International Hospitality Management: IHG Group's Strategic Plan

This report provides a comprehensive analysis of the IHG Group within the international hospitality sector. It begins with an overview of the hospitality sector and the IHG Group, followed by a detailed SWOT analysis highlighting the company's strengths, weaknesses, opportunities, and threats. The report then focuses on the emerging market, identifying key trends and strategic implementations. It also includes a PEST analysis of the emerging market and a discussion on the justification and practical application of the proposed strategy. The report concludes with a summary of the findings and recommendations for the IHG Group's future growth and success in the global hospitality market.

INTERNATIONAL
HOSPITALITY
MANAGEMENT

Table of Contents
Background of Hospitality sector....................................................................................................3
Overview of IHG group...................................................................................................................3
SWOT analysis of the IHG group...................................................................................................4
Introduction to emerging market.....................................................................................................6
PEST of emerging market...............................................................................................................9
Strategic implementation.................................................................................................................9
Justification of the strategy............................................................................................................10
Practical application of the strategy...............................................................................................11
Conclusion.....................................................................................................................................11
REFERENCES..............................................................................................................................13

Background of Hospitality sector
Hospitality segment is seen as ancient as the humanity because it is been continuing since
many years and is growing with success. From earliest caves to the inns, staging posts, resorts
and the motels, this sector is been thriving with like 187000 hotels across the world. In ancient
times, Roe & Greece, bathrooms & spas often facilitate sleeping facilities and was counted as
population attractions for the ones who are been seeking the relaxation & rest. A bordello in the
classical Pompeii is been counted as first hospitality development which charged for the lodging.
In Japan, first 2 hotels in the history were been built in early 700s. After the digital age, software
organizations started developing the new tools for hospitality sector which are been still evolving
at present, involving the customer databases & reservation system, housekeeping & room
management, preferences of customers and loyalty programs (Gardini, Ottenbacher and
Schuckert, eds., 2020). In 21st century, global company’s hotel chain merges and acquires one
another. InterContinental group of hotel owned Crowne Plaza & Holiday Inn, Accor Hotels
owned brands Raffles, Novotel & Sofitel and Marriot owned the Renaissance. In the year 2009,
AirBnB was founded which poses a challenge to hotel industry through attracting tourist &
capturing market share. The hotels responded with the creative marketing approach involving the
social media campaigns &personalized experience of customers creates by way of the smart
devices. The Waldorf Astoria in the New York is been sold to Chinese Anbang group of
Insurance for $1.95 billion, which is the most ever paid for the Hotel. The world’s first hotel in
Pahang, Malaysia expanded for becoming as biggest hotel globally with approx 7351 rooms.
Overview of IHG group
IHG group is one of global leading hotel firms and their respective principal objective is
for providing real hospitality service for all by way of recognizing & respecting the people along
with this creating unique and great experience of guest. The group offers the hotel brands which
are aimed at wide audience & is been loved by large number of the people across the globe. By
their worldwide reach, the group ensures that their respective service delivery extends to their
type of people, local communities and environment around the world (IHG about us, 2020). In
today’s highly competitive market, the group is been placed well for accelerating growth of their

main business and maximizing returns on the new initiatives like addition of the new brands
towards a portfolio, maintaining expansion related programs of the Crowne Plaza hotel operating
in China and the new locations or areas in developing countries to involve Kuala Lumpur,
Chendu, Bali and EMEAA geographic region. It is seen as one of the growing hotel companies
with approx 4 Lac colleagues who are been working around in greater than 100 countries for the
purpose of delivering true hospitality for all. The asset light strategy of the company helps the
group in growing their business at the time of generating maximum returns so that it could
achieve a top position within hospitality industry or market (Bergs and Lub, 2020). Worldwide
hotel sector is been driven by the economic growth & increasing trend for international &
domestic travel. The purpose & culture of the group is to focus on people’s expectations and
demand while they visit the hotel so that they could be able develop healthy relationship with the
tourists or guest by making them satisfied and meeting to their expectation in effective and
efficient manner.
SWOT analysis of the IHG group
Strengths
Profitability- It has been reflected that in the year 2017, the sales of the group have been
increased by $68 million that is 4% to $1784 million. In year 2017, hotel delivered the strong
underlying profitable growth & opened their highest number of the hotel since the year 2009,
including most ever with AMEA as well as Greater China.
Well-known global presence-The IHG group operate within around 100 countries and is seen as
one of leading companies within its sector. The major brands of this group that are operating
across the globe are Inter Continental, Hotel Indigo, Holiday Inn, Kimpton, Candlewood suite
hotel etc. Further, this group is been well-known for having large number of the rooms on a
global basis.
Effective recruiting strategies-The group had established the strong recruitment strategy where it
got rid of HR generalist technique & re-allocated recruitment function towards functional &
operating departments (Bauer, 2020). For instance- Payroll function was been distributed to the

payroll departments & supervisory level recruitment were handed back to the departments and
thus eliminating unnecessary delays & bureaucracy of the recruitment.
Proper employee engagement- as the company is having effective recruitment strategies and
because of this reason the company is having effective employee engagement. This is
particularly when the recruitment strategies are good and effective then this attracts the
employees to be engaged with the company and the operations of the company to a great extent
(Logue, 2020). Thus, this will motivate the employees to work in effective and efficient manner
and will improve the performance of the company and the employees as well.
Weaknesses
Weak Information technology security- Around 1200 IHG hotels was been infected with the
stealing of credit card malware & information of guest like name of cardholder, internal
verification code, card number etc. was stolen. This is the major weakness as the consumer and
the guest cannot trust the company and this has a great impact over the goodwill of the company.
Impact on goodwill- this is also a major weakness of the company as because of the low
information technology security the company is not in a position to implement and upgrade their
technologies. Thus, this will decrease the working efficiency of the company and will have a
negative impact over the working of the company.
IGH reward club- The loyalty program of the group like Holiday Inn club & IGH reward club
had drawn several negative reviews of customers. It was been claimed by most of the customers
that points promised were not been always given to customers. Most f the customers were told
that the points have been expired at the time when they tried in redeeming them.
Opportunities
New geographic market
The group can seek for partnership in the India with the SAMHI group which would help the
company to rebrand around 2000 rooms to the Holiday Inn hotel. The IHG group in China region
is been planning for the 300 new hotels in the China within next 5 years from 2018-2023. This
could be seen as the great opportunity for the group to expand its market with low investment in

the other countries where the people are interested in travelling the world like tourist places
where the demand for the hotel business is extremely increasing (Cunill and et.al., 2019). This
opportunity will also help the company in creating its worldwide presence and this also leads to
increase in its profitability and revenue.
Threats
Competitors
The IHG Company faces intense competition in this segment from Marriott, Accor, Wyndham
etc. and more competition from Hyatt, Hilton hotel and choice of the groups (Lin and
Ottenbacher, 2020).
Hotel recruitment within China
With large expansion in the China, IHG has faced with major challenges as only the half of the
graduates in the China selects hospitality sector for working & there present a skill and the
training gap in the front-desk & restaurant staff along with the key executive position in field of
HR, sales and finance. This poses a threat to the company as it there is a lack of the skilled
training staff in field of finance or sales.
Introduction to emerging market
The most suitable and right emerging market for IHG group is considered as Tourism industry
and the global hotel. There are several trends which are been taking place with respect to global
hotel & tourism segment within the developed market. This includes customer service, booking
for more of profitable business, customer service, real time related marketing and innovative
technology.
Customer service-Customer service is very important in tourism and hospitality industry
because the main objective of customers is to receive great consumer service and facilities at
adequate prices (García-Almeida, Schmidt and von Freyberg, 2020). Therefore, it plays an
important role while entering into the tourism market and for this purpose the employees must be

given proper training and development regarding offering of excellent customer service through
identifying their needs and wants, taste and preferences etc. Also, it is important to receive the
feedback from consumers and implement it in the future so that the target audience do not face
any problem in the near future.
Booking more profits- The global tourism industry contributes towards 10% of the world’s
GDP which means that 1 out of 10 people work in the tourism industry it may include being in a
hotel, travel company, guide, tour operator etc (Morgan and Pritchard, 2019). Thus, it has
become one of the most profitable and famous industries in the world and is expected to grow
more in the near future. Therefore, it is an adequate industry to enter and the IHG group can
make huge profits if it provides good services to its consumers. However, it is imperative to use
latest technology and follow trends in the tourism industry as it keeps on changing rapidly. This
could help the company in maximizing its revenue effectively and efficiently.
Innovative techniques- There are several innovative techniques used in the tourism industry. It
may include the implementation of AI technology, Chatbots, IOT etc. With the help of AI
technology, the software identifies the perfect travel destination and hotel room for the tourists
on the basis of their budget, reason for travel, and other preferences. Also, Chatbots help in
providing 24/7 assistance to its consumers and take care of their safety and security. Moreover,
with the help of latest innovation in the tourism industry the safety concerns of consumers have
reduced as many applications like Google maps, Apple maps help consumers in exploring travel
destinations according to their choice and provides assistance as well in case the tourists feel lost
in an unknown destination. Furthermore, applications like Citizen alert travelers by notifying
them about the crime that happened in the locality of the city they are in which refrains them
from visiting there.
Real marketing-In terms of marketing of tourism and hospitality industry, it is mainly done
through traditional advertising through TV, Newspaper and radio but with the implementation of
latest trends the companies have started promoting their services through digital marketing.
Under this approach the promotional activities are done through internet platforms like social
media marketing, E-mail marketing and blog writing and according to these techniques
consumers get attracted towards the services and thus end up planning the trips (Gursoy, 2019).
Also, there are various social media campaigns and contests run by these organizations which

garners the attention of the audience. The hospitality companies also offer discounts and offers
like 50% off on hotel rooms, free sight-seeing opportunity etc. Along with it the transportation
companies like airlines also offer discounts on the air fare and thus influences the consumers in
buying their products/services. These are the latest marketing techniques used by the companies
and lastly with the increasing use of photo sharing social media platforms like Instagram,
Snapchat and Facebook, there has been a huge rise in the tourism industry especially among the
millennials as they are the active users on such platforms.
Emerging market
There has seen as expansion in emerging tourism and the global hotel market because of the
increase in the connectivity across the world where the people are been travelling towards many
of the underserved regions. This may be several African countries and the places in the Southeast
Asia under which although there present an emergence of the business and economies. It has
been depicted that emerging market could be considered to have greater level of volatility. There
is a requirement for investing the money and time for the purpose of entering such markets and
also there present a significant level of the risk attached but with an insight of landscape for
domestic business, developing traditions and authentic interest in individual and cultural aspect
along with the mitigation of the risk. Africa is counted as one of emerging market for worldwide
hotel and the tourism industry. Moreover, in Africa the most excited emerging market is
considered as Nigeria. The main reason for this is they are having stable government, having
economic stability from the oil revenue and also having highly educated elite business
enterprises that are seen as very large. There are increased number of the people, who travel to
the Nigeria for conducting the business across the globe, although it is not the tourism economy,
increasing number of the business travelers showed by economy which is strong and growing
assist in creating some of the interesting tourist places (Pizam and Tasci, 2019). Currently, there
present very limited hotels in serving modern business travelers for catering to needs of modern
visitors and there are almost no any hotels which are seen as combination of the great
restaurants, spas and shopping. Morocco is counted as other emerging market in global
hospitality business and the tourism sector is offering exciting scope. Comparing to Nigeria,
place has strong establishments as tourist destination for sometime & development in past
decade did an elevation of market to extravagance standard. The other fastest growing marking

in the Latin America is seen as Colombia. There is balancing of modern centers and resort
destinations in the Colombia and also the topography of Colombia is facilitating huge scope with
the growing development relating to pacific and Caribbean coasts along with better security,
steadiness and natural environment which contains diversity. With an increase in the tourism,
There would be restaurants, hotel and entertainment which would be following.
PEST of emerging market
Political factors: There are several factors affecting the tourism industry like tax incentives,
stable governments and other economic reforms. It is important for the companies to analyze the
tax rates and government policies before entering into the new market otherwise it could cause
several problems for the travel and hospitality company in the near future.
Economic factors: It includes the inflation level, global GDP, purchasing power of consumers,
scale of tourism industry etc. Other factors of consideration include interest rates, recession,
exchange rates, demand/supply etc.
Social factors: The IHG group needs to analyze the culture, traditions and customs of the people
in the new country before offering their services. It is important to identify the local culture,
income level of people, level of education etc. Sensitive factors like racism, violence, religion
must be analyzed and interpreted adequately by the companies. These factors could help the
organization in offering products/services to its target consumers in a much better manner
(PESTLE analysis of UK, 2017).
Technological factors- It relates to the mechanization, increment, technological changes and
activities relating to design & research. Such attributes significantly affect the areas such as
limited effective production level, costs, quality and delegating the decisions for hotel & tourism
segment in emerging market.
Strategic implementation
Porter’s generic strategy

In context of Hotel’s strategic growth options for IHG group, it would be adopting or
implementing this type of strategy for gaining entry in new market, trying for seeking
development and ling run maintenance of their market share. There are majorly 3 types of the
strategic areas with this regard that includes cost leadership, focus and differentiation strategy.
The cost leadership strategy provides for being a low cost hotel producer for particular
level of quantity. IHG group would be facilitating its services either at average price of an
industry for achieving profit higher than competitors or below average price in an industry for
gaining the large market share. In case of the price war, IHG will maintain certain kind of
profitability at the time of suffering losses from the competitors.
IHG group will achieving success through differentiation strategy as they would be
having accessibility to the leading scientific research, having highly efficient and creative team
and good standing with respect to innovation and quality. The focus related strategy will
concentrate on contracted segment and in this section there would be efforts for actualizing either
the cost advantage or differentiation. The group will make use of focus strategy in order to enjoy
increased level of the customer loyalty.
Justification of the strategy
From all of the above strategic implementation the major strategy selected for the IHG
hotel is the differentiation form the Porters generic strategy, market development from the
Ansoff matrix and the all the strategies coming under Nykiel strategy (Dock, 2018). The major
reason behind the selection of these strategies is that this will assist the company in managing the
position of the company in the highly competitive market. The major reason underlying this fact
is that the differentiation is the strategy which includes developing a new product line or the
service other than in which the company was dealing. This will assist the IHG in adapting new
set or group of consumers. In the similar manner market development is the strategy which will
assist the company in developing a set of new consumer which will increase the working and
profitability of the company. Along with the major reason behind the use of all the principles of
Nykiel’s fourteen principles is that all these principles are helpful for the business IHG in
developing a new product and also to enter in the new market with the aim of market growth and
development. Further all these fourteen principle assist the company in developing and managing

the work and the operations of the company to a great extent. This will assist company in
developing and managing all its operation in effective and efficient manner. Hence, all these
strategies being selected will assist the company in managing the working of the company in
profitable and effective manner.
Practical application of the strategy
The mere selection of the strategies is not enough rather it is very essential for the
company to effectively apply all the strategies in such a manner that they achieve the aim for
which they are intending. Thus, if the application of the strategies will not be done in effective
manner then this will not get successful. Thus, for the application of the strategy of
differentiation the IHG can go in the other field like it deals in the hospitality sector so now they
can also go in the field of travel and tourism and can offer the services to the consumers who are
coming to the hotel. In the similar manner the strategy of market development can be applied
with the help of different types of methods. These methods can be like promoting the goods and
services on all the social media platforms and with the help of all latest methods of marketing. In
addition to this the company can also bring some innovation and creativity in the product and
services of the company. Thus, this will assist the company in managing the development of the
new market and this will also assist the company in managing the performance of the company.
For the application of the Nykiel’s fourteen strategy is applied in different way and this includes
many options like horizontal expansion, geographic expansion, product hybridization,
specialization, global positioning and many different methods of developing and expanding the
business (Tsenkov, 2019). Thus, if all these strategies will be applied in effective and efficient
manner then this will assist the company in getting success and managing the profitability and
productivity of the company. Further in the next 5 to 10 years as well this will assist the
company in having growth and development. This is particularly both these strategy whether be
it Porter generic strategy or the Nykiel fourteen strategy will be assistive in keeping a record of
the company in such a manner that this will direct company in direction of growth and
development.

Conclusion
From the above study it is clear the hospitality management is very important for the companies
in the hospitality sector. This is particularly because of the reason that there are many different
types of changes taking place in the external environment and because of this the company is not
able to secure a competitive position. Furthermore if the company will not analyze and upgrade
itself in accordance with the changes and this will assist the company in securing a competitive
position. With the study it was analyzed that the SWOT analysis is helpful for the company in
order to analyze the current position of the company. With help of this the company was able to
analyze its strength and weakness and try to assess the opportunity and threat present in the
external environment. Further the analysis of external environment was also done with help of
the PEST analysis and it was found that the there are many different types of opportunities
present for the company in the external environment. Further with help of the porter generic
strategy it was seen that Market development was used for the development of the business.