of
bargaining power because of low cost of providing. Generally these hotels have a secured
network of contacts which leaves the suppliers with no ground for broker settlements.
Power of customers
In the hotel industry the power of customers can be juxtaposed with the power of
suppliers as the hoteliers are never solely dependent on a single customer of value. These are
numerous and diverse with different purposes of staying. Demographic transitions might
sometimes affect this industry.
PART B
1. Evaluating strategic directions using Porter's Generic Strategies
Every business organization want competitive advantage in the market, firm have to use
the best strategies recommended by porter. Premier Inn need to focus on three most important
and effective strategies, these are:
The cost leadership strategy
This is one of the most common and effective strategy allowing firm to reduce price as
low as possible to get competitive advantage in the market. Premier Inn have to use this strategy
to reduce their room price to get competitive advantage, they can attract guest from all around
the world because of lower price (Ali and Anwar, 2021).
The differentiation strategy

This is another effective strategy but include major risk as well, here company have to
differentiate their product from product of competitors, this simply means either adding new
feature to existing product or introducing innovative product to meet the demand. Premier Inn
can adopt this strategy to differentiate their room from competitors, they can add new features in
their room and attract guest, however, they need to add or reduce room price to attract potential
guest from around the UK.
The focus strategy
This is rarely used strategy allowing the UK based firm to focus on niche market which
means they need to niche segmented their market to get competitive advantage. Premier Inn have
to focus on targeting niche market with mixture of two strategies mentioned above, these are:
The focused cost leadership: This strategy allow firm to reduce cost of their product
before entering niche market, this way company effectively enter niche market where audience is
already been segmented. The hotel in context has to be very transparent pertaining to its market
cost sensitivity as it concerns adding something new and productive to the existing market.
The focused differentiation: The differentiation focus is a generic focus strategy that puts
high emphasis on a niche market but offers a product or service that is unique in the market.
Increasing importance should be given to product features rather than its cost. For instance, hotel
Premier Inn can conduct its hospitality business by using an appropriate mix low cost strategies
with innovatively designed rooms (differentiated approach) that caters to customized needs.
2. Recommending appropriate growth platform and strategies using Ansoff Matrix
Developed by H. Igor Ansoff in 1957, the Ansoff Matrix is known as the product/market
expansion grid. This tool can be effectively used to analyze and help suggest useful growth
strategies for Premier Inn hotel.
MARKET PENETRATION
This primary strategy aims at increasing the market share of Premier Inn and poses no
immediate threats as the hotel barnd will enter further in the existing market. This displays a
stable linearity when it comes to the promotional business tactics of UK's hospitality firms to the
preferred customer segment. The hotel still has growth potential in its own niche market

therefore making this penetrative market strategy less fit and suitable for a comprehensive
development (George, 2021).
PRODUCT DEVELOPMENT
The secondary strategy of product or service development can be helpful for the UK
hotel chain. This is slightly more risky because a firm introduces a new product into present
market scenarios. This move needs extensive research and product development. It can be
implemented by certain ways such as strategic partnerships with other organization to gain the
access of each other's distribution channels. With the employment of of this strategy the
company can offer its customer base with more enriched products.
MARKET DEVELOPMENT
Whenever a new firm enters a new market sector, the share of its existing products in the
new market takes time in expanding due to geographical restraints. The distinct nature of
customer preferences and product trends also pose a downward fluctuation. Premier Inn can
benefit from this supporting strategy with reasanbale prices, powerful hallmarks, and a renewed
focus on expanding the products in new market places. This can be done by creating new
customer segment, entering into new domestic market, etc.
DIVERSIFICATION
This is yet another supporting strategy wherein the mentioned hotel business enters into
a new market with a whole new product. It is the riskiest tactic for the company. Product and
market development strategies are required in it. It leads to increased revenue as it opens up an
entirely new revenue stream. But it has its own risk of introducing a new and unproven product
into a whole new marketplace of which the firm may not have much knowledge.
Best suitable strategy for Premier Inn: It can be concisely observed from the above
analysis that the first primary stage of this growth & expansion matrix namely the 'Market
Development' approach appropriately fits as the base of Premier Inn's strategic measures. It is
beacause this variant provides a good opportunity to the company for an all-inclusive
development plan.

3. Strategic Planning Management Process
Vision
Premier Inn is one of the leading hotel brand in the UK founded by Samuel Whitbread in
year 1987. Formerly named as Premier Travel Inn, the hotel is one of the most reputed hotel
chains all over the country with a keen vision towards building a solid customer base. Its far
sighted project initiative 'Good Together' makes the business a profitable experience (Terence,
2022).
Mission
The hotel wants to stay true to its mission of becoming and staying one of the best
hospitality brands with a customer centric approach of conducting business. It started as a
simple brewery and over the course of time expanded itself into various additional industries.
Aims & Objectives
The Premier Inn hotel chain aims at a 30% rise in its advertising sales apart from
providing an array of provisional comfort to its customer range. It puts an objective and equal
emphasis on its social visibility and promotional strategies through television and online modes.
The hospitality business also aims at business expansion in areas other than its homeland London
(Page and Connell, 2020). In addition it places a good enough focus on other resource channels
such as pipelines and energy reserves.
Internal Environment Analysis
Premier Inn's internal strategic development can be assessed through a brief and precise
overview of its SWOT analysis as illustrated in Part A.
Strengths Weaknesses Opportunities Threats
Largest leading brand
in UK
Major emphasis on
elite customers
Utilizing financial
resources for novelty
Legal risks from the
Trade union
High customer
satisfaction
Geographical
confinement to native
areas only
Constructive
collaborations for
territorial expansion
Competitive rivals in
the hotel industry
Well-featured service
provider
Rising competitors in
industry
Extending its customer
base at reasonable
costs
Lack of proper legal
solutions

Strategic Planning
Strategic management include both the micro (internal) and macro (external)
environmental factors that affect a particular business, in this case the Premier Inn hotel (Thaher
and Jaaron, 2022). Penetrating an existing market with a focused approach can benefit Premier
Inn hotel in locating and expanding its business functions for profit maximization. In order to
reach its short term and long term goals and objectives, it can also utilize the strategy of
expanding its customer base towards the non-elite public too. The following analyses of the
included frameworks illustrate where this famous UK hotel chain stands and what strategies it
needs to incorporate in its fold.
External Strategic Analysis
Having done the PESTEL and SWOT analyses of the Premier Inn hospitality service
provider it can be fairly surmised that the hotel business sector can keep a track record of its
existing and new competitions through Porter's Five Forces. Premier Inn has a very good
opportunity in the form of the eradicating its potential indutrial rivals by offering a wide scope of
new product establishment and development plans. The PESTEL framework of the hotel offers a
critical view of its external factors such as political and economic drawbacks as well as
marketing and socio-operational issues.
This strategic model was followed by the four different variants of Porter's Generic
Growth strategies that identified and analyzed the hotel firm's business management techniques.
The most beneficial of these was the focus differentiation strategy as it is centered on the
competitive scope of the Premier Inn hotel. It can apply low cost method approach in
conjunction with an efficient differentiation focus approach which can help the hotel in providing
the customers with new and uniquely customized products at lower costs (Konovalova and et.al.,
2018).
Internal Strategic Analysis
Premier Inn can make use of the Ansoff matrix tool to strategize and plan its present and
future growth strategies. For instance, the market penetration strategy of the model can evidently
help the company in focusing on the expansion of its existing products and services in the current

markets. This will result in an enahanced customer service experience and will open new market
extensions for the hotel to invest in.
Key Performance Indicators (KPI's)
The KPI's of the Premier Inn hotel brand displays an overall good precentage of its employees
understanding of their company's aims and objectives. It can also be said that the company is
placing good efforts in increasing its use of innovative technology so that it can reach its desired
goal of a 30% hike in advertising and promotional sales.
CONCLUSION
The above report has analyzed the key issues that are involved in devising a good
business strategy for the hospitality sector. The research was compiled and done in the context of
the UK based largest hotel chain – Premier Inn. It analyzed the macro environmental factors that
govern the hotel industry including a detailed analysis of its internal factors. It also critically
observed the given hospitality organization's strategic capabilities and formulated an intrinsic
structure based on the same.
Various models such as the VRIO framework, Porter's Five Forces , Generic strategies,
and Ansoff matrix were used for a comprehensive analysis. In conclusion the report provided an
extensive outline of the different kinds of strategies that can be applied in corporate and business
growth of the chosen organization of Premier Inn.

REFERENCES
Books and Journals
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Strategies and its influence on the Competitive Advantage. International Journal of
Advanced Engineering, Management and Science. 7(6). pp.42-51.
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a knowledge-intensive organisation in an emerging market. VINE Journal of
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Benzaghta, M.A., and et.al., 2021. SWOT analysis applications: An integrative literature
review. Journal of Global Business Insights. 6(1). pp.55-73.
Bharwani, S. and Mathews, D., 2021. Techno-business strategies for enhancing guest experience
in luxury hotels: a managerial perspective. Worldwide Hospitality and Tourism
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business environment. Available at SSRN 3192207.
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hospitality and tourism: Looking back for moving forward. Business Strategy and the
Environment.
George, R., 2021. Tourism and Hospitality Marketing Planning. In Marketing Tourism and
Hospitality (pp. 149-182). Palgrave Macmillan, Cham.

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development of tourism and hospitality industry in the regions. Journal of
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Integrated Model of Strategic Sectors. In Handbook of Research on Organizational
Sustainability in Turbulent Economies (pp. 292-314). IGI Global.
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influence on business intelligence and strategic decision making in the hotel sector.
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Terence, B., 2022. UK Economic Strategy Presents Opportunity for Businesses, Including
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