Strategic Management Review of InterContinental Hotels 2016 Research Report

Running head: MANAGEMENT
Strategic Management
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Executive Summary:
The report aims at providing a review of the 2016 research report of InterContinental Hotels
(IHG) on the international hotel industry including the UK market. IHG represents an
internationally renowned hotel brand that manages sub brands like the Holiday Inn Express,
Holiday Inn and Crown Plaza. The report provides an update on research report from the point of
view of a strategic consultant working on contract with IHG. The report also puts forward a
critical evaluation and analysis in context of the business environment of IHG at the multiple
levels that included the perspective of the global industry, competitor and market level,
consumers and the internal dynamics of IHG. All these factors acted as stimuli for strategic
change. The report also presents a strategic plan justified by the findings and analysis of the
research along with a mention of the timescale for strategic plan depending on the opportunities
and issues understood through analysis.

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Table of Contents
Introduction:....................................................................................................................................3
Updates of Information of 2016 IHG Research Report:..................................................................4
Analysis and Critical Evaluation IHG Business Environment that Determined Stimuli for
Strategic Change............................................................................................................................10
Global Industry Perspective:..........................................................................................................10
Market Level:.................................................................................................................................13
Competitors:..................................................................................................................................15
Consumers:....................................................................................................................................18
IHG Internal Dynamics:................................................................................................................20
Strategic Plan Justified by Findings of the Analysis and Research...............................................22
References:....................................................................................................................................25
Appendices....................................................................................................................................29

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Introduction:
Intercontinental brand had been established after the Second World War by Pan Am, an
US based airline. The brand had its initial hotel opening in Brazil. During 1980s, Pan Am landed
in severe financial trouble that forced it to sell off the Intercontinental brand to Grand
Metropolitan which represented a conglomerate of the UK property. In the year 1998, Inter
Continental was acquired by Bass, an UK based brewing and the hospitality giant whose roots
could be traced to 1777. It was acquired at the time when Bass had been undertaking an
expansion in hotel industry and had already bought the chain of Holiday Inn in the later part of
the 1980s. The brewing business of Bass was sold in the year 2000 and in the year 2003, the
entire group had been divided into different entities; the retail business of Pub known as Mitchell
and Butlers plc and the hotel business came to be known as the InterContinental Hotels.
However, Denha remained the headquarters of the Inter Continental Hotel in UK while the US
headquarters in remained in Dunwoody, Georgia.
Nevertheless, the IHG possess quite a number of international brands, eight of them had
over10, 000 rooms across the world. Holiday Inn Express and Holiday Inn have been the best
known and the largest (ihg.com 2019). It also included others like Staybridge Suites, Crown
Plaza and the Candlewood Suites. The key business of IHG lies in operating under complicated
franchising model that allowed the company in maintaining its asset light strategy thereby
enabling them in effectively competing in the high growth, most attractive and the industrial
segment. Management at the IHG is further looking forward to the profitability and its further
growth as successful brand for maintaining its position as the leader in the international group of
hotels. The report provides a critical evaluation and detailed analysis of 2016 IHG report.

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Updates of Information of 2016 IHG Research Report:
According to the reports published in the year 2016, IHG possess a diverse portfolio of
the differentiated brands that are not only renowned but is loved by clients across the world. The
group remains focused towards strengthening the portfolio of the preferred brands, leveraging,
building and delivering revenue to the hotels through lower cost and direct channels. However,
the proposition to the third party hotel owners remains competitive and helps in driving superior
returns. With the focus on most attractive market industry segment and the higher growth
market, IHG is found to execute asset light strategy. Besides, IHG also undertakes disciplined
approach towards the allocation of capital thereby investing in the future growth of the brands.
This helps the hotel brand in driving towards sustainable growth thereby delivering superior
levels of the shareholder returns over long term.
The IHG has been one of the reputed hotel companies of the world with the purpose of
creating greater hotels through the delivery of promise that stood for true hospitality for
everyone. IHG franchises the individual brand with the aim of targeting different markets
(ihg.com 2019). The focus remains in building the preferred brands and generating stronger
revenue. IHG has been strongest hotel group across the world during the period 2009 to 2013
although it remained behind the Hilton Worldwide and the Marriott International. It left behind
the Starwood and the Accor Groups in the fourth and the fifth position respectively. The IHG
experienced an overall growth in North America and China measured on the basis of revenue
generated per room. However, the largest market of IHG has been North America where the
company planned to re-position the Crowne Plaza brand in business productivity segment and
prioritize quality amongst Holiday Inn brands through removal of more than 50 hotels. The

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company had a prominent presence in the global regions for ensuring that it is well positioned to
benefit from the global growth particularly the fastest developing markets.
IHG is keen on generating and sustaining competitive advantage in Chinese market in the
future years (Legrand, Chen and Sloan 2013). The company aims at building a stronger domestic
appeal through the creation of Hualuxe brand thereby trying to provide the Chinese visitors
luxuries having a Chinese touch and then targeting the outbound traveler who uses network of
the global brands when travelling abroad. IHG also consider itself to be well positioned for
taking advantage of emerging middle class in India and Russia where it had prominent hotels in
pipeline since it had been aiming at an expansion of the Holiday Inn Express and Holiday Inn
brands from a comparatively lower base.
It has been found that in UK there has been higher awareness level in regard to Holiday
Inn Express and the Holiday Inn but a lower usage rate compared to the rivals (Salvioni 2016).
There has been mixed perceptions of consumer in regard to the Holiday Inn brand especially if
the regular or the occasional customer of full service Holiday Inn checks into a budget friendly
Holiday Inn express and discovers that it lacked certain facilities as expected. Even if the
Holiday Inn is perceived as functional, accessible, friendly and reliable by the potential
customers however, the express sub brand results in perception of being very basic. Hence, it has
lower ratings as far as user experience is concerned. Nevertheless, it is relatively considered
good value compared to the higher end chains for satisfying those looking for comparatively
cheaper experience in relation to full service.

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Figure 1: Brands of IHG
Source: (Petrović et al. 2013)

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Figure 2: Map Showing the Operations of IHG
Source: (ihg.com 2019)