Strategic Planning for the Hospitality Industry

Strategic Planning for the
Hospitality Industry
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Table of Contents
Introduction......................................................................................................................................3
Main Body.......................................................................................................................................3
1. Appropriate factors to implement chosen strategy.............................................................3
2. Creative business strategies................................................................................................5
3. Different performance metrics...........................................................................................7
Conclusion.......................................................................................................................................9
References......................................................................................................................................10
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Introduction
Strategic planning is a part of planning process. It includes creating strategies which are
specific to business targets, their implementation and monitoring. Target can be both short term
for a specific project or long term goal of whole business. Hospitality industry is a densely
competitive industry and is directly impacted by even slight changes in any component of the
business environment (Boella and Goss-Turner, 2019). This report for strategic planning is
undertaken in context of Holiday Inn. Holiday Inn is a British-owned American brand of hotels
chain. It is a subsidiary company of InterContinental Hotels Group and is presently
headquartered at Denham, Buckinghamshire, UK. Many factors are analysed while deciding,
designing and implementing a strategy, such factors are discussed in this report. Different
performance metrics used to evaluate the performance of implementation of planning process are
also discussed.
Main Body
1. Appropriate factors to implement chosen strategy
Strategic planning is a process of giving a documented direction to the objectives and
targets of the company. It establishes a relationship between where a company is and where it
wants to reach on the basis of its mission, vision and values. Plans are made for both short and
long term goals. Long term strategic plans are made to take significant decision for long term
growth and operations of the company (Chandiok and Sharma, 2017). Most popular long term
strategic options are:
 Mergers and acquisitions – In mergers, two entities combine and subsequently form a
new legal entity under an agreed name. In acquisitions, one company purchases the other.
Acquired company's name and legal structure doesn't changes but it becomes the
subsidiary of the parent company which has acquired it.
 Joint Ventures – This is a type of strategic plan in which two or more parties enter into
an agreement to pool their resources for a specific purpose such as a new project. In it,
venture is a separate entity, distinct from all parties to the contract. Each of the party is
responsible for their share of costs and profit/loss agreed in the contract.
 Management Contracts – In this type of strategic plan, operational control of an
organisation is outsourced to another organisation for an agreed fees. It includes the likes
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of franchising and licensing methods (Dedeoğlu and Demirer, 2015). Contract can be
from any part of operations such as production, personnel management, accounting,
marketing, etc. or for all. This type of planning is done to obtain economies of scale.
 Franchising – This is a type of both of management contract as well as joint venture. In
it, franchisor grants permission to operate under its name to franchisee in exchange of
licensing fees. It helps franchisor expands its business without investing heavily into new
assets and helps franchisee in saving the cost of establishing a brand by taking advantage
of an established brand name.
Holiday Inn is a subsidiary of InterContinental Hotels Group (IHG). IHG manages its
hotels in three different ways – as a franchisor, a manager and on an owned and leased basis. It
operates its franchised models in two ways – some are owned and leased by IHG and some are
operated by franchisees.
Business Model Hotel
Ownership
IHG Capital
Intensity
Employees Brand ownership,
marketing and
distribution
Franchised Third party Low Third party IHG
Managed Third party Low IHG and third party IHG
Owned and leased IHG High IHG IHG
In 1954, pioneering a new business concept, franchising was adopted as a strategy to
expand the Holiday Inn brand (Our history, 2020). Holiday Inn is considered to be the first hotel
brand to franchise. It now has various brands in its portfolio such as Holiday Inn Hotel and
Suites, Holiday Inn Resort, Holiday Inn Select, Holiday Inn Garden Court and Holiday Inn
Express.
Critical analysis of the chosen method
These denotes all those variables which are critical to the success of the organisation.
These helps a company achieving its goals and targets. Most common CSFs in hospitality
industry are increasing cash flow, boosting sales, improving customer satisfaction, hiring right
staff, unique facilities, etc. (Nikolskaya and et.al., 2017)These factors can provide competitive
advantage to the company.
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