Premier Inn: Competitive Analysis and Value Chain

This report provides an analysis of the competitive environment of Premier Inn using Porter's five forces model. It also evaluates the inbound, operations, and outbound logistics of the company. Additionally, it discusses two supportive activities in Porter's value chain, namely technological development and human resource management. The report concludes with key value-adding activities and their justification.

Premier Inn Report

Contents
INTRODUCTION...........................................................................................................................3
TASK...............................................................................................................................................4
Analysis of competitive environment by making use of Porters five forces...............................4
Analysis of inbound, operations and outbound logistics.............................................................6
Analysis of two supportive activities in Porters value chain of Premier Inn...............................7
Key value adding activities with Justification.............................................................................8
Conclusion and reflection................................................................................................................8
REFERENCES..............................................................................................................................11

INTRODUCTION
Premier Inn is basically the British hotel chain as well as largest brand of hotel in UK
being established in 1987 by Whitbread. IT has its headquarter in Dunstable, United Kingdom.
This hotel currently operates in more than 23 countries and have its branches spread across the
various geographical locations. This hotel has more than 73000 rooms as well as have around
800 hotels of its own. It generally operates the hotels within variety of the locations and mainly
includes city centers, airports as well as suburbs. Thus, this hotel is present in large number of
locations which provides it a great competitive advantage and has made it among the largest
brands of hotels. The chain of Premier Inn is usually found in north of the Scotland to the
Helston, Cornwall in South-west England. The other various locations in which it has its
business are United Arab Emirates, Qatar, and Germany. Thus, Premier Inn has become of the
most renowned and well-known hotel in UK which have a great brand awareness.
The major and key competitors of Primier Inn are Holiday Inn, Easyhotel as well as Ibis.
Besides this, it remain in a strong competition with hotel Marriott and some other independent as
well as small hotels. This company was mainly established with the main to compete with
Travellodge(Moreno-Izquierdo, Ramón-Rodríguez and Perles-Ribes, 2016). Whitbread mainly
this hotel in the year 2004 and thus merged it with the Travel Inn and got a new name which
was Premier Travel Inn. It was then shortened to another name Premier Inn. This hotel basically
accounts for around 70% of the earnings of Whitbread. The current market share of Premier Inn
is around 13.2% with a rise in the average profit to around £225 million from 2018 to 2019. The
current sale of Premier Inn is around £16.8 million and thus have gained a great market share
from past few years.
Premier Inn offers a wide range of services as well as products to their customers and is
mainly known for providing high quality services. Premier Inn has around 72000 rooms across
the world and each of their room are divided as per the suitability of customers like deluxe room,
ultra deluxe rooms, normal rooms etc. Each and every room of this hotel mainly features en-suite
bathroom, Kingsize bed, super-comfy double bet, remote control TV as well as coffee making
facilities (Moreno-Izquierdo, Ramón-Rodríguez and Perles-Ribes, 2016). Along with this,
Premier Inn have their own restaurants accompanied by the hotel which provides an array of
facilities to their customers like breakfast, dinner etc. In short, Premier Inn provides a wide range
of services to its customers which mainly encompasses lodging services, room services,

cafeteria, luxury resorts etc. Here, the needs and demands of the customers are given utmost
importance. The additional services and products which are being offered to the customers along
with the main services are irons, free cot hire, hairdryers, free wi-fi etc. Along with this, Premier
Inn has around 10 resorts which are spread across the various locations in addition to hotels and
restaurants.
TASK
Analysis of competitive environment by making use of Porters five forces
Porters five forces model is basically used by company in order to analyse competition for
business. This framework assists in analysing and evaluating competitive strength and weakness
that an organization possess. Model is based on five forces that includes the following:
Bargaining power of suppliers: The threat of this factor is low as Premier Inn is engaged in
taking their products from more than 4000 suppliers globally. It is also considered to be low
because of as the product that is being supplied by suppliers limits uniqueness and
innovativeness. All of the suppliers are engaged in providing Premier Inn the same type of raw
material, good and services. Moreover, it has also been analysed that the importance of order
volume for Premier Inn is paramount and there is no cost involved in switching for hospitality
organization. Hotel is also being engaged in creating a new supplier diversity program that has
made sure that they need to but raw materials from various socially diverse suppliers. Thus, this
program organized by Premier Inn provides an increased competitive ground for all socially
diverse suppliers to various different group of suppliers. It has also been analysed that the
suppliers in hospitality industry has the significant power which assists them to provide higher
prices from the firms in Lodging field. So Premier Inn in order to overcome from this problem
needs to be engaged in building up efficient chain of supply with various suppliers.
Threat of substitutes products or services: The threat of this factor is high, in this a when
competitor provide a new product that meet out the needs of similar consumers in different ways,
then this can be a threat for Premier Inn. It is because value proposition of various organizations
is different from present offerings of the industry (Moreno-Izquierdo, Ramón-Rodríguez and
Perles-Ribes, 2016). In order to overcome this hotel can make use of service oriented concept
rather than focusing on product oriented. They can also get engaged in increasing the quality of
goods and services that is being provided by them. This can assist Premier Inn in gaining
competitive advantage. It will assist Hospitality organization in gaining. They can also lower

down the threat of substitute product by analysing needs and demands of consumers rather than
just laying emphasis on their buying patterns. Premier Inn can also get engaged in increasing the
switching cost of customers so they will be stick to only them. This will also assist company in
creating consumer’s loyalty. They are also facing threat related to technology based substitution.
If other hotels are being engaged in making use of advanced technology that fulfil their demand
easily, then consumers can shift to that. So Premier Inn needs to lay special emphasis on this, in
order to reduce threat of substitution.
Threat of new Entrants: It has been analysed that it is really difficult to have evaluation
about economies of scale in which Premier Inn operates. Thus, it makes product aspect costlier
for companies who are going to enter this market. So threat of new entrants is low. Also it has
been analysed that in hospitality organization the differentiation in product is really strong, they
are engaged in selling differentiated goods rather than standardised services. So customers are
highly engaged in buying different and creative products that makes it really difficult for new
organizations to enter into the market. Also the requirement of capital to set up the industry is
really high that makes it fairly difficult for new entrants to enter the market. So Premier Inn have
low amount of threat from new entrants. It has also been analysed that new company can face
difficulty in entering the market because it is really expensive for them to be able to adopt high
research and development cost. Also the access to networks of distribution is really easy for their
distribution channels and bring a new business in market. So it is easy for any of the new
company to have similar type of product over the shelves.
Bargaining power of buyers: It has been analysed that industry in which Premier Inn
operates have higher number of suppliers so they have more companies producing the same type
of products (Zhang, Leng and Zhou, 2020). This means that buyers only have some
organizations form which they can select the goods and services, so bargaining power of buyers
is firmly low. It has been analysed that differentiation of product in this type of industry is
particularly high so which means that buyers have no alternatives from where to buy the product.
There are various strategies through which Premier Inn can tackle the Bargaining power if
buyers like for example they can come up with more innovative and creative products and
services so that they can attract large number of consumer force. They also must be involved in
creating more of consumer loyalty through adopting effective marketing strategy as buyer’s

power is too weak. It will assist Premier Inn having benefits of cost advantage and selling at low
prices with better quality. It will also help them in building brand loyalty.
Rivalry among existing firms: Research has evaluated that the number of competitors
faced by Premier Inn is low (Koc and Bozdag, 2017). They are very few operators from which
hospitality organization can have rivalry. It has been analysed that main reason behind this that
low number of companies dealing in hospitality industry has large market share. It has also been
analysed that this industry is growing continuously so competitors do not need to have market
share from each other that makes rivalry among existing competitors a weaker force. Premier Inn
is engaged in selling differentiated products which in turn is really difficult for competitors to
have edge over, so this makes rivalry among existing competitors weak. Also they are making
use of advanced technology which is really difficult for competitors to adopt so this assist
Premier Inn in gaining advantage from them. It makes them more efficient than their
competitors.
Analysis of inbound, operations and outbound logistics
Value chain model is basically that framework which consists of activities needed to create a
product or service that can fulfil consumer needs. This model lays emphasis on enhancing
companies production efficiency so that they can maximise profits.
Inbound Logistics: It is very important for Premier Inn to develop a better relationship with
their suppliers so that it can assist them in easily receiving and distributing high quality of raw
materials. It has been analysed that hospitality organization can face severe challenge in phase
where product is being developed (Moreno-Izquierdo, Ramón-Rodríguez and Perles-Ribes,
2016). So in order to analyse in-bound logistic it is really necessary for hospitality organization
to focus on the transformation process in which raw materials are being processed to finished
products. Some of the instances that inbound logistics includes is improvising quality of their
goods and services. They also need to work on improvising distribution of their raw material
process.
Operations: It is really important phase for Premier Inn, in this company can engaged in
analysing and evaluating all operational activities that is being going in organization. It will help
them in knowing if firm is ready for processing raw material into finished products. They can
have engaged in improvising their manufacturing process by making effective utilization of
resources (Moreno-Izquierdo, Ramón-Rodríguez and Perles-Ribes, 2016). In this phase, Premier

Inn can also work on minimising their waste by improvising on operational process. Repair
related to equipment is also bene included in this stage. It can assist Premier Inn in enhancing
their productivity as well as operational efficiency.
Outbound Logistics: This phase includes all those activities in which products are being
deliver to the consumer by going through different type of intermediaries. In this Premier Inn
needs to manage all activities related to processing of order, transporting and warehousing
services. They must make sure that services are being delivered quickly to ultimate consumers,
so that loyalty can be created. This will assist hospitality organization in retaining their consumer
base which is really necessary for their growth.
Analysis of two supportive activities in Porters value chain of Premier Inn
The two supportive activities that can assist Premier Inn in enhancing their business and
analysing competition includes the following:
Technological development: It has been analysed that Premier Inn is been engaged in
selling out differentiated products by updating their technology which has provided them
advantage from competitors (Zhang, 2017). They are involved in selling out high quality of
goods and services at affordable prices through development in techniques. In order to increase
sales of hospitality organization, marketing plays a really important rile. They are engaged in
promoting their products and services on social media channels like Facebook and Instagram.
This has assisted them in reaching out large range of consumers and also it has helped Premier
Inn in increasing their profitability aspects. Company is also making use of digitalised marketing
funnel approach so that they can provide proper structure to its marketing and sales activities.
Hotel has also been involved in creating a digital marketing campaign in order to attract more
consumers and retain them. They are providing discount to their premium consumers in order to
create consumer base. Also it has been analysed that Premier Inn does not make false
commitments about the stuff supplied by them, this has assisted them in building up their brand
Equity and reputation.
Human Resource management: Premier Inn is being engaged in recruiting highly skilled
staff which can fulfil needs and demands of consumers. HR management in company in order to
reduce competitive pressure is involved in motivating and boosting morale of employees by
providing them with monetary and non-monetary incentives. They are also involved in providing
valuable asset of company with training and learning so that skills and capabilities of workers

can be increased (Amara, Halilem and Traoré, 2016). This has helped Premier Inn in growing
and achieving their short and long term goals and objectives. They are also engaged in providing
employees with better environment so that employee loyalty and trust is been created. This has
helped them in retaining highly skilled and efficient employees that is necessary for company’s
growth. Premier Inn is highly dependent on their human resource workforce, so this supporting
activity is really valuable for Premier Inn.
Key value adding activities with Justification
It has been analysed that Premier Inn is engaged in making use of various value adding
activities in order to grow and increase their production efficiency, it includes the following:
Firm Infrastructure: It has been analysed that in order to attract more consumers Premier
Inn has mesmerising and exquisite infrastructure. They are involved in bringing out changes in
their building according to needs and demands of their guest. This has helped Premier Inn in
allowing to have benefit of the whole value chain (Moreno-Izquierdo, Ramón-Rodríguez and
Perles-Ribes, 2016). They are also making use of updated technology like artificial intelligence
in order to attract more travellers. Like for example company has put on a television set, which
helps guest in knowing about the various features given by Premier Inn to travellers. They also
have facilities of Spa, private pools that assisted them in enhancing experience of guest. These
features in their infrastructure has created value for consumers which is really necessary for
firm’s growth.
Marketing and Sales: The marketing and sales department of Premier Inn is being engaged
in increasing profitability and revenue of frim (Lewis, 2017). They are being engaged in
promoting products and services through various platforms like Television, radio and even print
media. Also, various exciting offers are being given by them to travellers. All of the activities
conducted by Premier Inn have been made aware to consumers through marketing. This has
helped hospitality organization in increasing their operational as well as production efficiency. It
has assisted form in growing. By improvising in marketing aspects company has been able to
create consumer loyalty. Also, they are promoting through social media channels, thus creating
value for Premier Inn.
Conclusion and reflection
It has summarised that Business could deploy information technology and use of
innovative idea in the business expansion. In order to improve overall business process and

maintain competitive positioning in global world. information technology plays important role in
premier hotel chain which help for improving overall business operational activities. Both
customer and enterprise can benefit from advance in purpose of communication, reservation and
maintain guest services. An advanced technology allows for premier hotel to maintain
coordination between staff members where they can easily share information through email,
telephone. Furthermore, it has summarised about the background information of Premier hotel
chain enterprise, briefly describe product as well as service in business expansion. Its analysis
the competitive environment of hotel industry that applying porter’s five force. As per
discussion, it has concluded that Porters five forces model always helping for hotel chain
business in terms of competition level. it is to be consider as framework which assists in
analysing and evaluating competitive strength, weakness of organization possesses. It also
justified the key value that directly engaged with hotel chain business for increasing their
profitability in global marketplace.
Reflection
In personal experience, I have seen that information technology plays important role
within hotel industry because it directly relates to business operations and functions. it provides
better opportunities to improve productivity and profitability in global marketplace. As per
analysis, I have found that internet is powerful tool in hospitality industry where many customers
uses to check availability of rooms and other type of services. I could determine that customer
experience start as long before travelling (Amara, Halilem and Traoré, 2016). Sometimes, it
begins with visit to website and identifying essential information related hotels. Furthermore, I
believed that IT system support for staff member where they can predict interest of particular
consumer towards hotel services. so, as it become easier for hotel to target potential consumers
and provide better facilities as per requirement (Moreno-Izquierdo, Ramón-Rodríguez and
Perles-Ribes, 2016).
On the other hand, I have identified that hotel must use computer system for collecting large
information about consumer, it allows for purpose of communication between location and
branches. I have found that makes easier to streamline reservation and other hotel policies. I have
realised that staff members internally use IT system which always support for accessing
information of guest in order to improve their experience, preferences. It is useful for keep
record and maintain data into single system (Amara, Halilem and Traoré, 2016). In this way, I

have become easier for recognising role of Information technology in hotel chain business,
increasingly turning towards customer satisfaction. In most of cases, it has found that
information will help for hotels to create personal experience. However, I also analysed that IT
system become user-friendly so that it helpful for staff member to use them. On regular basis, it
also checking the number of booking within hotel effectively and efficiently.

REFERENCES
Books and Journals
Amara, N., Halilem, N. and Traoré, N., 2016. Adding value to companies' value chain: Role of
business schools scholars. Journal of Business Research. 69(5). pp.1661-1668.
Koc, T. and Bozdag, E., 2017. Measuring the degree of novelty of innovation based on Porter's
value chain approach. European Journal of Operational Research.257(2). pp.559-567.
Lewis, R., 2017. Porter's Five Forces of competitive advantage.
Moreno-Izquierdo, L., Ramón-Rodríguez, A.B. and Perles-Ribes, J.F., 2016. Pricing strategies of
the European low-cost carriers explained using Porter's Five Forces Model. Tourism
Economics, 22(2), pp.293-310.
Zhang, C., Leng, M. and Zhou, L., 2020. DEVELOPING STRATEGIES OF SOCIAL
ENTERPRISES EXPLAINED USING PORTER'S FIVE FORCES ANALYSIS
MODEL: TAKING MENTAL CHALLENGED CAR WASH AS AN
EXAMPLE. International Journal of Organizational Innovation, 12(3).
Zhang, D., 2017. Porter’s Five Forces Analysis and Value Chain Analysis of AUX Air-
conditioning Co., Ltd. DEStech Transactions on Social Science, Education and Human
Science, (icsste).

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