Hospitality Business Strategy

This report explores the impact of external factors, internal environment, competitive analysis, and strategic positioning in the hospitality business. It focuses on Premier Inn hotel and discusses their mission, vision, objectives, and strategies. The report also analyzes the external factors affecting Premier Inn, such as political, economic, social, technological, environmental, and legal factors. Additionally, it examines the internal environment of Premier Inn, including their strategic capabilities and the resource-based view strategy. The report concludes with a competitive analysis using Porter's 5 forces model and discusses Premier Inn's competitive advantages and threats.

Hospitality Business
Strategy

Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
Impact and influence of external (Macro) factor of Premier inn hotel........................................3
Internal environment of Premier Inn hotel..................................................................................5
Competitive analysis of Premier Inn hotel..................................................................................8
Model/Theory for strategic positioning.....................................................................................10
Conclusion.....................................................................................................................................11
References......................................................................................................................................11

Introduction
Business strategies are all those plans and actions which are taken for organisational
benefit. It helps in increasing employee’s performance and helps the company to increase their
overall productivity (Kumar and et. al., 2021). In context of hospitality sector, business strategies
are made in such a way that they can predict the need and wants of their customers and work
according to that to provide best services to their targeted customers. Premier Inn hotel is
headquartered in Dunstable, England UK. It is founded by its parent company Whitbread in the
year 1987. The following report covers external factors, internal factors, competitive analysis of
industry and models and theories applied for analysis of strategic directions in the mentioned
organisation.
Main Body
Impact and influence of external (Macro) factor of Premier inn hotel
Mission- Premier Inn mission is to provide best services to their customers and gain their good
experience which will help them to grow well.
Vision- Premier Inn vision is to become number one hotel in their industry to serve best services
to their clients and expand in more countries.
Objectives-
 Their main objective is to increase the overall productivity by 10% every year.
 To expand their business internationally in more countries.
 To become at the top in their industry within 8-10 years.
 To hire skilled employees who help them to become successful.
Strategies are the plans which are made to achieve some basic goals of success. In
context of companies they made some goals and objectives for the success of their business
(Ukko and et. al., 2019). This goals and objectives get achieved by making plans that how to
achieve these goals and in what time. These small plans which help the company to grow are
called their strategies. Strategies are made for many reasons like to grow internationally, to
compete with competitors, to increase the performance of employees and many others. Hence,
strategies play an important role in making the business successful. It helps in achieving
objective by eliminating all obstacles in their way of success. There are many strategic planning

techniques like SWOT analysis, PESTEL analysis, Porter’s 5 Forces analysis and many more on
which strategies are made.
PESTEL analysis
Political factors- These factors include trade restrictions, political stability, tax rate and
many others (Lim, Chalmers and Hanlon, 2018). In context of UK, they have political stability
and there are no trade restrictions for UK based companies. Hence, it is beneficial for Premier
Inn to trade with few or no restrictions. On the other hand their tax rates are high as compared to
other countries. Due to this Premier inn has to pay higher tax from their earnings.
Economical factor- These factors include growth rate, interest rates, employment rates
and many others. UK is one of the countries which is having high growth rate. Their employment
rate is also high which is beneficial for Premier Inn to hire skilled employees and UK has low
interest rate which help Premier Inn to take loans from banks if required and repay it in low
returns. Hence, economical factors are beneficial for Premier Inn.
Social factors- It includes beliefs, values, living standards, habit and many other
aspects of population of a country (Antamoshkina and Zinina, 2019). In UK, people have good
purchasing power. They purchase products to develop their living standards. Hence, Premier inn
must provide good services to their customers. On the other hand UK population are emotional
and sentimental. They stand against wrong things very quickly. Hence, Premier Inn must focus
to their promotional activity that they never convey any message which will harm any
community or any religion.
Technological factor- It includes the adoption rate of modern and advance technology
by a country. In context of UK, they have advance and modern technology which is beneficial
for Premier Inn to use good machines and other tools to maintain their hotels activities.
Environmental factors- It include all environmental elements like climate, weather,
pollution, temperature and many others. UK has good tourism arrival rate because of their
appropriate weather and climate. This is beneficial for Premier Inn because tourists stay at hotels
and more number of tourists means more opportunity to get more customers. Hence,
environmental factor is most important factor among all for Premier Inn.
Legal factors- This factors are all legal laws and rules and regulations of a country
(Moktadir and et. al., 2020). In context of UK, they are having some strict rules and regulations

for their hospitality sector. Their one of the famous hospitality law states that they must have that
furniture which will never spread fire and their every floor must have fire extinguisher for safety
and there are many other laws which help the hospitality industry to work with full discipline and
for the benefit of customers and employees. Hence, premier inn is supposed to follow all laws
made by their country for keep them self safe from paying penalty for avoiding laws.
SWOT analysis of Premier Inn
Strength-
 They are popular because of their brand
image. They have gained a good brand
image in their customer’s eye.
 Their availability is also their strength
because they have many branches of
their hotels in UK.
Weakness-
 They did not change strategies for
growth for many years. They work with
single strategy for many years which
impacted upon their performance.
 Few years back their customer’s
complaint about their hygienic factors
and they states that their housekeeping
department clean bathrooms and toilets
with the same towel which they offer
their customers for general use. Hence,
this impacted negatively upon their
brand image.
Opportunities-
 They must adopt some good strategies
for their international growth like
franchising and partnership with other
famous hotels and many others.
 They are supposed to modify their
decor because hotel becomes attractive
by their services as well as by interior
designs and decors. Hence, to attract
more customers they need to purchase
expensive and attractive decor items.
Threats-
 Every company have biggest threat
from their competitors (Ali and Anwar,
2021). Premier Inn also has many
competitors who have more strong
strategies then Premier Inn and their
presence in the market impacted bad
upon Premier Inn.
 Due to legal laws they have to pay
many penalties for their misconduct
activities.

Internal environment of Premier Inn hotel
Strategic capabilities are the ability of company to determine how effectively they can
use their resources for organisational benefit. In context of Premier Inn hotel they use their
available resources in such a way that it will directly increase their overall productivity.
Secondly, it also mentioned the skills and talents required by companies to manage their
activities (LESTARI and et. al., 2020). There are two components in strategic capabilities. First
is Resources which are the assets of the companies and second is Competences which states that
how to use those assets of companies effectively. In context of Premier Inn hotel their resources
are their employees, kitchen items and many more and their competences are the ways their
employees serve services to customers, cooks prepare dishes from vegetables and fruits and
many others.
Resource based view strategy is the model which states the importance of resources
for the organisation to become successful. It also states that how an organisation must use their
resources to gain competitive advantage in their market.
McKinsey 7S model-
Structure- It consists of the type of organisational structure of a company. Premier inn
hotel have functional organisational structure because their employees are grouped according to
their skills and talents. Similar kinds of people are grouped under same department and are
assigned with similar task.
Strategy- It means the plans and actions followed by the company to achieve their
business objectives (Martínez-Martínez and et. al., 2019). Premier Inn follows the strategy of
serving good services and other hospitality facilities to their clients to gain more customers.
System- It means a specific ways and techniques used by companies to complete their
daily task on time. In context of Premier Inn hotel they allow training to their new employees
and use good technological for their daily task to get complete in less time.
Skill- It means what kind of skills their employees have to help the company to get
success. Premier Inn employees are having skills according to their departments like their
finance department have financial skills like preparing financial statements, their kitchen
department have the cooking skills, and their housekeeping department has skills of keeping
surroundings clean and hygienic and many others. Hence, they are having mixture of skills.

Style- It covers all those leadership and management styles which help the company to
become successful (Elsharnouby and Elbanna, 2021). In context of Premier Inn, they are having
participative management style where their managers take suggestions from their employees
before taking any decision because employees are the person who have face to face conversation
with clients and know the demand and wants of customers. Hence, they can suggest good ideas.
Staff- It states what all capabilities an employee have to help the organisation to grow.
Employees of Premier Inn have the capabilities to serve their best roles in company growth and
because of their effective employees they are known worldwide in today’s scenario.
Shared Values- It covers all ethical behaviours and morals of a company which is
essential for them to gain good reputation (Ma and et. al., 2020). In Premier Inn hotel they have
good and positive working environment for employees working and their each employees has
friendly behaviour. They interact with each other on regular basis. They help other department
employees in case of help requirement. They work as a team with each other to help the hotel to
achieve the heights of success.
VRIO model-
VRIO analysis of Premier Inn hotel is explained below-
Resources Valuable Rare Inimitable Organised
Brand image YES NO NO NO
Supply chain
network
YES YES NO NO
Distribution channel YES YES YES NO
Human resource YES YES YES YES
Valuable-
Brand image- Premier Inn is famous for their brand image. Hence, it is most valuable for them.
Supply chain network- Their supply chain management is handled by a special team which they
hire for this purpose only.
Distribution channel- Premier Inn is available in many areas of UK which increase their value
for their customers and for them also.
Human resource- Premier Inn is successful because of their employees hard work and courage.
Hence, they are valuable for Premier Inn.
Rare-

Supply chain network- They have different process of serving facilities to their customers. They
have different recruitment and selection process and many others. Hence, their supply chain
management is rare.
Distribution channel- Their customers are satisfied with easily availability of Premier Inn hotels
near their locations that’s why it is rare for them.
Human resource- The skills and talents of their employees are different from other hotel’s skilled
employees. Hence, manpower of Premier Inn is rare.
Inimitable-
Distribution channel- They have different criteria to find where they have to open a new branch
of their hotel which is not copied by others. Hence, their distribution channel is inimitable.
Human resource- Qualification and experience is same in many employees but the level of skills
and talents are different in them. No other hotel can copy their human resource. Hence, they are
inimitable.
Organised-
Human resource- Employees of Premier Inn are well organised because they have fixed job and
task and know that what work is done by what time.
Benchmarking strategies are the ways where companies notice their competitors
activities and find out the reason of their success that how they work and manage their
capabilities to perform well (Cusumano, Gawer and Yoffie, 2019). This helps the company to
adopt some new strategies. In context of Premier Inn hotel, they are not so involved in
benchmarking strategies because they have their own strategies to grow which is copied by other
hotels.
Value chain analysis helps the company to focus on those productive activities only
which are considered as main activities for their growth. Premier Inn identifies their main
activities and their essential resources which help them to grow internationally. They focus on
these factors more than other factors.
Competitive analysis of Premier Inn hotel
Porter’s 5 forces-
Threat of new entry- It means that what all issues and challenges faced by companies
when new competitors enter the market (Stašák and Schmidt, 2019). In context of Premier Inn,
they have strong brand image and have good market share which will be not impacted by any

new entered hotel because new entered companies did not have that much funds which will
impact upon other hotels. Hence, Premier Inn is safe from this threat. They are only impacted
when already established hotel which is having better brand image and more popularity than
Premier Inn has entered newly in UK market. This is the case when they get impacted. Here,
they are supposed to serve good facilities and lower the prices than their competitors.
Threat of substitute goods- It means how many threats and issues a substitute products
or services impacted on business. In context of Premier Inn their customers have knowledge that
which hotel of premier inn is true and which are their substitutes. They prefer more to originality
rather than substitute because it is believed that substitute services or companies provide quality
less products and services as compared to original company. Hence, Premier Inn is safe from this
threat also.
Bargaining power of suppliers- It covers how many suppliers a company have and
what all causes and effects are there upon company from their supplier’s side (Berman and
Dalzell-Payne, 2018). In context of Premier Inn, they are having hood number of suppliers who
supply them materials like kitchen materials, furniture and many more on regular basis but they
are price sensitive. In case other hotel offers them higher prices for their raw material then they
switch to that hotel. Here, Premier Inn is get affected by their supplier’s behaviour. They can
offer appropriate prices and they can also provide some facilities that in case their suppliers
required Premier Inn facilities then they will get discounts. This will help them to become loyal
toward the hotel.
Bargaining power of customers- Here, the total number of customers and their
behaviour toward the company is considered. In context of Premier Inn, they have good number
of customers which are loyal and have good experience from hotel side. But beside all this,
customers are price sensitive. They can easily switch their preference to other hotel that is
cheaper than Premier Inn. In this condition premier inn must provide their hotel facilities in
fewer prices as compared to their competitors and focus on providing better services than others.
Competitive rivalry- It covers that what all are the competitors and how they impacted
upon business. In context of Premier Inn they have some tough competitors like Rosewood,
Intercontinental and many other hotels. They all have some strong and good competitive
strategies which impacted upon Premier Inn. Hence, it is recommended to Premier Inn that they

can study the strategies and impacts of their competitors on timely basis so that they can make
changes according to that.
Ansoff matrix-
Market penetration- This strategy consist that companies can develop by using their
existing product in their existing market (Priem, Wenzel and Koch, 2018). In context Of Premier
Inn hotel, they have same services for many years in their UK market and they are also growing
well. Hence, they use promotional activities to promote their existing services to their existing
customers.
Market development- It means when company enters the new market with existing
product. Premier Inn is recently focusing upon this strategy by expanding their business to other
countries. Here, they are supposed to do research on marketing conditions of other countries to
gain success in this strategy.
Product Development- It means company grow by introducing new products in their
existing market (Olson and et. al., 2018). In context of premier Inn, they are trying to introduce
new services to their UK branches but many of these services results failure. Hence, it is
suggested for them to survey the market of UK and analyse which new service will fulfil
customer satisfaction and then only they can adopt new service.
Diversification- It means when a company introduce new product or services in new
market. This is totally risky. Premier Inn always introduces their new service to their existing
market without taking risk to introduce it at new place. Hence, this strategy is not followed by
them.
Model/Theory for strategic positioning
Bowman’s extended model or Bowman’s strategy-
Position 1: Low price and low added value- This is the strategy for those companies who
only have main aim to compete in the market rather than earning profit. Here, companies lower
the prices at much extended where they perceive less customer value. Premier Inn has
appropriate price and their aim is not only to compete but they also want to earn good amount of
profit.
Position 2: Low Price- This is the case when companies produce or manufacture a large
quantity of product together and then they sold them in low prices (Kumar and et. al., 2021)

(Ukko and et. al., 2019). Premier Inn is service Sector Company where each service has different
prices. Hence, they cannot use this strategy.
Position 3: Hybrid- Here, companies adopt new services and products at lower prices to
gain high perceive value. Premier Inn always tries to have new services which will satisfy their
customers at low prices. Hence, this strategy can be followed by them.
Position 4: Differentiation- This is the strategy where high quality of products is sold on
average prices and customer will perceive high added value.
Position 5: Focus Differentiation- Here, companies offering high quality with high
prices to their targeted customer’s means only some specific segments are targeted here not
whole market and the companies earn high profit margin.
Position 6: Risky high margin- This strategy is very risky because here companies
charge very high prices and there is moderate or no perceived value by customers (Kumar and et.
al., 2021) (Ukko and et. al., 2019). In this strategy companies fails to stay longer in market
because their customers switches to other brand who may sold same or better product at low
prices.
Position 7: Monopoly Pricing- Here, there is only one company in market. So, seller
charge prices according to them without consulting what value will be perceived by their
customers because they know that customer has no other option to buy the product from their
shop.
Position 8: Loss of market share- Here, the company offer extremely high prices and
due to this their customers stay away from them. This is very risky strategy and totally creates
loss for company.
Conclusion
From the above information it is concluded that external and internal analysis is
important for the company and to know about the impact of this factors there are some models
like PESTEL analysis, SWOT analysis and many more are used. Competitive analysis is also
important to make strategies where companies analyse the impact of their competitors on them
and this is analysed by porter’s 5 forces. Companies are supposed to make those strategies only
which suits their present environment and which results for better future growth.

References
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