International Hospitality Management: Analysis of IHG and Strategies for Expansion

This report provides an analysis of the international hospitality industry, focusing on Intercontinental Hotel Group (IHG). It covers the background of the hospitality industry and IHG, SWOT analysis of IHG, and strategies for international expansion. The report also discusses emerging markets and conducts a PEST analysis. It offers insights into the challenges and opportunities faced by IHG in expanding its business globally.

INTERNATIONAL
HOSPITALITY
MANAGEMENT

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Background on Hospitality Industry (and tourism).........................................................................3
Background to IHG..........................................................................................................................4
SWOT analysis of IHG....................................................................................................................5
Background to Emerging markets...................................................................................................8
PEST of selected emerging market..................................................................................................8
Hotel strategy to be adopt and to be implemented (using strategic model and frameworks) within
the entering market..........................................................................................................................9
Justification of strategy..................................................................................................................11
Practical application of strategy – 5 and 10 years ahead...............................................................11
CONCLUSION..............................................................................................................................12
REFERENCES..............................................................................................................................13

INTRODUCTION
Hospitality management refferd as service management, in which the services are pr-
determined and intangible in nature. In addition to this, it is provided to the customer in a sense
of their satisfaction. In service industry or hospitality management it seek to ensure the hotel is
warm, welcoming and make guest feel like they are at home.(Franco and et. al., 2020). This is all
about an act which shows social behaviour, support and equality that is initiated for the
customer. For the presnt report, intercontinental Hotel group or IHG is taken into consideration.
It is a British multinational service industry that process of hospitality industry which have them
headquarter in England. Intercontinental hotel has about 889582 guest rooms and over 5900
hotels across hundred plus countries. Intercontinental hotel group have various brands including
intercontinental, regent hotel, hotel kimpton and various resort. The company is also listed in the
stock exchange with a huge base of customer. As per this report, this is going to cover about the
factor which affect international hotel groups. While, they face issue in expanding their business
in other country and total scenario which affect the business for a longer period of time. This
report is taking brief analysis of intercontinental hotels group and ensure with some
improvisation and strategy to recover from this issues.
MAIN BODY
Background on Hospitality Industry (and tourism)
According to the various research, it is identified that the origin of idea of hospitality
industry has been came in existence since the creation of word itself. In the concept of traditional
way stranger are welcomed by a group or a community and then offer to stay. So, the hospitality
industry was originated from this concept. As per this, thousand year ago, when road networks
was so much disturb and travelling was not comfortable and the peoples are not arrived at their
home at their fixed timing (Köseoglu and et. al., 2016). Then, they must need to stay somewhere
then the concept of hospitality industries is arising and peoples provide a local Shelters to them.
This is the primitive culture in that era.
After the changes, IT came in the trend and peoples make it a business scenario. Since,
this sector has been created and always unbroken in the field of growth and distance to create
international expansion in this modern time. As per this, travel industries are also grow up by the
hospitality industry. In which this is also take an immense potential with a network of service

provider. Which has developed a character to nearly every desire destination. Hospitality has
gradually become even the largest and more risen industry. Which have been playing hundreds
of million shares from different sectors. In addition to this, the travel history is originated with
the hospitality industry (Otache, I., 2020).
So, when the travel industry is rising and there is a concern of hospitality industry is also
taken. So, the overall scenario indicates the history of hospitality industry and travel industry. In
this context, the innovation in hospitality management is very necessary because there are
number of people who believe in exploring in various countries or state. Therefore, industry
provides him shelter and food. The concept of travelling industry is always growing the
proportion to hospitality industry. This is common now a day because this is create an emerge as
a business in many of countries and this industries is evolving day to day as per increasing
customer.
Background to IHG
In this context, the origin of this business can be started from 1777, when William Bass
was established appoint rent. This hotel is get recognition in 1875. when its red triangle logo was
first ever registered in the history of United Kingdom. The company is later changed their name
in 1978s. There on beneficial structure and framework which get recognition from various
countries (Ariza-Montes and et. al., 2017). This is all about the increase in sales and hospitality
service with a graceful to earn more profit. In 1988, the British government limited number of
such brewer which could help in the resulting of best objective investing in the expansion of their
hotel business. This led shareholders toward more profit in their centre. This organization have
their own origin with the specific investment in development of service industry. The hospitality
industry has proper resource like they need human resources to serve service in various
department. This industry need huge resources of human to manage the services in which they
used to fix and provide better service to customer. Pan America Airways which is founded by
pan am. Which established the American intercontinental hotel divisional change and opened the
first hotel in Brazil in 1945.
On 19th of August, the hotel was sold to the holding company of intercontinental hotel
corporation which is based in UK. This UK based grand metropolitan is of up-to 500 million
dollar. As grand met focused in their core business and expansion of hotel in the core department
of food through this. They can raise the sales and generate more revenue and context with this.

Which buy purchase burger King, which is sold by Japanese based group company in 1990. In
this context with, they sold hotel as per this hotel which is taken under by Bass and also there
write in name to the Belgian and interbrew of euros something 2.3 billion. They change its name
in their six continents. In addition to this, the company announced that it has been subjected by
hackers attack and they are stolen up to maximum revenues and profit buy credit card details.
The company have their headquarter and Europe offices are in Denham, in England. The
American offices is is in Dunwoody, and also they headquarter in Atlanta. Intercontinental hotel
group taken lease in 2006, joined forces to came in privatization of army program. At year 2012,
the international hotel group which have more than 5400 hotel and up to 4433 which is came in
operation under franchise their agreement. This company have nearly about 907 hotel which is
managed by organization but they running by serrate owner. In march this hotel has 8,42,759
room which is available for guest and 5,656 hotel across running in 100 and more countries.
They used to provide various scheme and offer to loyal customer. As per this intercontinental
hotel have huge customer base (Rahimi, R. and Gunlu, E., 2016).
The intercontinental hotel group is a brand name in the UK. Which is celebrating 70
years which is one of the world's leading luxury brand of hotel. Which value added to billions of
investment and profit. In addition to this, the success story of intercontinental is started in 1945.
when the Pan America world Airways decided to open a hotel. This hotel is well sheltered and
created in defined way which give luxurious look to customer. The hotel infrastructure attract
and influence people to stay. Number of peoples who believe in the business trips and tourism to
the area. This hotel also provide a luxurious outlook to those people who are visiting for come
with the reference of tourism in the country. As per this, they start to expand their business
across America. in context with intercontinental hotel group, they grow in worldwide their hotel
and become the finest hotel in the world and create landmark moment in the history.
SWOT analysis of IHG
It is defined as the strength, weakness, opportunities and threat. This is showing various
power and deficiencies of organization (De Camillis and et. al., 2017). As per this, their is
chances to generate loss or threatening attribute which is analyzed by SWOT analysis.
STRENGTH
 Huge customer base: In the context with
intercontinental hotel group they have high
WEAKNESS
 Never involved in competition:
Intercontinental group hotel never involved

customer base due to their services and
reputation in hospitality industry.
 Brand value: The company make use of
various promotional tools in order to
promote their brand and create value of
market (Sampson, E., 2018).
 High number of employee: as per this,
IHG have number of employee which
maintain the total service of hotel. They
ruled over 100 and more countries. They
serve their best possible service to their
hotel in context with consumer.
 Recognition: The respective hotel provide
rewards to its employees which motivate
them and help organisationto retain them
for longer time frame.
 Challenging nature: The strength of
intercontinental hotel group is to faced
challenges as per time the time. They
adopt new service pattern which help
customer to know the total dimension of
satisfaction.
 Satisfactory services: The employee of
respective organisation are skilled that
provide satisfactory services to the
customer.
in competition due to their customer base.
 Lack of technology: In this present time,
every organization taken responsibility to
admire new aspect of technology. As per
this, they not unable to take proper
technological structure to firm.
 Average profit: Due to high investment in
service, they used to acquire minimum of
cost initiative value because this overhead
cost reduce the profit margin of selected
firm.
 High investment: In context with this firm,
they used to do high investment in their
firm in context with service and food
product that affect on its revenue in a
negtaive manner.
 Lack of financial planning: The financial
planning is gone in proper way by this, the
factor of crises is faced by hotel in number
of times. To run this type of hospitality
industry they must create proper planning
of investment, cost planning and strategies
to implementation (Hermans and et. al.,
2018).
 Limited in success: Intercontinental hotel
group have their own bench of leading
firm. They have ability to face number of
challenges in moving to product segments
with it recent time of culture.
OPPORTUNITY
 Try to open transportation for hotel: They
THREAT
 Rising raw cost: This is major issue which

invest high fund on their service. As per
this they also focus on their transport
group which make him flexible and
adaptive for customer convenience
(Abdolshah and et. al., 2018).
 Technology involvement: In present time,
the advancement is n peak. Every
organization follow various technology to
improve their customer experience
 New customer from online channel: This
opportunity is based on new channel of
online where customer have ability to
book their favorite room. They have
maximum option to take services.
 Opening of new market: The selected firm
have capability to enter in market. In this
they have just make new strategies and
plan to enter in market with various aspect
of promotional tool.
 New trend of customer behaviour: This is
an approach of customer to develop their
own look and style. In context with
hospitality industry they need privacy and
convertibility to take comfort. So this
approach is taken by organization to gain
maximum profit and revenues (Helmold,
M., 2019).
 Lower inflation rate: The low inflation rate
provide more stability to market. As per
this, the intercontinental hotel group
provide best quality of service in low cost
is faced by IHG, they used to spend more
money in their raw material.
 Environmental regulation: Sometime as
under government law and regulation, new
guidelines which is related to environment
are processed. So this factor and new law
create issue in functioning of firm.
 Changing customer approach: The
intercontinental hotel used to follow the
service which is based on customer
viewpoint. As per this, customer play vital
role in development of pursuing consumer
experience.
 Liability law: This is difference in their
countries. In context with this,
intercontinental hotel exposed to various
liability claims which is able to change
policies in those market.

to customer.
Background to Emerging markets
Intercontinental hotel group can select the location of California in United States of
America for the diversification of business.California have number of capital which have
appropriate location in country. on the other side, California is most significant and tourist place
of United State. It is also the fastest City in overall for the all business startups. The city also has
a beautiful places which attract a large number of tourist to visit there. So, it is very appropriate
for the hospitality industry to set their businesses which provide them an opportunity to grab the
tourist. California is a place where investor see an opportunity to take an risk by investing their
money and they are ready to invest their funds along with the emergent market in the risk. In
context with this their is risk of local and international competitors which is already available
their. But in the context with services and product, intercontinental hotel group ability and
capability to take this as opportunity and invest their money to expand their business.
PEST of selected emerging market
PEST analysis is defined as a framework which used to analyse the macro environment
factors of any organization. In this analysis stand for political, economic, social, environmental,
technological and legal factors which affect and organizations functioning on the basis of micro
environment factors.
Political factor: Political factor is highly affects the business of hosptialtiy. In the context
with the intercontinental hotel groups, this political factor affect the profit profitability of
organization in certain countries of market. Intercontinental hotel group is operating in various
countries which they are facing several political and government risk. In this, they also get
associated with the travel and tourism industry. So, as per the changing norms and regulation of
government. IHG should to be in business there is high need to have inforamtion which is there
changing. The impact is affected profit and revenue of selected firm. In this some factors are
regulation, traffic regulation, antitrust laws, price law regulations and sometime political stability
along with hospitality sector (Aithal and et. al., 2019).
Economic factor: Country economy highly affect the hospitality business. There are a
number of factor which is associated with economic. This create impact on the hospitality
industry where inflation rate it is high, foreign exchange rate, sharing rates and the cycle of
economics is also aggressive. Which affect the organization financial culture. In this

intercontinental hotel groups face various differences and the laws of the emerging country.
Which decrease the workforce for profit in the selected location. Company should focus on
economy to stay in business.
Social factor: Social factor which affect the business in emerging country is culture and
society. Which have their personal beliefs and social norms (Permaisela, D., 2019). The change
in attitude of customers and their expectation. So, under this context, they are dealing with
hospitality industry and it is very difficult to analyzing the psychological expectations of any
consumer. To analyze what are their expectations from the industry. Concept of culture structure
and the demographic and living standard of peoples affect firm stability in emerging nation.
Servicing socieity and taking initiative can give better result in business.
Technological factor: Technology is highly effecting the hospitality business. In the
present scenario, the technology is one of the most vital factor which affect a number of
industries. In context with intercontinental hotel group, they used to follow some technologies
which effect an positive environment by reducing the workload from the employees and also
provide easy path for the customer while they are booking their rooms and services. Using
modern technology can help buseinss to get more popular. This approach is useful now days to
attract and influence customer for their product and services.
Hotel strategy to be adopt and to be implemented (using strategic model and frameworks) within
the entering market
Porter’s generic strategy:
Porters Generic strategy
Porters generic model is strategic tool used by the business enterprises to measure their
growth and analyse their competitive advantage in the target market, various strategies involved
in this model are cost leadership, differentiation strategy and focus strategy. This model helps in
understanding how business can increase their profit as well gain competitive advantage in an
effective way. In context to Intercontinental hotel, various strategies of porters generic model is
highlighted below:
Cost leadership: This strategy focuses on lowering their cost in the market, and
increasing their efficiency in order to gain competitive advantage in the marketplace.

Differentiation strategy: Differentiation strategy focuses on producing new and distinct
products as compared to their competitors in order to gain competitive advantage in the
marketplace.
Focus strategy: This strategy mainly focuses on targeting their product and services to
the target market or audience.
From the above discussion, Intercontinental hotel must adopt cost leadership as this
strategy will help company to attract new customer base by lowing their cost and increasing
efficiency and gaining competitive advantage in the marketplace.
Ansoffs matrix:
This matrix is also called as product of market expansion matrix. This technique used
used by organization to make a strategy for the growth of firm (Reißmann and et. al., 2018).
This metrix show four strategies that is used by firm and such a way to develop and analyse
various risk factor which is associated with this.
Market penetration: In the context with intercontinental hotel group, this strategy is used
by firm. They can introduce their product on the existing market. In addition to this, hotel
increase their market and they introduce their hospitality services in existing market is called
market penetration.
Product development: It is defined as development of new product or services in the
existing market. in the context with intercontinental hotel group, the hotel must introduce new
product and service in the existing market to gain maximum profit and fulfill the meet and needs
of customer in existing market.
Market development: In the market development strategy, the firm enter in new market
with their previous product. In this the hotel must enter in a new market with their product and
services. This approach help hotel to gain competitive advantage and also create and opportunity
to enter in a domestic market from a foreign market.
Diversification: In context to diversification strategies, the firm enter in new market with
a new product. In addition, this strategies is very risky for both market and product development
(Salvador and et. al., 2019). This enable potential to generate revenue and needed high
investment to set up an organization in new market.

Justification of strategy
There are various strategies which is followed by organization to make itself global but
in case of hospitality industry they attract customer by their services. In addition, intercontinental
hotel group has their own journey and they have their structure and framework by this they came
on this point. Therefore, adoption of diversification strategy is appropriate and deasible for the
respective organisation as it help in attrcating gaining high market presence ans share which
impact directly on the productivity and performance of business entity. In addition to this, it also
help compoany to reach large number of customers taht affect on its revenue level in a positive
manner.
Practical application of strategy – 5 and 10 years ahead
As per this, the application which help in formulating several approach which is enhance
customer loyalty, chances of employment, formulating profit, increase market share and growth,
synthesizing brand image in emerged market, and fix bench mark which help in determination of
brand in domestic and international market. Whereas, the raise in economic help a country to
gain advantage because a successful firm contribute their capital in development of capital of
country. This strategies reduce the promotional activity of organization because of brand
recognition.
CONCLUSION
International hospitality management is rapidly facing several issue which is based on
internal and external threat. On the concept of SWOT and PEST, it is analyze that IHG is
capable to conduct their business in California. Moreover, IHG can follow diversification
strategy that help to built the position in market as well as gain a competitive advantage. This
overall discussed strategy help IHG to become upcoming market leader in California.

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