Inflation Management Strategies at IHG: A Foundation Year Project

This project analyzes InterContinental Hotels Group's (IHG) strategies for managing inflation, focusing on the period between 2009-2011. It discusses the causes of inflation, including economic growth rates, wage increases, and rising raw material costs, and their impact on IHG's operations, such as reduced purchasing power, higher interest rates, and decreased bond values. The project highlights IHG's key strategies: lowering fixed costs, securing long-term contracts with suppliers, investing in assets that hold value, and applying monetary theory to manage credit and debt. It also covers IHG's mission, vision, key operations, and market segmentation, emphasizing customer satisfaction through loyalty programs and differentiated services. The conclusion emphasizes that managing fixed costs and reducing debt are critical for effective inflation management.

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Foundation Year Research Project (MGBBT0FYP)
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Introduction
The concept of the inflation tends to refers and associated with the rise in a broad price index
representing the overall price level for goods and services in the economy (Rochon, 2022). Thus,
inflation tends to have a significant impact on the business operations and performance of a
company. The main aim and purpose of the current project is to analysis about a tourism company
that has been affected by inflation in the past and how they overcame this challenge. The
organisation selected for current poster is InterContinental Hotels Group and its include a
discussion about the company background as well as the Inflationary periods and main causes,
Impacts of inflations on company’s operations and performance and Inflation management
strategies.
Key operations and markets
The InterContinental Hotels Group is tend to be the one of the world's leading hotel companies of
the world that has having an around 325,000 colleagues that are currently working across the
more than 100 countries of the world in order to deliver True Hospitality for Good. Further, the
key operations of the InterContinental Hotels Group tend to comprises of all the set of business
function and operations which are essential to supports and lead higher satisfaction and convince
for its customers. (McLeay and Tenreyro, 2020) The key operations of the InterContinental
Hotels Group includes of the management and finance, front office department, reservations and
marketing department as well as food and beverage department along with daily housekeeping
department and maintenance operations. Apart from this, as a vital operation of the
InterContinental Hotels Group it tend to have regular loyalty programme as well as the effective
channel management and superior owner proposition to attract and cater a larger number of
customer as well as to have higher customer satisfaction level. Their Market segmentation of the
InterContinental Hotels Group is mainly demographic whereby products are packaged focusing
on the income of the targeted market which includes of the most prestigious people n the
community. Apart from this, the InterContinental Hotels Group is also tend to following market
differentiation and niche marketing by the way of the creating a series of products that target
different markets and also tend to have unique services that meet and fit to each targeted market.
Conclusion
On the basis of current poster a conclusion can be made that the inflation tend to
provide and comprises of a measure of the rate that reflects of the rising prices of
goods as well as the services in an economy. Further, it has been also summarised that
the key factors and reasons of the inflation comprises of the increases in production
costs as well as the rising rate of other business operations and factors such as raw
materials and wages. Finally a conclusion can be made that focusing in reducing fixed
costs as well as getting rid of debt tend to support and bring out better inflation
management.
Inflation management strategies
deployed
•The effective ways and strategy that are being adopted and implicated by the
InterContinental Hotels Group to get rid of the information and support better
inflation management in relation of various theories are discussed as below:
•Focus on lowering the fixed cost- It has been seen that the Lower fixed costs per
member hotel create conditions for a decrease in the chain affiliation fees leading to
its competitive advantage and also ensures and brings to the better management of
the inflation for InterContinental Hotels Group (Tenkanen and Tomberg, 2020).
•Having long term contract with suppliers of product and workers- One of the
effective strategy and way to manage inflation within the InterContinental Hotels
Group tend to comprises and includes of the having the long term contract with the
suppliers and workers as it would reduce the caches of increase in price of raw
material. Further, it also tends to help to maintain a constant labour cost thus ensure
better management of inflation in InterContinental Hotels Group.
•Have higher investment in the assets which hold their value- It has been seen that
having a higher investment in the assets that hold their value is an effective way for
InterContinental Hotels Group to manage inflation as there prices are not affected
much during the times of inflation (McLeay and Tenreyro, 2020).
•Implication of monetary theory for controlling inflation- The monetary theory of
controlling information that can be deployed by the InterContinental Hotels Group
comprises of supporting and leading out better management of the credit. It has been
seen and find out that the get rid of the debt by the InterContinental Hotels Group
supports better management of inflation as it saves the amount spent in increased
interest rate.
Company background and overview
The organisation selected for current project is InterContinental Hotels Group which is commonly
marketed and famous as IHG Hotels & Resorts. InterContinental Hotels Group is basically a
British multinational hospitality company the main headquarter of which is located in Denham,
Buckinghamshire, England. The Intercontinental Hotels Group PLC maintains a high quality of
products and is also focused towards the adding value during different stages of the value chain to
offer exclusive services for its customer to meet there satisfaction and wants level. Further, the
mission of the InterContinental Hotels Group is to become the words greatest company in
hospitality and tourism sector (Tenkanen and Tomberg, 2020). While the vision of the
InterContinental Hotels Group is based on the bringing and leading the high levels of cleanliness.
That means offering a clean as well as a well maintained clutter free rooms that tend to effectively
meet the customer satisfaction level and key performance standards.
References
•Blau, B.M., Griffith, T.G. and Whitby, R.J., 2021. Inflation and Bitcoin: A descriptive time-series analysis. Economics Letters, 203, p.109848.
•Forbes, K., 2019. Inflation dynamics: Dead, dormant, or determined abroad? (No. w26496). National Bureau of Economic Research.
•Haggard, S. and Kaufman, R.R., 2018. CHAPTER SIX. The Political Economy of Inflation and Stabilization in Middle-Income Countries. In The politics of economic adjustment (pp. 270-316). Princeton University Press.
•McLeay, M. and Tenreyro, S., 2020. Optimal inflation and the identification of the Phillips curve. NBER Macroeconomics Annual, 34(1), pp.199-255.
•Rochon, L.P., 2022. The general ineffectiveness of monetary policy or the weaponization of inflation. In The Future of Central Banking (pp. 20-36). Edward Elgar Publishing.
•Tenkanen, T. and Tomberg, E., 2020. Initial conditions for plateau inflation: a case study. Journal of Cosmology and Astroparticle Physics, 2020(04), p.050.
The InterContinental Hotels Group tend to have a diverse portfolio of differentiated brands as well as it is also well
known and loved by millions of consumers around the world for its premium quality and standards hospitality services
(Forbes, 2019). Apart from this, the key operations of the InterContinental Hotels Group includes of having a preferred
brands delivered through its people along with supporting and leading build and leverage scale together with having of a
strong brand portfolio. The InterContinental Hotels Group tend to faces the inflationary period between the years of the
2009-2011 and the main causes of which are rate of the economic growth as well as higher wage rate and increase in the
price of oil and other raw materials that has created an issue of high inflation. It has been seen that during the times of the
2009-2011 an issue of slow down in the economic growth rate of UK has been seen that lead to the creation of the issue of
the information in InterContinental Hotels Group based on higher cost of labours and other raw materials. Mina causes of
inflation for in InterContinental Hotels Group during the time period of 2009-2011:
 Increased wage price and labour cost
 Higher cost of raw material and other supplies
Inflationary periods and main causes
Impacts of inflations on company’s operations
and performance
It has been seen that the inflation tend to have a negative impact n the company operations and performance as
it tend to increase the amount of the external financing and investment that is required by a company (Haggard
and Kaufman, 2018). In case of the in InterContinental Hotels Group it has been seen that the during the times
of the 2009-2011 the inflation tend to distorts the reported earnings figure as well as overstates the the
economic earnings which lead to less money left for dividends, investments and growth as higher expenditure
are made on production. Further, the other impacts of the inflation that have been seen on the operations and
performance of the in InterContinental Hotels Group is listed and discussed as below:
Erodes purchasing power- The most common impact of inflation that is seen in the in InterContinental Hotels
Group comprises of the fact that it limit the purchasing power of the customers. Thus, it directly impacts the
overall productivity and cash inflow of the in InterContinental Hotels Group (Blau, Griffith and Whitby,
2021).
Higher interest and wage rate- The another negative impact of the inflation on the InterContinental Hotels
Group tend to includes and comprises of the fact that it causes a rise in the interest rates thus effects the overall
investment level for the InterContinental Hotels Group. Along with this, a negative impact of inflation on
operations and business performace of the in InterContinental Hotels Group has been also seen in form of the
higher wage arte that lead to increased cost of the operation.
Reduce the value of bonds and growth stock- During the times of inflation the InterContinental Hotels Group
also faces an issue and challenge related with the reduction in its bond and stock value that further negatively
impacts its business performance and profit level (Rochon, 2022).