Organisational Structure and Business Environment Analysis of Premier Inn

This report analyses the organisational structure and business environment of Premier Inn, the largest hotel brand in the UK. It includes a SWOT analysis and PESTLE analysis to identify internal and external factors affecting the organisation.

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Understanding
Business Organisation

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Organisational structure of Premier Inn......................................................................................3
Business Environment analysis of Premier Inn Hotel.................................................................4
SWOT Analysis...........................................................................................................................5
Strengths......................................................................................................................................5
Weaknesses..................................................................................................................................5
Opportunities...............................................................................................................................5
Threats.........................................................................................................................................5
PESTLE Analysis........................................................................................................................6
Political Factors..........................................................................................................................6
Economical Factors.....................................................................................................................6
Social or Socio-Culture Factors..................................................................................................6
Technological Factors.................................................................................................................6
Legal Factors...............................................................................................................................7
Environmental Factors................................................................................................................7
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
This report on case study will be in context with the limited service hotel chain called Premier
Inn which was founded in 1987. It is a subsidiary company of Whitbread PLC. It has hotels at
various locations in countries like UK, UAE, Germany, Ireland, Qatar, etc. It is the largest
hotel brand in UK having around 800 hotels and 72000 rooms. Its headquarters are in
Dunstable, England. Around 70% of Whitbread’s earnings are accounted from Premier Inn. In
this report, the organisational structure of Premier Inn will be examined and the benefits and
drawbacks of its structure over the working and operations of the hotel group. The business
environment of the hotel chain will also be analysed using SWOT analysis(Strengths,
Weaknesses, Opportunities and Threats) and PESTLE analysis(Political, Economical. Social or
socio-cultural, Technological, Legal, Environmental) to identify both favourable and
unfavourable internal as well as external factors, that affect the organisation.
MAIN BODY
Organisational structure of Premier Inn
An organisational structure is a method or system of relationships, roles, responsibilities or
rules that define how the work flows and the activities like supervisions, task allocation, etc.
are directed and delegated to achieve the objectives and goals of the organisation(Roberts,
2018).
Premier Inn has a vertically integrated model or structure that combines the inventory
distribution, hotel operations, brands and ownership of properties. This has helped the hotel
group to grow significantly as compared to competitors. This structure also helped the
shareholders to earn a great return on capital. It also delivered a superior and better customer
experience due to its efficient structure.

The company’s structure gives it a competitive advantage by winning customer proposition and
delivering satisfactory customer experience(Stverkova and Pohludka, 2018). The key
components that give the company competitive advantage along with its direct distribution and
strong brand are-
 Brand Strength – it is UK’s strongest brand of hotels ; it is one of the first choices of
travellers and its customer metrics are also leading in the market and industry.
 Scale advantage – the company has UK’s largest network and its network access is
superior to competitors ; the company also enjoys economies of scale.
 Direct digital distribution – the company’s direct digital distribution model also leads
the market and the customer acquisition and retention is also low cost.
 Operational control – all the hotels are operated directly by the top management which
have very high quality experience ; the hotels also offer tailored Food and Beverage
facilities ; it does not really have to pay brand fees and the execution of the operations
is also consistent(Organisational structure of Premier Inn, 2022).
 Property flexibility - the company’s access to capital is also low cost and has to pay
lower costs for rents ; their access at local level for their preferred sites is also good
 Everyday efficiency – the models and rooms for the hotels are standardised and their
operating structures are quite efficient.
Business Environment analysis of Premier Inn Hotel
Business environment is a collection or total of all the internal factors that can be controlled by
the organisation as well as external factors that the organisation cannot control which might

also be influences, institutions or circumstances that have an impact on the organisation and its
operations(Cherunilam, 2021). The factors that can affect the organisation are employees,
government, stakeholders, customer needs and expectations, etc. Business environment
analysis can be done using SWOT analysis for internal factors and PESTLE analysis for
external factors.
SWOT Analysis
Strengths
 Premier Inn has a strong presence in the UK with over 800 hotels.
 The hotel stand on a good position in the industry with occupancy rate of more than 76%
(SWOT analysis of Premier Inn, 2022).
 Premier Inn hotels are generally situated near universities, airports and other tourist
attractions that makes it feasible for customers to stay near the desired places.
 Premier Inn has also been voted as the ‘Best UK economy hotel brand’ and has won
many such accolades that helped it to establish a good brand image.
Weaknesses
 The company has a limited global presence as it operates in a limited number of
countries.
 The company has low promotional and marketing campaign.
 It has been in a scandal of refund issues to the customers.
 The operating costs has been continuously increasing.
 Premier Inn has also been criticised for exploitative work practices(SWOT analysis of
Premier Inn, 2022).
 An undercover film also revealed some serious hygienic issues in the housekeeping.
Opportunities
 Premier Inn can take advantage by entering and exploring new markets.
 The company can further grow in Germany as the country has high tourism.
 The renovation and new decor can also prove to be a great opportunity to attract
guests.

 This is a great time for the hotel chain to enter into event management and food
catering segments.
Threats
 Premier Inn has strong competitors within the industry for same category small and
independent hotels.
 The company is under legal threat from health and safety executives and trade unions
due to various hygienic issues and exploitative work practices in the
organisation(SWOT analysis of Premier Inn, 2022).
 Covid-19 and lockdowns has badly affected Premier Inn and various businesses all
around the world.
PESTLE Analysis
Political Factors
 UK government has pragmatic and positive collaboration with the hospitality industry
as it is a key contributor in the country’s economy.
 The government also tries to use hospitality industry to increase the
employment(PESTLE analysis of Premier Inn, 2022).
 The government reduced corporation taxes to increase the profits for the hospitality
industry but the increase in VAT nullified it.
Economical Factors
 The financial crisis caused a recession in UK. However, Premier Inn got some benefits
out of this economic disaster as customers prefer budget hotels during such times.
Social or Socio-Culture Factors
 The hotel chain’s dependency on tourism greatly affects the booking dates.
 Premier Inn is persistent on satisfaction of customers by providing comfortable stays
and quality services.
 The hotel chain also tries to take into account customer’s preference for higher value of
money and provides effective and timely response to customer demands and
queries(PESTLE analysis of Premier Inn, 2022).

 Premier Inn focuses more on customers during Christmas and other such important
dates as people are willing to spend more during such occasions.
Technological Factors
 The increase in use of internet browsing, computers and mobile apps has increased the
company’s ease-of-use.
 Social-media advertisements and targeting wide audience is a cost-effective method
that the hotel can use.
 The company also has a good interactive website.
 The hotel chain also uses mobile phones to communicate with customers and send
messages to them regarding promotions and offers
Legal Factors
 The increase in wage rate by around 15.5% by government can increase the hotels’
operational costs.
 Increase in production cost due to rise in operative costs make it difficult for the
company to offer competitive rates to the customers.
 The company has developed a Responsible Sourcing Policy to maintain high standards
and avoid legal issues. This policy states principles and minimum standards for
cooperation that the company expects from its contractors, partners, suppliers(PESTLE
analysis of Premier Inn, 2022).
 Premier Inn has been forced compliance with health and safety legislation.
Environmental Factors
 Now-a-days customers prefer businesses that cares about environment and adopt
business policies and operations that are more eco-friendly, sustainable and takes care
of proper waste disposals
 The company created “Good Together” programme to reduce carbon emissions and
wastes.
 Global climatic changes also affect the business of Premier Inn. As during floods or
other calamities, transportation is greatly affected, this has a direct impact on the
tourism. This has negative impact on the bookings as rail networks are disturbed and
flights get cancelled due to environment and climatic issues.

CONCLUSION
This report is on case study of Premier Inn, one of the biggest UK brands of hotels. The
organisational structure of the company was outlined and identified as an integrated vertical
structure which is a top-down structure of management which is generally a pyramid like
structure. The report then highlights the strengths, weaknesses, opportunities and threats of the
hotel group using SWOT analysis. The company’s brand reputation, strong presence in UK and
good occupancy rate along with its feasible locations and the accolades given to the company
are proven to be company’s strengths. However, limited global experience and various
scandals can make the company vulnerable. The PESTLE analysis of the company to identify
the political, economical, social, technological, legal and environmental factors that affect the
company showed that the government regulations have been in favour of the hospitality
industry and thus the hotel chain. The economical aspect of financial crisis also benefitted the
company. The social and technological changes have also helped the company to improve its
operations and efficiency, while the legal actions that could be taken against the company can
damage its reputation. The environmental factors of climatic changes can hamper the working
and bookings of the hotel.

REFERENCES
Books and Journals
Cherunilam, F., 2021. Business environment. Himalaya Publishing House Pvt. Ltd.
Roberts, J., 2018. Multinational business service firms: The development of multinational
organisational structures in the UK business services sector. Routledge.
Stverkova, H. and Pohludka, M., 2018. Business organisational structures of global companies:
Use of the territorial model to ensure long-term growth. Social Sciences. 7(6). p.98.
Online
Organisational structure of Premier Inn. 2022. Available
through:<https://www.whitbread.co.uk/about-us/our-business-model/>
SWOT analysis of Premier Inn. 2022. Available through:<
https://www.mbaskool.com/brandguide/tourism-and-hospitality/14052-premier-inn.html
>
SWOT analysis of Premier Inn. 2022. Available through :<https://www.ipl.org/essay/Premier-
Inn-Case-Study-PCYHPN4PG>
SWOT analysis of Premier Inn. 2022. Available through :<
https://www.cram.com/essay/Premier-Inn-Case-Study/PCF2KMJ7QG >
PESTLE analysis of Premier Inn. 2022. Available through:<https://phdessay.com/strategic-
analysis-swot-pestel-porter-of-premier-inn-whitbread-plc/>
PESTLE analysis of Premier Inn. 2022. Available
through:https://www.coursehero.com/file/24384218/PESTLE-ANALYSISdocx/
PESTLE analysis of Premier Inn. 2022. Available through :< https://topnotchresearch.org/pestel-
analysis/how-to-write-pestle-analysis-of-premier-inn/ >