Strategic Planning for the Hospitality Industry

STRATEGIC PLANNING FOR THE
HOSPITALITY INDUSTRY

TABLE OF CONTENTS
INTRODUCTION ...............................................................................................................................3
MAIN BODY.......................................................................................................................................3
CONCLUSION....................................................................................................................................8
REFERENCES.....................................................................................................................................9

INTRODUCTION
Strategic planning has significant part in the global hospitality field as there has been an
upsurge of strategic tools to measure, evaluate and design the future objectivity for profit generation
with maximum development and progress by providing higher standards of services to the
customers. This report is based on this strategic planning and management of hotel industry
organisations like Intercontinental Hotels Group, which undergoes through different functional
decisions like mergers or acquisitions, contracting etc. to enhance profitability in the market. It will
serve the purpose of various performance metrics adopted in this sector for proper orientation and
progress of operations.
Background of the chosen organisation: Intercontinental Hotels Group is a well known name which
is headquartered in Denham, Buckinghamshire. This hotel has approximately 5000 hotel worldwide
with about 800000 guest rooms accommodation. Its operations is in around 100 countries with
many diversified brands that have already established its name in this circuit and carved a niche.
In addition, these have a wide array of brands and includes Crowne Plaza, holiday inn, hotel
indigo, intercontinental, Avid hotels and many more. Furthermore, this brand has established many
notable landmarks in context of properties. For instance, The InterContinental Davos has been
famous for its rich architecture along with, the tallest building of Los Angeles which is popularly
known as Wilshire Grand Tower.
MAIN BODY
Explanation about the most popular strategic options
Strategic option can be considered as that alternative action oriented event which has been
Illustration 1: Details of brands and pricing of IHG based on Financial Reports of 2017
(Source: Intercontinental Hotel Group IHG, 2018)

taken for the identification and implementation of an enterprise's long term objectives. Here,
Intercontinental Hotels Group (IHG) has been considered.
Franchising: This is a framework where the franchiser transfer its rights on legal terms to
another organization called as franchisee. It has become evident in hospitality industry via
restaurants, cafes and hotels. Moreover, this is mainly done for three major enhancements such as
development of conceptual design work, continuum assistance and process for initiation for
consistent running and training of all the operational activities. Franchising can act as the licensing
strategy for understanding the implications from franchisee's point of view in arenas like selection
of site, assistance in operations, screening etc. It accelerates a company's expansion plans. For e.g.
IHG became synonym to affordable accommodation which is pulling customers as a franchisee for
several hotels with a predominance in almost major locations of UK. Furthermore, it has benefited
in various ways such as access to find suitable and qualified talent pool who are ready to manage
work at other locations for profits generation. It supports in higher returns of financial growth with
minimum risk and it's the biggest advantage is establishment of brand at faster pace with formation
of loyal customer-base through a network of support in developing new products.
Management Contracts: It is popularly known as contract administration. This is
implemented for smooth execution of procedures for performance management and employees'
engagement. These management contracts are the legal written relationship for the control of the
operations through negotiation between business's owner and third agency. Here, the focus is to
operate the activities at hotel under expert guidance on behalf of the rightful proprietor. However,
the main aim is to maximise productivity and revenues through increasing profits with low risk.
Management Contracts are like the sourcing process to bring validity, reliability and sustainability
to the hotel investors and shareholders involved (Elbanna, 2016). In hotel industry, there is
bifurcation for management companies into independent and brand operators. For e.g. IHG Groups
of Hotel hired them for gaining competitive advantages for both managing brand and regulating
operations. Such brand operators work in non-flexible mode who moderately anticipate savings for
more incurring benefits. On the other hand, independent operators have large number of clients with
broad range of services and products. These help in high margins in profits and sales, autonomous
termination provisions and are less volatile towards the fluctuating economic factors and local
marketplaces. For e.g. Melvin Gold Consulting Ltd is one of the big names in UK's hotel industry
which underwent a legal document with IHG.
Joint Ventures: It is the common platform formed by the combination of complex
arrangement of expertise and resources. Recently, this has been accelerated by major companies for
their overall business opportunities in profits and development as well. This helps in promoting
foreign direct investment by passing through untapped markets and distribution networks.