International Hospitality Management: IHG Analysis and Emerging Markets

This report provides an analysis of Intercontinental Hotels Group (IHG) and explores its strategic growth options in emerging markets. It covers the strengths, weaknesses, opportunities, and threats of IHG. The report also highlights the potential of emerging markets such as Kuala Lumpur, Bali, Chengdu, and the EMEA region for the hospitality industry.

International
Hospitality
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Background of IHG................................................................................................................1
SWOT Analysis......................................................................................................................2
Background of emerging markets..........................................................................................3
PESTLE Analysis...................................................................................................................5
Hotel strategy to be adopted and implemented......................................................................8
Justification of strategy...........................................................................................................9
Practical application of strategy.............................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
Hospitality industry is the broad category which include service industry within it and
also undertake various sectors in it such as food, drinks, event planning, theme parks,
transportation and so on. Hospitality management include overlooking the administrative task of
hotel and it is undertaken as the study which include knowledge about various departments such
as tourism, hotel management, administration and so on. Basically, international hospitality
management is the field that tends to prepare candidates in order to travel and work hard for the
effective development of their career (García-Lillo, Úbeda-García and Marco-Lajara, 2016).
International hospitality management include various careers and field for effective opportunities
which include lodging manager, food service manager, event planner and so on. To carry
forward this report, Intercontinental hotels group is considered which is a British multinational
hospitality company headquarter in Denham, Buckinghamshire, England. Hotel has around
842,749 guest rooms and approximately 5,656 hotels in 100 countries. Moreover, report covers
both internal and external analysis of respective company and also choose one emerging market
that has direct influence on the hospitality industry. Furthermore, it also carry forward the
strategic growth options for the respective company by considering the emerging market.
MAIN BODY
Background of IHG
Intercontinental hotel is the multinational group situated in England and its own its
several brands considering regent hotels, six senses hotels, crowne plaza, hotel indigo, holiday
Inn, EVEN hotels, staybridge suites and so on. In addition to this, the hotel chain is developed by
William Bass in Burton-upon-Trent and in 1875 the red triangle logo was the first ever
trademark which is registered in UK. Apart from this, company later changed its name in 1969
and again launch itself as the Crest Hotel chain that make its first entry into the hospitality sector.
Along with this, in 1988, the British government limited the number of pubs in which brewers
also directly own and result in Bass's further investing for the expansion of its hotel business.
Along with this, in 2003 the independent corporation IHG was developed after six continents
split into two companies and also take control for the restaurant assets as IHG focus on hotels
and soft drinks.
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SWOT Analysis
SWOT analysis is the strategic planning tool which is used to help individuals and
organisation in order to identify strengths, weaknesses, opportunities and threats which is related
with business competition or project planning (Gursoy, 2019). It is the detailed analysis and its
objective is to analyse the weakness and strengths of Intercontinental hotels group and also tends
to explore various opportunities and threats that are concerned with company. Strengths: The intercontinental hotel group operates in around 100 countries which is
one of the leading organisation in the industry and also undertake various brands in it and
because of this, it is known for the largest number hotel chain in worldwide. Along with
this, the revenue of hotel group increased by $69 million and in 2017 it tends to deliver
strong underlying profit growth and opened its highest number of hotels since 2009. In
terms of this, IHG also develop its strong recruitment strategy and also got rid of the HR
generalist approach and re-allocate the recruitment functions to functional or operating
departments (Law, 2019). Furthermore, payroll functions was distributed by the payroll
departments and line level recruitment which is handed back to departments by reducing
irrelevant delays and bureaucracy of hiring. Weaknesses: Hotel has weak technical security as around 1200 hotels were infected with
credit card stealing malware and guest information like name of cardholder, card number,
internal verification and so on. Along with this, loyalty programs including Holiday Inn
Priority club and IGH rewards that tend to get various negative customer reviews and
also claimed by several customers regarding their points that are not always given to the
customers. Along with this, various customers were also told the points that have expired
and also tried to redeem them (Kandampully, Zhang and Jaakkola, 2018). Despite from
this, the workforce of Intercontinental hotels is concentrated majorly with local workers
and also has low amounts of workers from the racial backgrounds. Along with this, lack
of diversification tends to make it quite difficult for employees regarding various racial
background in order to adjust things at the workplace. Opportunities: The new geographical markets tends to make effective partnership with
SAMHI group that will rebrand with 2000 rooms of Holiday Inn express hotels. IHG in
China is planning for around 300 new hotels in next five years. Along with this, there
has been a new trend regarding the growth of e-commerce industry which means a lot for
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the people who purchase things online (Bojanic and Reid, 2017). Moreover,
Intercontinental hotel group leads to earn more revenues by opening online stores and
also make there sales through it. In terms of this, technology comes with various benefits
undertaking several departments and operations that are automated in order to eliminate
cost. For this, technology tends to enable things better which is the data that is collected
by customers and also improve marketing efforts (Horner, 2017).
 Threats: In this the top competitors of Intercontinental hotels group is Marriott, Accor
hotels and so on and more competitors include Hilton, Hyatt and choice groups.
Moreover, with the huge expansion in China, IHG tends to face huge challenge as only
half of the graduates in China tends to select hospitality sector in order work for their
skills and training gap for the front desk and restaurant staff undertaking the key
executive position for HR, sales and finance (Lugosi and Jameson, 2017).
Background of emerging markets
It is a market that has some characteristics for the developed market but does not tends to
meet its standards and it also include market that can be considered as the developing market in
future (Litvin, Goldsmith and Pan, 2018). Moreover, the economies of China and India
undertaken as the largest emerging market and for this, many people find the term economist
outdated but no new term gain the traction. In terms of this, emerging market also hedge funds
for the capital reached and also record new level for the first quarter of 2011. furthermore, the
nine largest emerging and developing markets are either nominal or adjusted for GDP. Few
emerging markets of IHG include: Kuala Lumpur: It is the federal territory of Kuala Lumpur and capital city of Malaysia
which is the largest city covering the area of 243 km with an estimated population of 1.73
million. Along with this, it is also known as the Klang valley and it is the fastest growing
metropolitan region in Southeast Asia for both population and economic development.
Kuala Lumpur is the cultural, financial and economic centre of Malaysia which is also
the home of the Parliament of Malaysia as it is the capital and because of this, it has
prominent opportunities to achieve growth and success which is useful for improving the
image and reputation of hotel (Cabral and Jabbour, 2020). Kuala Lumpur is considered as
the most visited place and due to this it is beneficial for hotel to survive. Away with this,
International hotel chains have less presence in Malaysia and the total brand hotels and
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their chains supply. For expanding the footprints, many international hotels and other
brands tends to focus on the particular region. Besides this, Malaysian hospitality
industry is the combination of international hotel brands and Asian brands which is
almost the equal number of the terms of total hotels present in the country. Bali: Bali is the province of Indonesia and include the island of Bali for the few smaller
neighbouring island. Moreover, the provincial capital, Denpasar is the most populous city
in the lesser Sunda island and it is the main tourist destination with significant rise in
tourism and the tourism business is related with the economy of country that makes up
around 80%. It is renowned for the highly developed arts considering the modern dance,
painting, leather, sculpture, music and so on (Gannon, Rodrigo and Santomà, 2016).
Because of the best tourism spot, Bali will always be loaded with tourists from all over
the world and starting with business in the hospitality sector makes more sense in Bali. In
terms of Intercontinental hotels, Bali will always be there and also undertaken as the
aspiring entrepreneur which is best business opportunity as hotel is more passionate in
order to offer the highest return on investment. Furthermore, Bali take part in exciting
activities such as Scuba diving, surfing and so on as Bali is endowed with various
beaches. Chengdu: Chengdu is the sub provincial city that serves as the capital for the Chinese
province of Sichuan which is one of the three most popular city in Western China.
Chengdu is the fifth most populous agglomeration in China and also considered as the
world city. Moreover, Chengdu plain is known for the country of Heaven and also the
important centre of China's national defence industry. Chengdu is now one of the most
significant economic, financial, commercial, cultural, transportation and communication
centres in Western China. Because of the beauty of Chengdu, it becomes more important
for Intercontinental hotels and groups to expand in the particular region which is helpful
for company to expand for earning more profitability and increasing sales and reputation
of hotel.
 EMEA region: It is the shorthand designation meaning for the Europe, Middle East and
Africa which is used by the government within the marketing and businesses in order to
refer for the region which referencing for the two countries. It is also common among the
North American company and also used in terms of dividing the operations of company
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by geography. Moreover, the region generally accept considering the European nation
and other African nations considering extends east to Iran considering Russia.
Furthermore, Intercontinental hotels and groups take pledge to support the hospitality
industry by continuing the expansion of the efforts across the EMEA and also explore the
opportunities in Tanzania, Nigeria, Uganda, Oman, Kuwait and so on. Despite from the
various challenges it is important for hotel to put emphasis on the long term strategies for
proactively target in the hospitality sector (Lugosi, 2019). Along with this,
Intercontinental hotels and resorts are more committed to expand their footprints in the
target market by offering superior brands and other services.
PESTLE Analysis
This analysis is useful in describing the prominent framework of external factors which is
useful for the environmental scanning and its elements for the strategic management. As it is the
part of examining the external market in order to conduct the strategic analysis to organise
market research. As it tends to provide an overview for the various external factors that should
be taken into consideration. It is the strategic tool in terms of understanding the market growth,
business position, potential and direction for operations. It is useful in terms of scanning the
overall business environment to identify the risk factors and also find out prominent ways and
strategies to overcome the uncertainty. Political: In Asia, many government procedure has been followed and these factors has
major influence on the profitability of the survival of company which is quite diverse. For
this, political risk tends to vary as per the sudden changes within the existing regimes in
terms of taking major decisions taken by the government (Madera and et. al., 2017). In
terms of this, significant multinational tends to include probable factors and various
operations that tends to engage in whole trading. In regard of this, the integrity of
politicians acts in corruption and its outcome include repercussions in order to lead for
the possible impeachments to high level government workers. Currently, negotiation
among European Union and Vietnam tends to seen very close attention regarding the
apparel and footwear organisations. In regard of this, because of frequent growth and
development among young people for the population of country become very attractive
for the growth in market. In terms of this, government tends to hold extensive power over
the industry as undertaking the current situation regarding pandemic depicts that it can
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kill hotel industry because of banning travelling and accommodations. For example, the
political parties tends to set power in order to ban travel as it can negatively impact the
hotel industry. For this, hotel owners tends to enjoy tax reforms as there should be the tax
reform in which hotel owners pay low taxes and also improve the industry as a whole.
Along with this, government tends to impact the industry as many hotels owners and new
presidents tends to deal with the major impact on hotel industry. Economical: These factors undertaken as those who tends to pertain for the economy of
country including various changes regarding the inflation rates, foreign exchange, interest
rates, gross domestic product and so on. In regard of this, various factors tends to result
regarding the impact on aggregate demand, business climate and many more regarding
the potential in order to make company more profitable that tends to incur loss. For this,
the economic system tends to operate under the monopoly or something which is familiar
to the perfect competition (Gardini, Ottenbacher and Schuckert, 2020). In regard of this,
the largest contribution depicts the proper increment within various services that is
increased by 0.7% and in the last quarter it is widely spread its growth. Moreover, the
services which are offered by Intercontinental hotels and group grew steadily during this
period as the activity in this industry is slightly above previous period. For this, the
continuous long term economic uncertainty is increased by Euro area and also increase
debt crisis. For this, the big investment tends to grow in hospitality as it is one of big
investment for the global investors that grow continuously. Moreover, the strengths and
weaknesses of the currency tends to impact the attractiveness of specific area like the
international currencies are quite stronger than the American dollar which tends to go
outside. Considering the economic changes it tends to impact the economic changes as
the intercontinental hotel is one of the significant susceptible regarding its influence. For
this, economic cycle comes prominently that depends on the initial factors considering
unemployment rates, job growth and so on (Franco and et. al., 2020). Away with this,
tailoring to the patrons in terms of varying prominent locations tends to enhance the
profitability of hotel chains in order to acquire the worldwide market area as hotels tends
to change their offerings based on the demand of their guest and also appreciate its offers
that tends to motivate them in order to retain them in future.
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 Social: These factors tends to impact on the direct reflection on the society in which they
operate regarding the culture, belief and values considering the majority of population
which company hold in the community. For this, the impact of these factors is not much
important regarding the operational aspects in marketing. For this, the effective
understanding of customers undertaking the lifestyle, education and beliefs within the
society and other segments in order to design both the products as the needs and
preferences of customers. For this, the demographics of the effective population depicts
the prominent age factor and gender for the certain product which is marketed to
customers (Lee and et. al., 2018). In terms of this, Intercontinental hotels and resorts is
the largest hotel chain in world as the travellers and millennials tends to enjoy the
effective selection of rooms and their comfort zone considering the other facilities and
amenities. In terms of this, customers prominently book their hotel and room as per their
convenience with the help of applications and website and also get less expensive rather
than manual bookings. In terms of this, hotels runs out of the room at the time of peak
season and for this, they tends to offer various services for per-booking and cancellation.
Moreover, Intercontinental hotels and resorts offer more than standard rooms as many
hotels tends to offer additional facilities such as pools, gym and so on. Technological: This factor tends to develop effective price structure which is competitive
in nature and also has landscape in industry which is for the very short period of time.
Therefore, it tends to become more important to innovate and develop something unique
in terms of enhancing the possible profitability that helps in becoming the leader of
market. In terms of this, the recent technologies are effective regarding the development
that are made by the rivals and they also need to encounters the new technology in order
to increase their profitability within the industry (Manoharan and Singal, 2017). For this,
it is also important to monitor the popularity level for the disruption in the revenues of
competitors. For this, hotels tends to use new and advanced technology considering the
social media that tends to bought with the help of internet and social media including
various mobile apps and Facebook considering various tools and so on. For this, Fast
sharing is also increased due to the effective use of social media as here things are
available on the 24*7 and various incidents tends to report within just few minutes. For
this, significant blogs are review that tens to develop the effective image and reputation
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of hotel. For this, the owner of hotel are quite confident and also worthy to pay in terms
of influencing through social media. Legal: This factor include significant frameworks considering the political factors and
other policies and also undertake government bodies. In terms of this, Intercontinental
hotels and resorts need to consider various laws and policies which is useful for them in
order to stay protective within the dynamic business environment. In represent that, each
and every individual stay safe as they always try to consider that the hotel should be
located in that are in which crime rates are low as they does not want to face any kind of
issue in their vacation and always want safe environment (Ali and et. al., 2018). In terms
of Intercontinental hotels and resorts, they tends to offer healthy and safe environment
that makes customers more comfortable because it the selected hotel is not safe then
customers would not come back. Along with this, the owner of hotel also follow
innkeeper laws that tends to make them sure about the safety and welfare of their guests
considering the prominent locations and properties.
 Environmental: This factor depicts the significance of local climate as the hotel guests
stay in hotels considering the variety of reasons like visiting friends and family on the
vacations and so on (Min, Park and Kim, 2016). For this, on vacations customers want to
stay somewhere in which they find peace and also can relax. Along with this, the weather
for the local area tends to decide prominent factors as someone select area to stay at the
specific area. In terms of this, hotel owners take proper control and also understand the
seasonal difference before developing prices as per their cost and demand.
Hotel strategy to be adopted and implemented
Ansoff matrix is used which is useful in order to identify the strategic options for the
company as it is the most common tool and also helps in identifying things because of its
simplicity and easy to use. This model tends offer prominent ways and options to the manager of
Intercontinental hotels and resorts regarding the prominent strategies that are used as the future
product in market activities (Golubovskaya, Solnet and Robinson, 2019). It is used by
organisations in terms of identifying and develop plans regarding the strategies for growth. This
model depicts various strategies and also helpful for the company in order to grow by
undertaking the risk which is associated with each strategy.
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Market penetration: This strategy is considered as the less risky as in this company tends
to operate in existing market considering the current products, resources and abilities. For this,
growing market tends to maintain market share prominently and also grow with the exist
opportunities in terms of enhancing the market share. This strategy also has suitable limits as if
market approaches to its saturation point then the another strategy should be considered if
organisation need to achieve growth and success.
Market development: This element tends to include the development of additional
market area and particular geographic region. In terms of this, the development and growth of
new market area with existing product as it is considered as the good strategy which is related
with the core competencies of the related products and services (Boella and Goss-Turner, 2019).
In terms of this, the product is developed considering the needs and preferences of customers
within the particular market area. For this, the company expand in new market with its effective
strategy and it also tends to carry risk factor with it in comparison to market penetration.
Product development: This strategy is effective for company considering the strengths
which is related with the particular customer segment instead of particular product. In this, the
overall situation tends to describe the leverage in terms of developing a new product in market to
the existing customers. It consider the launch of new product in the existing market that include
more risk in order to attempt towards the enhancement of market share. For this, organisation
need to consider the needs and preferences of customers in order to develop product in market
which is useful in achieving growth and success.
Diversification: It is considered as the most risky strategy in terms of achieving growth
and success in market. For this, the effective market development is out with the core
competencies of company. Along with this, the quadrant of risk is highly active and it is
considered as the suicide cell (Baker and Magnini, 2016). For this, diversification is considered
as the reasonable choice which is at the high risk and also compensated by chance in terms of
high return. In regard of this, the benefit of diversification consider the potential in order to gain
the attractiveness in industry and tends to eliminate the risk factor and it require research of
highly skilled and experienced individuals.
Justification of strategy
By considering the above discussed strategies, it is identified that market development is
effective and worthy for the respective hotel regarding their expansion. It become the prominent
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advantage for company as they can take entry in new market with the help of its existing
products and services that helps in earning effective sales and profitability (Gursoy, 2019). It is
good for company because with the help of current product Intercontinental hotels and resorts
already know about the needs and requirements of customers which is beneficial in terms of
increasing the brand image and reputation of company. In relation with this, it does not include
prominent research and investigation for the successfully execution of strategy.
Practical application of strategy
With the help of considered strategy, it is analysed that by forecasting the future and
predicting about the upcoming 5 to 10 years success and growth, it is identified that market
development is quite effective for the short term survival but for the long term company need
other strategies regarding its survival like product development and diversification (Law, 2019).
As both of these strategies are helpful in attaining long term profitability which is reliable for the
effective survival and helps in retaining in the dynamic business environment.
CONCLUSION
By considering the above discussion, it is identified that hospitality industry is dynamic
in nature and has various risk with it considering the successfully running and functioning of
company. Along with this, it is also for the effective expansion environmental analysis is
organised which consider both internal and external factors undertaking the emerging trends and
marketing strategies. Furthermore, for the effective expansion it is identified that strategic
growth options in order to maintain growth in market for the longer period of time.
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REFERENCES
Books and Journals
Ali, F. and et. al., 2018. An assessment of the use of partial least squares structural equation
modeling (PLS-SEM) in hospitality research. International Journal of Contemporary
Hospitality Management.
Baker, M.A. and Magnini, V.P., 2016. The evolution of services marketing, hospitality
marketing and building the constituency model for hospitality marketing. International
Journal of Contemporary Hospitality Management.
Boella, M.J. and Goss-Turner, S., 2019. Human resource management in the hospitality
industry: A guide to best practice. Routledge.
Bojanic, D.C. and Reid, R.D., 2017. Hospitality marketing management. Wiley.
Cabral, C. and Jabbour, C.J.C., 2020. Understanding the human side of green hospitality
management. International Journal of Hospitality Management, 88, p.102389.
Franco, S and et. al., 2020. Are you good enough? CSR, quality management and corporate
financial performance in the hospitality industry. International Journal of Hospitality
Management, 88, p.102395.
Gannon, J., Rodrigo, Z. and Santomà, R., 2016. Learning to work interculturally and virtually:
Developing postgraduate hospitality management students across international HE
institutions. The International Journal of Management Education, 14(1), pp.18-27.
García-Lillo, F., Úbeda-García, M. and Marco-Lajara, B., 2016. The intellectual structure of
research in hospitality management: A literature review using bibliometric methods of
the journal International Journal of Hospitality Management. International Journal of
Hospitality Management, 52, pp.121-130.
Gardini, M.A., Ottenbacher, M.C. and Schuckert, M., 2020. The Routledge Companion to
International Hospitality Management.
Golubovskaya, M., Solnet, D. and Robinson, R.N., 2019. Recalibrating talent management for
hospitality: a youth development perspective. International Journal of Contemporary
Hospitality Management.
Gursoy, D., 2019. A critical review of determinants of information search behavior and
utilization of online reviews in decision making process (invited paper for ‘luminaries’
special issue of International Journal of Hospitality Management). International Journal
of Hospitality Management, 76, pp.53-60.
Horner, S. ed., 2017. Talent management in Hospitality and Tourism. Oxford: Goodfellow
Publishers Limited.
Kandampully, J., Zhang, T.C. and Jaakkola, E., 2018. Customer experience management in
hospitality. International Journal of Contemporary Hospitality Management.
Law, R., 2019. Evaluation of hotel websites: Progress and future developments (invited paper for
‘luminaries’ special issue of International Journal of Hospitality
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Lee, S. and et. al., 2018. Price, people, location, culture and reputation: determinants of Malaysia
as study destination by international hospitality and tourism undergraduates. Journal of
Tourism and Cultural Change, 16(4), pp.335-347.
Litvin, S.W., Goldsmith, R.E. and Pan, B., 2018. A retrospective view of electronic word-of-
mouth in hospitality and tourism management. International Journal of Contemporary
Hospitality Management.
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Lugosi, P. and Jameson, S., 2017. Challenges in hospitality management education: Perspectives
from the United Kingdom. Journal of Hospitality and Tourism Management, 31,
pp.163-172.
Lugosi, P., 2019. Deviance, deviant behaviour and hospitality management: Sources, forms and
drivers. Tourism Management, 74, pp.81-98.
Madera, J.M. And et. al., 2017. Strategic human resources management research in hospitality
and tourism. International Journal of Contemporary Hospitality Management.
Manoharan, A. and Singal, M., 2017. A systematic literature review of research on diversity and
diversity management in the hospitality literature. International Journal of Hospitality
Management, 66, pp.77-91.
Min, H., Park, J. and Kim, H.J., 2016. Common method bias in hospitality research: A critical
review of literature and an empirical study. International Journal of Hospitality
Management, 56, pp.126-135.
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