Strategic Options for HOLIDAY INN Expansion

The report concludes that the right choice of strategic options is crucial for the success of a business, and HOLIDAY INN's decision to expand through franchising is an appropriate strategy. The analysis also highlights the significance of evaluating performance metrics such as growth aspects, business processes, customers, and finance to ensure sustainability in the market.

STRATEGIC PLANNING
FOR THE HOSPITALITY
INDUSTRY

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
Knowledge and understanding about most popular strategic option ..........................................1
TASK 2............................................................................................................................................3
Factors affecting implementation of strategies ...........................................................................3
TASK 3............................................................................................................................................5
Analysis and evaluation of different performance metrics .........................................................5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Strategic planning is an organisation's process of defining its strategies, to set priorities,
focus on energy and resources. This planning is also termed as management activity that
strengthen operations and always ensures that employees and other shareholders are working to
attain common goal. Strategic planning helps organisation to plan its future activities that are
needed to be performed. Planning gives a glance of future on some expected basis that helps to
be prepared for future events (Brotherton, 2012). Strategic planning helps to develop a plan,
guideline and creates a roadmap for hotel HOLIDAY INN. These plans will be prepared from set
missions, vision, values and goals that are set to be achieved by continuous working towards
them. Allocation of resources towards productivity activity becomes well defined with strategic
planning. In this project report discussion regarding most popular strategic options, factors
affecting implementation of strategies will be done. Together with this, analysis and evaluation
of different performance metrics will be included.
TASK 1
Knowledge and understanding about most popular strategic option
 Franchising is an agreement between two parties in which one party grants right to use
trademark or trade name to other party. Franchising is based on the market concept which
is adopted by organisation as a strategy for expansion of business. When strategy of
franchising is done in a right way then both the parties involved are benefited by this.
Franchising gives a process that needs to be followed before giving franchise. This
process starts with finding a growing market that absorbs new services provided. After
that an organisation that is ready to become franchisor and is capable of managing
operations will be provided with franchise and all legal documents are prepared.
Franchisor have all the managing responsibilities and a part of revenue will be transferred
to franchisee. HOLIDAY INN will consider this method to expand its business as it
fulfils all requirements that are required by company.
 Management contract is an arrangement under which, contract to manage operations of
an enterprise is given in different hands. Other enterprise performs necessary managerial
functions and in return charge fees for this service. Operations of hotel industry are based
upon efficient management. This contract provides an opportunity to give management in
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qualified, experienced and efficient hands. Operating with efficient management helps
hotels to develop and grow more. Goals of the organisation are achieved quickly and
productivity increases. Effective management of hotels helps to create a positive image
for hotel name. Contract for management is done by without dilution in ownership. As
management moves to some other hand leads to conflicts between ownership and
managers to business so, HOLIDAY INN will not move forward with this option to
expand its business.
 Joint venture means when two business enterprises come together for same project. This
is usually done for a single project only. Joint venture creates different business entity to
which owners contribute assets, have equity and agree to manage operations. When two
entities join hands that bring more resources in form of capital and qualified
professionals. (Ogbeide and Harrington, 2011). In hotel industry joint venture is done to
improve efficiency by effective management and also helps to remove geographical
boundaries.
 Merger and acquisition are used termed as same with little difference. As merger is
voluntary fusion of two companies on broadly equal terms to form a new entity. Merger
is done between two enterprise that have same operations scale, consumer size. On the
other hand acquisition means when one company purchases all or more then 50% shares
of other company to have control over it. Merger of two entities generate a new enterprise
and in acquisition one enterprise mix with the other. Merger and acquisition helps to
expand hotel business through already established business operations of one enterprise.
A large consumer base will be provided by more access to existing established markets.
Merger and acquisition requires more funds to buy business of some other company and
will not be considered as effective option by HOLIDAY INN.
These all are different strategic options that are available to hotel HOLIDAY INN make
an expansion plan. Plan that provides more benefits and fewer drawbacks will be approved by
hotel. In business of hospitality management of hotels franchising is considered as one of the
most profitable method. As providing franchise to other business enterprise will reduce
involvement in management that will reduce operating cost. When franchise is provided by
HOLIDAY INN to other enterprise in different geographical area that will bring funds to
business inform of initial payment. Also payment of franchise fee is received on annual basis
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together with initial pay. To establish a business in different countries requires various legal
requirements that needed to be fulfilled. Expansion of business through franchise reduces
various legal compliances that needed to be followed in other countries. Operating and set up
cost in different areas of world will be reduced. As franchise provides right to use name for
performing business and ownership will be in single hand only. It is very costly to set up a
business structure in different countries and through franchise another enterprise creates business
structure for HOLIDAY INN. This also helps to provide access to more countries in the world
that helps to expand business more and more. When management and ownership lies in same
hand it is easy to create responsibility.
TASK 2
Factors affecting implementation of strategies
 Leadership is a practical skill that reflects ability of an individual or organisation to
guide other persons, team or an organisation. Leadership is a style of providing direction,
implementing plans and motivating people by a leader. This is a result of philosophy,
personality and experience of a leader. A good leader is asset to organisation who takes
organisation to right path and helps to achieve organisational objective. A leader should
be flexible and open for new ideas. Leader of hotel HOLIDAY INN should not be rigid
while giving franchise to other enterprise (Rodríguez-Antón ed., 2012). If it is necessary
and beneficial for business to expand through franchise then as a good leader it should be
supported. A good leadership will provide benefit to business by suggesting best method
of expansion and carrying out effective process for expansion. A good leader will always
give opportunity to others to express their views and if any change is required to be made
for goods results then that changes will be implemented.
 Structural design is a method and tool by which a safe and economical structure or
number of structure that are sufficient to carry out load is designed. Organisational
structure of HOLIDAY INN will be made up of executive management group, which
serves as the leadership of property. It has functional group that directly deal with issue
related to guests and administration group that handles other matters. Structure of
organisation plays vital role in success and expansion of business plan. A well designed
business plan reduces complexity in decision making as powers and responsibilities are
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already allotted. Structure of HOLIDAY INN designed in such manner that expansion
plan is easy to implement. When franchise is given then changes will be easily adopted
by organisational structure. Organisation's structure is designed in such manner that all
issues are reported to respected authority and solutions to issues are provided on time to
reduce any complications.
 Information and control system is a system which gathers and uses information to
evaluate the performance of different organisational resources such as human, finance
and physical and also organisation as a whole. A formal information system is designed
for HOLIDAY INN that helps to collect, process, store and distribute information. There
are various type of information system in an organisation such as management
information system, decision support system, executive information system. Management
information system is consider as one of the effective source to collect information
regarding various operations of business. This system provides information regarding all
resources available with hotel and also efficiency in their applicability. As to prepare
planes for future current situation is effectively analysed with the help of information
provided by MIS. Control system helps organisation to compare past performances with
baseline and variations are recorded and continuous improvement will be done. Feedback
of consumers plays very important role to control variation in service provided. By
continuous monitoring on consumers need goals are effectively achieved.
 Human resource are people who makes workforce in an organisation. Every business
is very much depended on its workforce as they are the only one who is going to perform
on behalf of the company. A industry like hotel is highly depended on human resource as
every business activity requires humans to perform it. As business of HOLIDAY INN is
continuously expanding in different cities, countries and this expansion increases volume
and scope of business. To operate increased business functions more human resource is
required. Human resource is termed as biggest resource in hotel industry (Hoque, K,
2013). Providing franchise to other enterprise leads to more human resource in
organisation to work on this expansion plan. Importance of human resource is recognised
by business sector and to manage this resource a separate department is operated named
as human resource management. Employing is skilled and efficient employee is very
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important and also to retain that resource is also important. As more skilled and
competent workforce will increase productivity of organisation.
TASK 3
Analysis and evaluation of different performance metrics
Performance metric measures an organisations behaviour, activities and performance. It
evaluate how workers are performing their task and and how company is accomplishing their
objectives. It provides data that gives clear outcome that facilitates improvement and up
gradation. Performance metrics helps to capture internal performance that includes productivity
measurement and quality of service. There are different type of performance metrics used by
HOLIDAY INN some of them are as follows-
Critical Success Factors ( CSF's) refers to specific activity, procedure or area that a
business required for continuous survival. This is a management term for an element that is
necessary for an organisation and its projects to be successful. CSF is a critical factor that is
required to ensure success of the business. Critical Success Factor is unique to every organisation
and will reflect its current and future business goals. Critical success factors are mentioned in
business and strategic planning. There are five factors that affects success of HOLIDAY INN.
These factors are strategic focus, people, quality management, marketing and finances
(Theobald, ed., 2012). Critical factor for success of hotel business consider quality as one of the
most important priority. In today's world capitation turned out globally this brings focus of hotel
business towards quality services. Businesses of hotels are very much affected by its location but
together with its location quality also plays very important role.
Competition is continuously growing in hotel industry and providing services to
consumers to is not sufficient to attract them. Consumer will prefer quality services when price
difference is not high. Good location with quality service is great combination that makes
business of HOLIDAY INN successful. Franchise provided by company must be located at
central location and also a condition to maintain quality in services must be provided.
 Key Performance Indicators is a type of performance measurement that demonstrates
how efficiently a company is achieving its key business objectives. Every organisation
have different performance indicators that are used at different levels to evaluate success
for reaching targets. This is a metrics used by managers and corporate executives to track
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and analyse factors that are crucial for success of business. Key performance indicators
for HOLIDAY INN that really matters for success of business are its online rating,
consumer satisfaction level, occupancy %, advertising return on investment and revenue
per available room. Online ratings are important as on the basis of this consumers make
booking in hotel. This rating also helps to know about what services that needs to be
improved for better consumer satisfaction. Measuring occupancy rate is simplest method
to know performance level. A hotel with high occupancy generates more revenue.
Revenue per room is a useful method to measure performance. This is calculated by
average daily room revenue generated by available rooms. Measuring consumer
satisfaction is difficult but without measuring it business can not be challenged to
compete against its competitors. Satisfaction of consumers can be measured by feedback
provided and to improve satisfaction level more quality services will be provided to
consumers. Calculating return earned because of advertising and promotions will save
business for wasting money on inefficient advertising (Phillips and Moutinho, 2014).
Online advertising is easier task but a effective method is followed to calculate its
contribution towards return.
 Balanced Scorecard: It is a metric to evaluate the performance of strategic management
in order to assess the internal functions and their respective external outcomes. The
motive behind this metric is to measure the performance of product innovation and the
areas of customer satisfaction. The data collected by this metric is used to ascertain the
quantitative results for making better decisions for the organization. Under this metric,
four areas of an organization needs to be evaluated. The areas are growth aspects,
business processes, customers and finance. The data collected by using balanced
scorecard will be use by company to identify the problems or difficulties in the
performance of the company and to make strategic plans to remove/reduce such
problems. The other reason to use this metric is to know the additional benefits gained by
the company. HOLIDAY INN is proposing expansion plan for which this metric has been
used. The growth prospects was analysed with the use of Balanced Scorecard before
deciding to expand the business. All the positive and negative aspects were considered
for growth prospects. Further, the finance department should be efficient in order to
prepare budgets required for the expansion and other activities. The performance of
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finance department was evaluated with this metric so that the budgets are prepared
appropriately. Customers are most important for any business, HOLIDAY INN
incorporated this metric to know the satisfaction level of the customer so that it can
provide better services.
CONCLUSION
From the report, it has been concluded that the right choice of strategic options is very
important for the success of the business. The chosen strategy i.e. franchising is an appropriate
strategy for a hotel business to expand its business for surviving the competition and to earn
profits. It further provides, that factors like leadership, structural design, information and control
system and human resources have their impact on the implementation of the chosen strategy.
Along with this, a regular analysis and evaluation of different performance metrics of the
business provides sustainability in the market. Therefore, the business should use these elements
in a combined form in order to know the viability and survival prospects of the company.
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REFERENCES
Books and Journals
Brotherton, B. ed., 2012. International Hospitality Industry. Routledge.
Hoque, K., 2013. Human resource management in the hotel industry: Strategy, innovation and
performance. Routledge.
Ogbeide, G.C.A. and Harrington, R.J., 2011. The relationship among participative management
style, strategy implementation success, and financial performance in the foodservice
industry. International Journal of Contemporary Hospitality Management.23(6).
pp.719-738.
Phillips, P. and Moutinho, L., 2014. Critical review of strategic planning research in hospitality
and tourism. Annals of Tourism Research, 48, pp.96-120.
Rodríguez-Antón, J. M. and et. al., 2012. Use of different sustainability management systems in
the hospitality industry. The case of Spanish hotels. Journal of Cleaner Production,
22(1), pp.76-84.
Swanson, J.R. and Edgell Sr, D.L., 2013. Tourism policy and planning: Yesterday, today, and
tomorrow. Routledge.
Theobald, W.F. ed., 2012. Global tourism. Routledge.
Online
Mergers and Acquisitions. 2018. [Online]. Available
through:<https://efinancemanagement.com/mergers-and-acquisitions>.
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