Hospitality Business Strategy: Analysis and Evaluation of Premier Inn

This report analyzes and evaluates the hospitality business strategy of Premier Inn using various models, theories, analysis, frameworks, and strategies. It includes PESTLE and SWOT analysis, McKinsey's framework, Porter's five forces analysis, Porter's generic strategies, Ansoff's product matrix, and Bowman strategy clock model. The report covers the impact and application of these models and strategies on Premier Inn's market share and growth.

Hospitality businesses
strategy

Contents
INTRODUCTION...........................................................................................................................2
PART A...........................................................................................................................................3
P1: Application of PESTLE and SWOT analysis to analyse the impact of macro environment
on hospitality organisation...........................................................................................................3
P2: To analyse the capabilities of hospitality organisation and internal environment by using
McKinsey’s framework...............................................................................................................5
P3: To evaluate competitive forces in hospitality organisation by applying five forces of
Porter's model..............................................................................................................................6
PART B............................................................................................................................................7
P4: To evaluate the strategic directions accessible to the organisation by applying Generic
strategies of Porter......................................................................................................................7
P5: To recommend the appropriate platform of growth and strategies by applying Ansoff's
product matrix..............................................................................................................................8
P6: Application of Bowman strategy clock model and formation of Strategic plan in context to
hotel Premier Inn..........................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES................................................................................................................................1
INTRODUCTION
Hospitality business strategy refers to the strategy of implementing and creating the
objectives those are concerned with the particular industry for the improvement of status of the
organisation. Strategies are develop by the board of directors with the involvement of employees
of the organisation. It helps to find the right direction for the industry to carry its task.
Employees can understand their job in best effective way and use these strategies for the growth
of industry. Premier Inn is the chain of hospitality industry founded in 1987 and it's headquarters
is in Dunstable, England, UK. It has 800 hotels and 72,000 rooms at different locations.
Whitbread established the company as Travel Inn and further renamed as Premier Inn. This
report covers the different models, theories, analysis, frameworks and strategies which are used
to enhance the market share of hospitality industry like Premier Inn (Ardani and Harianto, 2021).

It comprises of SWOT and PESTLE analysis, framework of McKinsey’s, five forces of Porter's
model, product matrix of Ansoff, Porter's Generic strategies, Bowman strategy clock model
Strategic management plan applied on hospitality industry and also covers their application,
impact and analysis.
PART A
P1: Application of PESTLE and SWOT analysis to analyse the impact of macro environment on
hospitality organisation
PESTEL Analysis of Premier Inn
The term PESTEL stands for Political, Economical, Social, Technological, Environmental and
Legal factors which indicates an effective and tactical framework of external environment which
is mostly used for the evaluation of business environment.
Political factors: This factors relates to policies and actions of the government. There is
monarchy system in UK, so Premier Inn cannot expand or contracts its business without the
permission of queen , so it has negative impact on the Premier Inn. Due to the same government
there is no change in policies which results in consistent business unit and positive factor for
Premier Inn, which is also the largest and fast growing budgeted hotel chain in UK.
Collaboration with UK government has positive impact in hospitality industry.
Economic factors: Factors includes interest rate, inflation and exchange rates and many
more. At a current pace, inflation rate of UK has increased consistently which resulted in 9.4%
which negatively impacted on people to acquire services of Premier Inn. Best facilities are
provided to people who have high purchasing power (Camilleri, 2021). Exchange rate of UK is
high, every country has its own currency and its value is increased or decreased frequently so if
exchange rate is high it is positive impact and if exchange rate is low then it is negative factor.
Social factors: Welfare of the society like health, employment opportunity, working
environment involves in social factors. The objective of Premier Inn is to provide best services to
their customers at reasonable price, it impacted positively to the Premier Inn. Customer demand
and preferences are changing with the trends, so it is difficult to meet the demand of the
customer, due to changing demands, this impact negatively to the hotel.
Technological factors: Technology is updating day by day, so it bring immanence
change in the premier inn services. Online reservation facilities are available for the hotel

bookings and promotion of the product can be done on social sites, it has positive impact on
Premier Inn. UK has the fourth best communication technology in the world. All the information
is widely available on the internet so it has some privacy issues. Privacy is breached due to
hacking and clients private information is easily accessible, it has negative impact on the Premier
Inn.
Environmental factors: Factors like environment protection involves pollution, natural
disasters, change in climate, global warming and many more affects the environment.
Organisations use environment sustainable methods of production are most likely preferable by
the customers, that impacts positively on the Premier Inn. Corporate social responsibility is the
core competencies of Premier Inn. Hotel waste effect the environment badly it has negative
impact on the Premier Inn.
Legal factors: Factors related to court of laws, decision and code of conduct of the
government refers to the legal environmental factors. UK government has increase the minimum
wage rate by 15.5%, that result in increase in operating cost of hotel, increased cost has negative
impact on Premier Inn (Chen, 2021).
SWOT Analysis of Premier Inn
Strength Weakness
 Best hotel chain award of the year won
by Premier Inn, at British travel
awards.
 UK's largest brand of hotel is Premier
Inn with more than 50,000 rooms and
700 hotels.
 This is the premium and highly
advertised chain of hotels.
 They provide various offers on online
bookings
 Premier Inn need to deal with extreme
competition.
 They are generating less margins due to
cut-throat competition.
 Presence at globally is not elaborate as
hotel chains elaborated internationally.
 Premier Inn has less geographical reach
as compare to other brands.
Opportunities Threat
 Premier Inn has more strategic tie-ups.
 They are investing in the newly
 Changing policies of government.
 Competition is enhanced day by day.

invented concept of digital marketing.
 They focuses on building brand value
by customer experience.
 With the development of backpackers
hostels, Premier Inn revenue is divided.
 They provide private rooms which can
result in happening of illegal activities.
P2: To analyse the capabilities of hospitality organisation and internal environment by using
McKinsey’s framework
Internal environment: The term internal environment refers to all the factors those influence
the day to day activities of the organisation. Internal environment include shareholders, financial
institutions, customers, competitors, employees and suppliers. Hotel industry like Premier Inn
has internal environment which exist inside the organisation like financial resources, goodwill of
hotel, culture of hotel, technological resources, information resource and human resources.
McKinsey’7S Model: This tool analyse organisational design of the company. The objective is
to achieve the effectiveness in the organisation by the interaction of seven key elements.
 Structure: Its refers to the structure of the Premier Inn in which hotel is organised.
Organisational chart is formed by chain of command and accountability. It also involve
who will report to whom. Without proper structure of the hotel industry it becomes very
difficult for the organisation to carry their daily activities (Chepkwei, 2021). This model
is helpful to create best structure of the organisation and proper working.
 Strategy: Organised business plan of the Premier Inn is formed to achieve sustainable
competitive advantage and plan of action it is known as strategy. Company mission and
values are reinforced in it. Premier Inn provide best quality services and advanced
combination of information and technologies of communication into different aspect of
hospitality experience.
 Style: Code of conduct is established by senior employees of the organisation, by their
ways of interactions and decision making. This forms leaders management style, it is
essential to ensure job satisfaction and employees productivity.
 Skills: Capabilities and competencies of employees that enables them to achieve the goal
in most precise manner. Hotel employees should have best skills so that they can conduct
their task in best effective manner.

 Systems: System refers to the technical infrastructure of the organisation that establishes
chain of decision making, workflows and procedures on daily basis (Donbak, Kirpik and
Valeri, 2022). System define the ways to carry out business activities and includes
everything from production to aftersales services.
 Staff: Talent management involves in staff and all the organisation decisions related to
human resource like recruitment, selection, training and reward system. Premier Inn
recruit staff according to need of the organisation and train staff frequently.
 Shared values: Foundation of every organisation formed by objectives, mission and
values. It plays an important role in placing whole key elements for the maintenance
effective design of the organisation. Shared values consist of behaviour and norms that
are expected from the staff of Premier Inn. All these values are mentioned in guidelines
of company, employees need to familiarize themselves with these values.
P3: To evaluate competitive forces in hospitality organisation by applying five forces of Porter's
model
Five forces of Porter analysis states the tools of management to analyse and evaluate the
organisation and to examine the profitable opportunities (Dwomoh, Luguterah and Duah, 2020).
Porter's forces are used by Premier Inn to explore different opportunities of profit in service
sector.
Porter's five forces in context to Premier Inn
 Threat of new entrants: Consumer goods industries are operated by many firms, they
increases competition for Premier Inn. For the achievement of success they need to carry out
their activities according to competitive as well as dynamic business environment. Supply
chain of Premier Inn is vast and has distribution unit world wide. They provide best services
and build goodwill in recent years.
 Substitutes threat: Premier Inn has high threat from substitute because they located in
tourist places where other hotels are also situated, so consumer has more alternatives. They
are providing best hotel services with reasonable price to their customers. The main reason
of growth of hospitality organisation is, they does not need huge capital, high budget to
maintain the business, they just need to keep cleanliness and availability of things on time in
their premises.

 Bargaining power of customers: Customers has high bargaining power when there is vast
competition. It depends on the location of the hotel, If only one hotel is located in premium
place than there will be no competition but if more than one hotel exist at the same location
than there will be cut-throat competition (Ebersberger, Herstad and Nordli, 2021) .
 Bargaining power of suppliers: Suppliers has less bargaining power in hotel industry.
Premier Inn is a service field, lot of manpower is required to carry the business and serve to
the customers, so staff of hotel is main in-charge for the supply of daily operations.
Employees are suppliers for hotel industries.
 Competitive rivalry: In Hotel industry customer has very low switching cost so they can
change it when they want, so degree of rivalry in Premier Inn is very high. Rivalry between
competitors can lead to hostile pricing and promotion to attract more customer's.
PART B
P4: To evaluate the strategic directions accessible to the organisation by applying Generic
strategies of Porter
Strategic directions in context to Premier Inn: The term strategic direction refers to
the essential actions or ideas that permit for higher stability in strategy over the time. Strategic
directions helps Premier Inn to achieve its vision and mission. It helps to provide stability in
future by unite the strategies of Premier Inn. It determines the objectives of the company and
also define the ways to achieve specified goals (Ertuna, Gu and Yu, 2022). Strategic directions
include seven types are culture, vision, mission, values, principles, ideology, and grand strategy.
Porters generic strategies: Position of the firm is determined by the generic strategies of
porter's whether firm's profitability is more than the industry average or below from it. These
forces are defined by cost leadership, differentiation, cost focus and differentiation focus.
 Cost leadership: It refers to keep the prices low to capture wide market coverage. The
hotel industry should try to keep the price as lowest as possible, so that they have
substantial investment capital at disposal. By this force organisation mostly concerned on
internal process.
 Differentiation: Interior of every hotel is different also they can make it as exclusive as
possible and making it more alluring with the comparison to the competitors. To develop

this strategy effective innovation, best quality and research and development is essential.
While offering unique product/services effective marketing is required by Premier Inn.
They can easily beat the competition by their unique services.
 Cost focus: It refers to focus on particular segment or area in target market. They select
the niche market and offer the price as lowest as possible (Gjerald, Dagsland and
Furunes, 2021). A particular segment is target by the industry and keep the cost remain
low to capture the market share of particular segment.
 Differentiation focus: It refers to target niche market by offering unique
product/services, Strong brand loyalty can be developed by this strategy among
customers. While focusing on differentiation, it is very significant to ensure that offered
product and services are unique, to keep away from the competition.
P5: To recommend the appropriate platform of growth and strategies by applying Ansoff's
product matrix
The strategic opportunity matrix or Ansoff's Matrix is a planning framework to decide
strategies for the growth and helps in development of business enterprise. It's structure is
designed to provide strategic option and specify the levels of risk associated in it. Ansoff provide
two ways of growth marketing strategy: adjust the market or adjust the product. On the basis of
approach four quadrants are defined: development of product, market penetration, diversification
and market development.
 Market penetration: The strategy of market penetration is used when Premier Inn want
to make customer base and capture the market share. Premier Inn use this strategy to
enhance current market share.
 Product development: It refers to development of new product and improve the existing
product to attract more customers (Huang and Yang, 2021). Premier Inn must use this
strategy by providing new facilities to the customers and change the interior of the rooms
of hotel according to culture of the customers.
 Market development: It refers to the entering in new market with the existing product.
Market that is new of the hotel industry can be different geographic locations or new
segments of customers. Premier Inn can approach new customers by using this strategy.
 Diversification: It can be of two types related or unrelated. Related refers to
diversification strategy of staying in the same market by offering product with common

similarities (Munjal and Singh, 2021). Unrelated refers to the diversification strategy of
extending into market with no experience. Premier Inn use related strategy to uplift their
market share.
P6: Application of Bowman strategy clock model and formation of Strategic plan in context to
hotel Premier Inn
Bowman strategy clock model: It refers to the strategic tool that provide many options to keep
position in the market depends on the perceived price and value. This model is conjuncted with
Ansoff Matrix and alternate of Porter's Generic Strategies.
There are eight positions of Bowman Model are:
1. Price and addition value is low: In this strategy value of product and services is low
and price is as lowest as possible. This strategy of clock makes the least competitive area.
2. Low price: This strategy concerned with keeping the price low, this strategy determined
to capture more market share by less price strategy.
3. Hybrid: It is combination of low price and differentiation of product or services from
competitors (Redjeki, Narimawati, and Priadana, 2021). This strategy keep the balance
between cost and differentiation, by maximising both, with the maintenance of
reasonable margins.
4. Differentiation: Premier Inn focus on differentiating their services from their
competitors (Son, Huang and Padovan, 2021). It has wide spectrum up to full diversity of
product and by its unique features and core product strategies.
5. Focused differentiation: In this strategy high value products are provided at high prices.
Profitability is high in this strategy but it is more complex to maintain.
6. Risky high margins: The brand name which is famous, customer is ready to pay for it
(Sumb, 2021). When customer make purchase from the same brand then if company
increase the price they will keep on purchasing it as they have trust on the brand and
quality of the product by this company can enhance their profit margin.
7. Monopoly pricing: When customer have limited alternatives, company can charge
monopoly pricing.

Hybrid strategy of Bowman model is used by the hotel Premier Inn as it provide both the
benefits to the hotel, to provide services in unique and distinct manner and to provide different
holiday packages at lowest prices (Tomasella and Ali, 2019).
Strategic management plan:
Executive summary Premier Inn hotel is deciding to launch a new, different and exclusive
package for executives of business in which they offer free hall for
conference and banquet hall in the package so that customers can plan
different meetings at hotel.
Vision Premier Inn vision is to serve their customers in most precise manner.
Mission Their mission is to make meaningful contribution to customers and
communities.
Objectives  To provide affordable and quality hotel services to customers.
 To provide career and skill development opportunities to
employees.
Strategy Their strategy is to offer unique services that provides them competitive
advantage in challenging environment.
Tactics  Product: New business package will introduced by Premier Inn
to provide more facilities like conference and banquet hall.
 Price: Premier Inn charge reasonable price for this new and
different service so that they will have wider scope.
 Place: Premier Inn will provide their services in the hotel
situated in London.
 Promotion: New services are promoted in a unique way.
Monitoring and
controlling
Premier Inn will use reference tools, so that they can compare their
actual performance with the standards.

CONCLUSION
Currently, hospitality industry use different strategic models to enhance their market share and
make the good brand image. SWOT and PESTLE analysis, framework of McKinsey’s, five
forces model of Porter's, product matrix of Ansoff's, Porter's Generic strategies, Bowman
strategy clock model and Strategic management plan are explained in the above report. This
report cover all the P's of entire project. All these models, frameworks, strategies analysis and
strategies define the plan and procedure of hospitality industry used to increase their business
and capture the opportunities for future growth.

REFERENCES
Books and Journals:
Ardani, E.G. and Harianto, A., 2021. Surviving strategy of hospitality sector in pandemic
situation: case hospitality business in Jakarta. E-journal of Tourism. 8(1). pp.77-86.
Camilleri, D., 2021. How social media has affected public perception of the hospitality industry
(Bachelor's thesis, University of Malta).
Chen, Y., 2021. Economics of Tourism and Hospitality: A Micro Approach. Routledge.
Chepkwei, A., 2021. STRATEGY IMPLEMENTATION IN HOSPITALITY INDUSTRY:
GLOBAL PERSPECTIVE. Journal of Strategic Management. 6(1). pp.33-45.
Donbak, E.R., Kirpik, G. and Valeri, M., 2022. An Overview of Crisis Management in
Hospitality Enterprises: The Case of Operating at an International Level Hotel in
Adiyaman. Tourism Risk.
Dwomoh, G., Luguterah, A.W. and Duah, S.B., 2020. Hoteliers’ human resource strategies for
business sustainability during Covid-19 pandemic in Ghana. Journal of Business and
Retail Management Research (JBRMR). 14(3). pp.34-43.
Ebersberger, B., Herstad, S.J. and Nordli, A., 2021. Hospitality innovation strategies: Robustness
analysis of paths to firm performance. Tourism Management. 85. p.104310.
Ertuna, B., Gu, H. and Yu, L., 2022. “A thread connects all beads”: Aligning global CSR
strategy by hotel MNCs. Tourism Management. 91. p.104520.
Gjerald, O., Dagsland, Å.H.B. and Furunes, T., 2021. 20 years of Nordic hospitality research: a
review and future research agenda. Scandinavian Journal of Hospitality and Tourism.
21(1). pp.37-48.
Huang, C.J. and Yang, Y.N., 2021. Research on the effectiveness of black-faced spoonbill bird
tourism and conservation strategy. A case study of Shifen community at Chi-gu district
of Tainan City. Journal of Environmental Management & Tourism. 12(2). pp.313-320.
Munjal, S. and Singh, A., 2021. Conclusion: going digital is the only way forward for the Indian
tourism and hospitality industry. Worldwide Hospitality and Tourism Themes. 13(2).
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Redjeki, F., Narimawati, U. and Priadana, S., 2021. Marketing Strategies Used by Hospitality
Businesses in Times of Crisis of the COVID-19 Pandemic: Case Study. ENDLESS:
International Journal of Future Studies. 4(1). pp.121-131.
Son, I.S., Huang, S.S. and Padovan, D., 2021. Realising the goals of event leveraging: The
tourism and hospitality SME perspective. Journal of Hospitality and Tourism
Management. 49. pp.253-259.
Sumb, A., 2021. Assessing financial impacts of COVID-19 on tourism and hospitality businesses
in Papua New Guinea. Contemporary PNG Studies. 36. pp.14-27.
Tomasella, B. and Ali, A., 2019. The importance of personal values and hospitableness in small
foodservice businesses’ social responsibility. Hospitality & Society. 9(3). pp.307-329.
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