Hospitality Business Strategy

This report discusses the impact of macro environment on a business firm, specifically focusing on Premier Inn, a British hotel chain. It analyzes the political, economic, social, technological, environmental, and legal factors affecting the company. The report also evaluates the internal environment and capabilities of Premier Inn using SWOT and VRIO analysis. Furthermore, it examines the competitive forces in the hospitality industry using Porter's five forces analysis. Finally, the report suggests strategic planning options for Premier Inn using the Ansoff Matrix.

Hospitality Business Strategy

Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Analyse the impact and influence of the macro environment over business firm.......................1
Domination of the internal environment and capabilities of company........................................2
Evaluation of the competitive forces of organisation..................................................................5
Application of range of concepts and models, interpret and frame strategic planning...............6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
A business strategy is set of activities and competitive moves which company utilises for
getting attention consumers, strengthening execution, attaining business organisation’s aims and
compete successfully. It is outlines from which business should be carried for expected ends
(Kandampully, Zhang and Jaakkola, 2018). It is master plan which administration utilise for
securing rivalry position in marketplace, carrying operations and accomplishing goal and
objectives of company. The given report is based on Premier Inn which is a British Hotel chain
and the UK’s largest hotel brand. This organisation was incorporated in 1987 by Whitbread and
is headquartered in Dunstable, England. The document will be defining about influence of macro
environment, internal environment and capabilities of company. Premier Inn has applied porter
five force models for measuring competitive forces and strategies for developing benefits and
market position. Different theories, models, concepts and devise for strategic planning for
Premier.
MAIN BODY
Analyse the impact and influence of the macro environment over business firm
PESTEL analysis
It is a tool and technique that is used and applied by a venture to determine the macro
environmental components that influence the business venture. The explanation of this
framework in reference to Premier Inn is as under:
Political- This factor consider diverse aspects like government policy, political stability or
instability, taxation policy, foreign trade, trade restrictions and many more. In context of Premier
Inn, government policy is a main influence factor that instantly and indirectly impacts the
business of company. Brexit is the main factor cause of changes is occurred in government
policies that affect the business of respective organisation in unfavourable form.
Economical- It consider different components like economic growth, currency rate,
exchange rate, interest rate, employment or unemployment rate, economic recession, inflation
and deflation etc. Brexit is a factor that influences the business of respective venture in negative
firm (Revathi and Aithal, 2018). Due to this, inflation arise and cost of commodities are
increased, cause of which the administration of the venture also make change in its prices in term
of increasing them.
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Social- This factor plays an important role in the growth and development of the company.
it consist several elements like culture, beliefs, values, needs, demands, taste and preference,
livening standards, income distribution and different demographic factors. Premier Inn is
concentrated on consumer fulfilment and maintaining revitalizing there business strategy with
modifying social values and target audiences preferences (Li and Singal, 2019). They provide to
their consumer a 100% money back guarantee of a good quality room, comfortable surroundings
and friendly services. This favourably affects the business of the company and assist in
improving brand image.
Technological- This component consider different elements like technical advancement,
technical innovation, artificial intelligence, research and development and many more. In
Premier Inn, this factor influences the business of the company in positive and negative manner.
The respective firm is also maintaining a good look and interactive website in this context.
Online reservation facilitation services are also assisting in retaining consumer as in current era
people prefer online booking. Mobile application also plays a crucial role in term of promotion
and offering better services to target audiences.
Environmental- The care of atmosphere and social accountability are considered as the
centre phase lf consumer’s preferences and expectations. In current era, target audiences are
more vigilant and normally favour the companies that care about environment. This factor
consist climate, weather, environmental laws and many more. The strong prominence on CSR is
one of the main core competencies of Premier Inn. The respective firm has also launched Good
Together program which aims at CO2 reduction. This is not fit the government proposal but fit
the society’s environmental demands.
Legal- It considers different laws and legislations that are formulated and developed by the
national authorities for the effective running of business organisation. It includes employment
act, health and safety law, consumer protection act and many others. To remove legal
complexities and keep high standard, the administration of Premier Inn have framed a
Responsible Sourcing Policy that explains the minimum standards and principles of company
that Premier Inn expect from suppliers, contractors and business partners (Bratton and Watson,
2018). By considering equality, heath and consumer protection laws the venture provide equal
pay, better growth option, the firm provide security to employees and securing information of
customer provide protection to them.
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Domination of the internal environment and capabilities of company
SWOT Analysis
It is a strategic tool and technique that is used and implement by a business firm to
determine the internal environment of the company in term of determining strengths,
weaknesses, growth option and risk (Metaxas, Chatzoglou and Koulouriotis, 2019). The
description of this framework in context of Premier Inn is defined as under:
Strengths
 Strong business base as Whitbread Business Group is doing business from last to
centuries. Largest and fastest developing brand in UK with approx 590 budget hotels and
more than 43000 rooms.
 Exploring franchising opportunities for development of business at local and global
horizons. The company use low pricing strategy that help in getting attention of number
of customers and increasing sales as well customer base of the firm.
Weaknesses
 Premier Inn has its hotels in few nations so the limited global presence is a weakness of
firm.
 There are number of hospitality organisations which are operating their business in
hospital sector and generating high level competition for respective firm that means small
margins.
Opportunities
 The administration of firm can get a growth option by investing in digital marketing and
building brand value by customer experience.
 By expanding business in those nations where it is not exist by using option of joint
venture and partnership etc.
Threats
 Currently, entire world is facing threat of COVID19 that affect the business of company
generating risk of health and safety issues (Altin and et. al., 2018). Decline in tourism due
to this pandemic another disaster as well as terror activities.
 High level completion, economic recession and bad reputation within few target
audiences are some other risk that influences the business of respective firm in negative
form.
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VRIO Analysis
It is a strategic tool to find out the internal assets within the venture and capabilities that
provided long term competitive benefits. It includes four factors like value, rarity, inimitability
and organisation (Akindayomi, Amin and Hassan, 2020). Premier Inn implements this concept to
determine the internal resources and identify whether these resources survived for long term in a
competitive environment.
Resources Valuable Rare Inimitable Organisable
Brand image Yes No No No Competitive
disadvantage
Technical
capability
Yes No No No Unused parity
Financial
resources
Yes Yes Yes No Competitive
sustainable
Human
resource
Yes Yes Yes Yes Temporary
parity
Valuable- The brand image of Premier Inn is very valuable in the rivalry market as it
products and services are familiar to its target markets. The technology that is utilised by the firm
is valuable as it utilise innovative features to design their commodities and is fiscal resources is
valuable as it assist in investing in to external growth option. The financial resources of the
company also valuable because it help in operating the business of venture in effective manner.
Human resource of the respective organisation also effective valuable as employee uses their
efforts and effectiveness in business operations.
Rare- Technical capability of Premier Inn is not rare as the company use technology in
its promotion activity and customer services that can be used by other business firm in easy
manner. Financial resources of the enterprise are very rare as it has strong financial resource and
only few firms can possessed it (Okumus and et. al., 2019). Human resource of the company is
also rare because each person has its own skills and capabilities.
Inimitable- Premier Inn financial resource is highly costly that is hard to imitate. This
will restrict the new entrants and organisations obtain higher profits. Technology, which are used
by the administration in promotion and offering customer services are imitate as there are several
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other ventures in a same sector. Human resource of the firm also has different skills and
knowledge that is not easy to copy by others.
Organisable- The fiscal assets of organisation are managed to capture the value as the firm
utilise resources strategically and invest on right place this will generate growth option and
minimising treats (Boella and Goss-Turner, 2019). By conducting training and development
sessions, the human resource of Premier Inn can be administrating by the administration of the
venture.
Evaluation of the competitive forces of organisation
Porter’s five forces analysis
This framework is used by a company to determine the competition in a specific sector
within the organisation operating its business. The concept of Five force analysis is developed by
Michael Porter in 1979 to acknowledge the five competitive forces that influence the business of
an industry. This framework generally utilised by the firm to find out a business sector’s
structure to analyse corporate strategy. The explanation of this concept in reference to Premier
Inn is defined as below:
Threats of new entrants- The hotel industry internationally characterised by high capital
costs i.e. the total cost that is needed to project a commercially operable status. To set up a
business in hospitality industry, there are requirement of large monetary value and there are
several laws and legislation of national authority that are compulsory to follow regarding safety
and security of customers and many more. So it is not easy to establish a business in this sector
and gaining trust of target audiences. So the level of risk is low in context of threats of new
entrants towards Premier Inn.
Bargaining power of suppliers- The power of providers over hospitality sector is
relatively low. The respective industry is only subjected to the power of the labour, trained staff
or employees and the industry has a huge need of them. Hotels like Premier Inn are not subjected
to the bargaining power of suppliers and it has low and indirect force of their rivalry
(Radjenovic, 2018). For a sustainable business strategy over the long term a hotel will have to
keep a permanent cosy benefit over possible rivals in higher strategic groups.
Bargaining power of buyers- When the focus of the purchasers is high than the market
players then the business sector is subjected to the high power of buyers. In hospitality sector,
certain groups of purchasers exercise power over the business when the buying of hotel rooms in
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bilk is needed. These groups consist domestic and international airlines, tour operator and
convention organisers and participants. When business travellers are disturbed the segregation
becomes important and the hotels are under pressure to maintain their brand uniqueness.
Threats of substitutes- This force affect the business of hospitality sector firms like
Premier inn less and the threat of the substitutes is relatively low (Hutchinson, 2018). Individual
looking for cheap accommodation that can easily opt to live in hotels, motels and with relatives
and Premier Inn use low pricing strategy cause of which this threat less affect the business of
firm. This market is price sensitive and the hotel’s target audience becomes the cost conscious
individual. However, in case of accommodating, large group of people like travelling groups and
business travellers. The hotel does not face a threat of substitute however it faces rivalry of
separation.
Rivalry among existing competitors- The competition in hospitality sector is strong as the
cost of commodities segregate and switching costs is low. The business development needed is
greater than the rate at which the business is developing. Premier Inn s company where there is
high capital costs, the pressure to sell the capacity by price cutting is high and the competition
becomes intense. There are number of hotels like Holiday Inn, Marriott, InterContinental and
many more that are creating high level of rivalry towards Premier Inn.
Application of range of concepts and models, interpret and frame strategic planning
To sustain in competitive market, environmental analysis is essential for each firm so that it
can operate the business in right direction and accomplish its set business objective in set time
duration. Some of the strategic direction accessible for Premier Inn is described under by using
Ansoff Matrix framework:
Ansoff Matrix
It is a strategic planning tool that is implemented by companies to offer directions in
order to support senior, executives and others for future development. There are four strategic
options within this model, they are as:
Market penetration- It is a growth strategy that can be implemented to maximise the sales
of the company. In context of Premier Inn, the management can adopt this growth strategy
because there is less risk as existing services and products are launched in existing market with
the purpose of economic growth of the firm. (Melissen and Sauer, 2018) For this, venture can
make innovation in promotional channels and making change in pricing strategies.
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Product development- It is another strategic option that can be adopt the administration of
Premier Inn with the motive of enhancing productivity and improving brand image. This
development option requires for the growth of new competencies and develops new products and
services in market, by performing research and development to manufacture new commodities
and services to launch in current market (Han, Lee and Kim, 2018). This strategy is risky more
than market penetration as new goods and services are launched in to existing market so it is not
sure that they are liked by customers of new market or able to fulfil their needs.
Market development- In this growth option, the firm can accomplish development by
entering in a new market with its current services and products. In Premier Inn, the company can
expand its business in developing nations like China, Asia and Africa etc so that it can maximise
its sales by offering its services in that market according to need and requirements of the target
audiences of that nations. This strategy is risky as the business expands in new market so it is
difficult to determine about the demand of consumers that services will offer fulfilment to them.
Diversification- This growth and development strategic option is highly risky because by
adopting this option, the firm can launch its new goods and services in to new market. so it is not
clear that the new services of Premier Inn will liked by the customer of new market. This
strategic option can be adopt by the firm to increase sales and profits, maximise customer base
and enhance productivity of the company.
From the above content, it can be analysed that market development is an effective option of
growth that can be adopt by the management of Premier Inn. With the assistance of this option,
the firm can expand its business in that nation where it is not operating that will assist in
development of the venture.
Strategic management plan
It refers to a written document that can be implement and utilised by the firm for
communicating and its assist in setting aim, focus energy, setting priorities and many more. It is
beneficial for assuring that staff is working effectively for accomplishing the aims, goals and
objectives (Prebensen, Chen and Uysal, 2018). These plan of actions, objectives and tactics in
context of strategic management plan are as following:
Strategies
It indicates to high level plan that are framed by the administration division of the firm
for accomplish the goals and aims of the business venture. When this firm expand its business in
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new market with its existing services than it should consider some plan of actions which are as
under:
STP- It mentions to a broad structure that abridges and summarises the activity of market
segmentation (Han, Lee and Kim, 2018). This strategy is beneficial for Premier Inn as each
factor of STP assist the organisation in defining the profit measures can be accepted by
respective firm.
Segmentation- It indicates to segregate market as per the demographics such as
customer’s age, gender, income, profession, education, living standards etc, geographic by nation
and state and psycho-graphically such as attitude, values, risk and many more. When the
company will make expansion in new market then it can do segmentation on the basis of cost
conscious group.
Targeting- The firm can target all income group of people when it will expand its
business in to new market. The management will target this income group of individual as the
venture use low pricing strategy.
Positioning- The company deals in hospitality sector and providing accommodating
services to its target audiences so the firm need to make focus on its target audiences and
choices. Premier Inn already has a good position in market but during business expansion in to
new market, the company will use effective promotion tools and good technology in customer
services.
Objective- The SMART objective o Premier Inn is under:
 To maximise the sales of the company by 10% within 1 year by offering better
accommodating services.
 To increase 5% profit margins of the business venture in upcoming 10 months by
expanding business in to new market.
Tactics- It refers to those plan and tools that are used to resolve short term issues. In Premier
Inn, the administration can use cash management tactics that assist in designing good budget
when the firm will make expansion in its business in new market (Murphy and et. al., 2018). By
making innovation in technology regarding customer services, the organisation can also offer
effective customer services in new market.
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CONCLUSION
This has been summarised from the above mentioned information that business strategies
are those plan of actions that are used and implement by the management of a business form to
make development or growth as well as effective running of the venture. To survive in market
till long term, the company should use PESTEL, SWOT and VRIO analysis that assist in
offering information about external environment and capabilities of organisation. To determine
the level of competition in respective business industry, the enterprise can use Porter’s five force
model and Ansoff matrix also assist by offering strategic growth option. By adopting an effective
strategic option, the firm can devise strategic planning for development.
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REFERENCES
Books & Journal
Kandampully, J., Zhang, T.C. and Jaakkola, E., 2018. Customer experience management in
hospitality. International Journal of Contemporary Hospitality Management.
Revathi, R. and Aithal, P.S., 2018. Business Strategy of Top Indian Company: L&T
InfoTech. International Journal of Case Studies in Business, IT, and Education (IJCSBE), 2(1),
pp.64-89.
Li, Y. and Singal, M., 2019. Capital structure in the hospitality industry: The role of the asset-
light and fee-oriented strategy. Tourism Management, 70, pp.124-133.
Bratton, J. and Watson, S., 2018. Talent management, emotional labour and the role of line
managers in the Scottish hospitality industry. Worldwide Hospitality and Tourism Themes.
Metaxas, I.N., Chatzoglou, P.D. and Koulouriotis, D.E., 2019. Proposing a new modus operandi
for sustainable business excellence: the case of Greek hospitality industry. Total Quality
Management & Business Excellence, 30(5-6), pp.499-524.
Altin, M. and et. al., 2018. Performance measurement and management research in the
hospitality and tourism industry. International Journal of Contemporary Hospitality
Management.
Akindayomi, A., Amin, M.R. and Hassan, N., 2020. Business Strategy and CEO Compensation:
Evidence From the Hospitality and Tourism Industry. Available at SSRN 3539942.
Okumus, F. and et. al., 2019. Strategic management for hospitality and tourism. Routledge.
Boella, M.J. and Goss-Turner, S., 2019. Human resource management in the hospitality
industry: A guide to best practice. Routledge.
Radjenovic, M., 2018. THE QUALITY OF HUMAN RESOURCES IN TOURISM AND
HOSPITALITY INDUSTRY IN MONTENEGRO. Transformations in Business &
Economics, 17(2).
Murphy, K., Torres, E., Ingram, W. and Hutchinson, J., 2018. A review of high performance
work practices (HPWPs) literature and recommendations for future research in the hospitality
industry. International Journal of Contemporary Hospitality Management.
Melissen, F. and Sauer, L., 2018. Improving sustainability in the hospitality industry. Routledge.
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Han, H., Lee, M.J. and Kim, W., 2018. Antecedents of green loyalty in the cruise industry:
Sustainable development and environmental management. Business Strategy and the
Environment, 27(3), pp.323-335.
Prebensen, N.K., Chen, J.S. and Uysal, M. eds., 2018. Creating experience value in tourism.
Cabi.
Han, H., Lee, M.J. and Kim, W., 2018. Promoting towel reuse behaviour in guests: A water
conservation management and environmental policy in the hotel industry. Business Strategy and
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Online
Strategic analysis of Premier Inn. 2020. [Online]. Available Through:
<https://writepass.com/journal/2012/12/strategic-analysis-swot-pestel-porter-of-
premier-inn-whitbread-plc/>.
Premier Inn SWOT Analysis. 2020. [Online]. Available Through:
<https://www.mbaskool.com/brandguide/tourism-and-hospitality/14052-premier-inn.html>.
Porter’s Five Force Model of Hotel industry. 2020. [Online]. Available Through:
<https://www.porteranalysis.com/porters-five-forces-model-of-hotel-industry/>.
Ansoff Matrix. 2020. [Online]. Available Through: <
https://www.tutor2u.net/business/reference/ansoffs-matrix>.
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