Business Development Strategies for Holiday Inn: A Case Study

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SMALL BUSINESS ENTERPRISE
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Table of Contents
Introduction:...............................................................................................................................3
Task 1:........................................................................................................................................3
1.1 A selected small business and its strengths and weaknesses...........................................3
1.2 An analysis of the business using measures of performance...........................................5
Task 2:........................................................................................................................................6
2.1 Suggestion with justification, proper actions to overcome the identified weaknesses in
the business............................................................................................................................6
2.2 The ways in which existing performance could be maintained and strengthened...........7
2.3 Suggestion with justification, new areas in which the business could be expanded........8
Task 3:........................................................................................................................................9
3.1 An assessment of existing business objectives and plans................................................9
3.2 Revised plans to incorporate proper changes.................................................................10
3.3 An action plan to implement the changes......................................................................10
Task 4:......................................................................................................................................11
4.1 The impact of the proposed changes on the business and its personnel........................11
4.2 Plan how the changes will be managed in the business.................................................11
4.3 Monitoring improvement in the performance of the business over a given timescale.. 12
Conclusion:..............................................................................................................................13
Reference:................................................................................................................................14
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Introduction:
A small and medium enterprise is one of the most evolving industries in the UK. Almost 4%
of the entire small and medium Enterprises belong to the hospitality sector. Holiday Inn a
well-renowned franchise hotel under the IHG group is the topic of discussion in this paper.
The report tries to enlighten the individual about the strength weakness type structure of a
hotel and how proper solution can be adopted to address the weaknesses. It also depicts the
process of proposing changes to the business plan, makes an assessment of it, delves deep
into the impact of changes on business and monitoring of improvement.
Task 1:
1.1 A selected small business and its strengths and weaknesses
The Holiday Inn is one of the reputed hotels based in the United Kingdom. The firm has a
long rooted operation in the UK and basically a subsidiary under the Intercontinental Hotel
Group with its headquarter in Denham, Buckinghamshire, The hotel was founded as a Motel
chain buy us and today it has grown as one of the largest hotel chains in the world has almost
1200 active hotels in Europe, Africa, Middle East etc. Recently, the Ooh hotel has launched a
new unit in London and its analysis of profile and performance are the theme as well as the
main area of discussion in this report.
The structure of the company is strictly hierarchical distributing the roles and responsibilities,
powers among different individuals based on different departments. The important
department that exists in the hotel is the front office, human resource, Finance, sales,
Logistics Food and beverages (Ma, 2017). The rule of the front office is to deal with the
customer services desk services and other services associated with reservation, house,
laundry etc. The major role of the finance department has to keep a record of the financial
data each year that helps in further analysis of the performance and growth of the firm. The
role of the Human Resource Department is to recruit proper employee according to the ability
to match the mission and vision of the company and serve the need of the customers with
proper skills. The food and beverage department looks into the matter is related to restaurant,
kitchen, bars, dining rooms and cleanup services of both kitchen and restaurant. The quality
and quantity of the product are also dependent upon this department along with the weather
services, food runner etc. The department of the Steel is responsible for selling different
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services such a spa, laundry, massage, food drinks etc with the help of advertisement. Lastly,
the Logistic department helps in the purchase, making arrangement of the supplies keep
check of the stocks and truck their daily inventor etc (Alon, Ni and Wang 2012).
The objectives of the Holiday Inn are derived from its rich mission and vision of providing
world class services to its potential customers. For that, the firm has come up with certain
attainable goals to ensure its vision to come true. Firstly the major objective is to take care of
each and every customer needs and provide them with best of the facilities to ensure your
seamless Customer services (Shamim, Cang, Yu and Li 2017). The take in the objective of
the firm is to ensure good quality of the product utilised so that the end result of the goods
and services are of top standard allowing to attract more customers and avoiding criticism.
The firm also aims for a higher rating in order to give a boost to its business operation and
existence. Lastly enhancing the scale or the volume of the business is an important target by
the hotel. More the other three objectives attend greater will be the volume anus growth of
the hotel service leading it towards achieving the best position among the world-class hotel.
One of the major strength of the holiday inn is its location that helps to attract the majority of
the population visiting the city. The hotel Never runs out of proper customer based on
demand rather in peak season it faces excess demand. The quality of the room services, suits
and its associated facilities, design infrastructure, customer service, services of the hotel staff
and waiters, quality of bar and kitchen, food and beverage and the wider availability of multi-
cuisine menu are its strong aspects (Wenkatha and Aruna 2016).
Despite the strong range of services delivered by the hotel, there exist few weaknesses
pulling it back from achieving ultimate growth. The primary revolves around the cost
associated with the industry. Good quality of services come at the cost which tends to get
higher leading to a huge amount of charges and prices for the hotel services. This limits the
access to a huge amount of customers. Structure of taxation regarding the services opted
within the hotel is the second major weakness reflected by the firm (Wilson, Murphy and
Fierro, 2012). The differences in the price mostly stem from differences in the charging of tax
leading to ambiguity and lack of transparency among customers. It is needless to say that the
good qualities of services are the outcome of diligent effort of the employees as well as a
good management system within the hotel. However, the firm fails to keep its employees
happy and satisfied with proper work-life balance and important incentives. This creates a
hole within the growth of the hotel. The hotel lacks expanded facilities such as refreshment,
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entertainment, casino, game zone etc. as compared to other hotels in the city (Alon, Ni and
Wang 2012). The size of the hotel is another issue. The crowd of international visitors, as
well as natives of London, has more demand than the hotel can make the supply of.
1.2 An analysis of the business using measures of performance
Key performance indicators of the Holiday Inn net room supply, signings, gross revenue and
growth in the fee revenue, revenue per available room or RevPAR growth, free cash flow,
profit margin etc. Growth in the underlying fees revenue refers to the group revenue
excluding the revenues from the lease, owned, managed hotels and liquidated damages. The
data has shown an increasing trend as the rate of growth was 4.7% in 2017 and reached 6.5%
in 2018. The indicator refers to the continuity of attractiveness of the business owners. Total
gross revenue from the hotel reference to the revenues achieved from total rooms of all the
franchised hotels, least, owned and managed units under the truth (Alon, Ni and Wang 2012).
Following the IHG report there Has been of growth in this performance indicator and the
total revenue was 24 billion dollars in the year 2015 and it reached 27.4 billion dollars in the
year 2018 indicating slow yet positive uprising trend. RevPar refers To the amount of
revenue available room. Dividing the total revenue derived from rooms by the total number
of rooms available night the rate of RevPar Is captured. The significance of this indicator is
the indication of growth for the increase of the brand value in the market based on the growth
in the value. From the IHG report, it has been noticed that the growth rate of RevPar has been
only 4.4 % in the year 2015 followed by 1.8% in 2016, 2.7 % in 2017 and 2.5% in 2018.
From the data, it can be said that the growth rate has declined over the period of time
(Shamim, Cang, Yu and Li 2017). There has been a significant increase in the growth rate in
the numbers of room supply, signings indicating enhance guest love.
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Task 2:
2.1 Suggestion with justification, proper actions to overcome the identified weaknesses
in the business
Figure: Strategic Model and targeted portfolio
(Source: Bae and Park 2016)
The above figure reflects the strategic model adopted by the Holiday Inn and its targeted
portfolio Keeping in mind the objectives of the firm and existing weakness it is important to
make use of the strategic model of the hotel (Tarí et al. 2014).
Building and leveraging scale requires proper identification of the problems and solving them
with the judicious implementation of strategies. It is quite clear in order to access more
customer base the hotel has to balance between its price of services as well as its quality. Too
high quality at higher prices will not be beneficial for the firm owing to its recency of
existence in the UK hotel industry and market. Application of cost management model would
help the small and medium scale of operation of the new unit of the hotel to get rid of the
high cost and pricing issues (Bae and Park 2016). In order to solve the varied taxation of
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different rooms, the firm needs to follow a unified tax structure for the ease of the customers
as well as its own record keeping.
Figure: Cost management model
(Source: Bae and Park 2016)
In order to deal with the dissatisfaction of the employees, it is important the firm keeps track
of the feedback of the employees and give focus to their needs. Availability of flexible shifts,
good condition of rooms and foods for the staffs, good pay scale, health safety and incentive
benefits given to them are important measures that the hotel can adapt to evoke a sense of
security. For bringing a sense of fulfilment among the employees their efforts need to be
rewarded with appreciation, incentives and also the employees should be included in the
decisions of the management (Suryawardani and Wiranatha, 2016).
2.2 The ways in which existing performance could be maintained and strengthened
From the IHG report, it is clear that the hotel has been experiencing increasing guest love and
signing, revenue per room indicating its growing market demand. It has been possible
because of the tremendously good quality of services the hotel has been able to manage to
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provide to its customer base within a much short period of the span. The good quality of
service entails better management and integration of all the departments and execution of
their respective functions. This further can be maintained and consolidated by the
management of the hotel. Transactional form of leadership executed by the managers of the
hotel will be of great help in this regard. It is important for the leaders to take its team
members along with him and bring out the best in them. For that understanding of an
individual's strength, weakness, the ability is important as that only helps in proper allocation
of resources and yields better productivity (Bae and Park 2016). The employees should be
given proper training required to keep up with the standard and also upgrade over time with
the changing needs. For those workshops, employee refreshment training etc should be made
available on a monthly basis.
The hotel can continue its quality of service by providing customised operational Customer
services. In this regard, the firm has to to make sure to each customer his value and
importance of experience derived by the hotel and its services. The improvement of the front
desk services, improving booking and reservation prospect, provision of important
information, attending the individual taste and preference and meeting them with proper
services can be of major help (Alberti, 2014). In order to keep up the quality of the room,
kitchen, bar, laundry, cleanup services etc the firm needs to make the proper allocation of
financial resources and a good amount of investment time to time. For that, the hotel can go
for partnership, for sponsorship to acquire capital.
2.3 Suggestion with justification, new areas in which the business could be expanded.
Their lies several options for the hotel in order to expand its business in the market of UK.
The expanded business of the Holiday Inn well depends on its ability to Cater to the range of
services in a different department than the Hotel services such as dining, beverage, food,
lodging etc. The hotel can focus on installing a system that would generate recreational
refreshment or leisure activities within the hotel premise. For example, the hotel may provide
facilities for playing basketball, gyming, swimming etc. The hotel can make provision for
formal and informal occasions observed by families, corporate group, other companies such
as ting, workshop, annual shows, marriages, birthday celebration and so on (Alon, Ni and
Wang 2012). This kind of expansion of provision helps the hotel to generate revenue
throughout the year. The hotel can also provide franchising services to start-ups, new
growing small businesses, cafes, clubs, pub etc.
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Task 3:
3.1 An assessment of existing business objectives and plans
The Strategies adopted by the holiday in order to bring growth art building and leverage
scale, Strengthening the Loyalty program, Optimisation of the brand portfolio for the owners
as well as the Guests and also a wall the position of the owner over time. All of these can be
achieved when the Hotel is able to provide good quality of services and that further is
attracting more customers with their increasing faith and brand value with the hotel. The
assessment of the business plan can help the hotel to ascertain its business definition and
strategies and also allow it to make provision of changes and improvement. Important tools
for assessment can be the analysis of the financial and economic performance exerted by the
hotel, study the Market Positioning and stock market indices, data analysis etc (Wenkatha and
Aruna 2016). Assessment of the business plan should also include validity, reliability in
terms of other competitors in the market. For that market-based analysis, analysis of the
internal and external factors through tools like swot, pestle etc are important in this regard.
Business plan of Holiday Inn:
Type of business: Hotel, motel, in services
Mission: To grow into large scale world class hotel
Growth strategy: To improve the quality of all the associated departments through need-based
performance, to train the employees adequately, to be able to give services at an affordable
price without losing competitive edge from the other hotels in the market of UK
Competition Strategy: Quality over quantity has been an important directive for the hotel to
beat the market pressure (Dibb and Simkin, 2013).
Target market: Mostly the elites, business professionals and stable sound citizens,
international visitors with decent budgets.
Marketing: Advertisement, event planning, exciting deals and offers, cashback facilities etc
have been important to promote the brand name of the hotel attracting more customers.
Finances: Improving its capital generation as well as accumulation, receive more sponsors
and over time provide franchising facilities (Shamim et al. 2017).
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3.2 Revised plans to incorporate proper changes
Suggestion for improvement:
Type of business: needs to expand services to casino, banquets, games, sports, luxurious
events etc.
Growth strategy: Manage cost and charge prices affordable for a maximum of the population,
flexibility of taxation, personalised customer service
Competition Strategy: Focus on expanding the quantity of the services along with quality
Target market: citizens and visitors with moderate income (Fraj, Matute and Melero, 2015)
Finances: provide franchising facilities.
3.3 An action plan to implement the changes
Action Plan help in recording the important steps to be taken in order to materialize the
proposal of changes within the business. It is the technical procedure of maintaining record
while giving a tabular form of information regarding the plan, progress, priority, features and
associated time.
ACTION RESPONSIBLE PRIORITY STATUS START END
Meetings for
the
Expansion of
services
Management High Complete 20/04/2018 20/4/2018
Plans of
Accumulatio
n of capital
Managers,
Customers,
employees,
market
Medium Complete 20/04/2018 20/4/2018
The
personalized
customer
services plan
Employees High Complete 10/04/2018 10/05/2018
Market
research for
target market
management Medium Complete 10/04/2018 20/05/2018
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expansion
Task 4:
4.1 The impact of the proposed changes on the business and its personnel
Changes proposed for Holiday Inn would definitely be beneficial for its growth and
development of market positioning as it would be able to gain the faith of more and more
customers. The changes are expected to create upward pressure in the market demand
favouring the revenue growth of the hotel (Alon, Ni and Wang 2012). The expansion of
business in diversified line can help it to acquire extension in the customer base within the
locality along with attracting visitors from all around the country in the world. The
competitive strategy of enhancing quantity that means the supply of more spaces, rooms
within an affordable price range and exciting Deals And offers will actually be beneficial for
huge revenue generation of the hotel (Jell-Ojobor and Windsperger, 2014). This will also
increase the profit margin has large scale demand will create an excess of revenue over the
cost.
4.2 Plan how the changes will be managed in the business
Application of the ADKAR model is beneficial in the context of management of the business.
Management of the changes proposed for the hotel can be ascertained by active reviewing,
evaluating, Revising, continuously improving, assessing the impact and so on. The hotel
needs to match its changed outcome with the potential of expected planning. Role of
communication is of huge importance in this context. Another important necessary
component for asserting Change management is resistance to the change plan (Ma, 2017). It
is important so that the impact of the change proposal can be evaluated before moving to the
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other strategies. Monitoring the risk associated which Change management project
investment, budget allocation is important (O’Neill, Dev and Hiromi, 2013).
4.3 Monitoring improvement in the performance of the business over a given timescale.
To track the performance of the key indicators in the hotel business and assess its growth due
to changes proposed, a time scale of 5 months has been taken from June 2018 to October
2018.
Tasks 1st month 2nd month 3rd month 4th month 5th month
Increase in
the supply of
no of rooms
Increase in
the signings
Total growth
in gross
revenue
Global
RevPAR
Growth
Guest Love
Growth in
underlying
fees revenue
Increase
Cashflow
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