Research Report: Pricing Strategy Analysis for Intercontinental Hotels

This research report examines the pricing strategy employed by Intercontinental Hotels. It begins with an introduction, background, and literature review, setting the stage for the study's aims and objectives. The methodology involves primary research, using questionnaires to gather data from customers and hotel management. The report analyzes the collected data, comparing management perspectives with customer opinions to understand price perception and strategy effectiveness. The discussion section interprets the findings, followed by a timescale and conclusion. The report identifies the importance of pricing strategies in the hospitality industry, focusing on how Intercontinental Hotels positions its services and competes with rivals. The study considers factors such as service quality, consumer behavior, and the impact of pricing on attracting and retaining customers. The limitations of the research, including the focus on a single firm and a limited sample size, are also acknowledged. The report aims to provide insights into the Intercontinental Hotel's pricing approach, including the use of premium pricing, price skimming, and differential pricing, and how these strategies influence customer perceptions.

Research Topic: Pricing Strategy for
Intercontinental Hotels
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Table of Contents
Pricing Strategy for Intercontinental Hotels...............................................................................1
1. Introduction............................................................................................................................1
1.1 Background......................................................................................................................1
1.2 Literature Review.............................................................................................................2
1.3 Aims ................................................................................................................................3
1.4 Objective..........................................................................................................................3
2. Methodology..........................................................................................................................4
2.1Research Tools..................................................................................................................4
2.2 Bias...................................................................................................................................4
2.3Ethical Issues.....................................................................................................................4
2.4 Validity and Reliability....................................................................................................5
2.5 Limitations.......................................................................................................................5
3. Data Analysis.........................................................................................................................5
3.1 Management.....................................................................................................................5
3.2 Customers.........................................................................................................................6
....................................................................................................................................................7
4. Discussion..............................................................................................................................8
5. Time scale...............................................................................................................................8
Conclusion..................................................................................................................................9
REFERENCES.........................................................................................................................11
Appendices...............................................................................................................................13
Appendix 1...........................................................................................................................13
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PRICING STRATEGY FOR INTERCONTINENTAL HOTELS
1. INTRODUCTION
In this research report pricing strategy that is adopted by the Intercontinental hotels is
identified and discussed in detail. In respect to this, a primary research on firm pricing
strategies was conducted under which data is collected from local people and corporate. A
pricing strategy is a plan under which firms charge an amount for the service delivered by
them to their customers. By formulating and implementing sound pricing strategy hotels will
be able to determine different prices by using which it will achieve huge profit, growth in
relevant industry. By doing this it will be able to beat its rival firms in relevant industry.
Companies prepare pricing strategy in order to achieve their long and short term goals as well
as objectives (Spencer, 2010). However, business objectives are achieved in a manner the
management appreciates internal and external factors within business unit.
Thus, in this research report pricing strategy of the firm will be compared with
customers’ opinions which are given in second part of research. Information about
customers’ opinion is collected in order to find out opinion of customers on the price for the
service that they charged on their customers. In order to better understand pricing strategy it
will be good to read the available literature on strategies implemented by competitors at the
market place. Review of such kind of literature will help in identifying strategies
implemented b the companies at ground level in relevant industry. This will certainly helps in
comprehending pricing strategy followed by companies in the industry (Tso and Law, 2005).
Hence, by reviewing available literature researcher will get an overview about pricing
strategy employed in the industry and factors that affects industry. In this report, employed
research methods will be explained in detail. Theoretical literature will be reviewed in order
to prepare project report in better way. It is also necessary to highlight the background of
research into consideration.
1.1 Background
Mentioned topic was selected because there are numerous Intercontinental hotels in
many towns. The main objective of research is to understand the pricing strategies of these
hotels which are important element of marketing mix. It is commonly said that companies
determined price of their products by considering level of service quality they give to their
customers while delivering a service to them (Wang and Chung, 2015). Therefore, it will be
necessary to identify the way which companies are using in order to compete with their rival
firms on the basis of price.
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The consumer behaviour of the people is very difficult to understand because it keeps on
changing with passage of time. Pricing strategy is a weapon that can be used to attract people
towards company product. A marketing segment is group of people with some uniform
characteristics that a company wants to target for selling its product. According to Jobber
(2004), firms must draft messages, set pricing level and direct other strategic efforts for
compelling target customers for making purchase of the company product (Steed and Gu,
2005). Due to this reason, the pricing strategy is commonly used for positioning a product.
Hence, the main aim of this research is to comprehend the Intercontinental hotel’s efforts in
terms of their pricing strategy. Nevertheless, literature review will help in understanding
pricing strategies employed by competitors.
1.2 Literature Review
Many firms in this industry are using multiple plans in order to enhance their
customer base. In other words, it can also be said that they are not sticking to single plan. A
strategy is a kind of plan which is prepared to achieve objective in pre determined time period
(Collins and Parsa, 2006). For research Hilton hotel is taken as intercontinental hotel which is
a 5 star hotel and known for charging a premium prices for its products and services. The
mission of Hilton hotels is to make available best services money can buy. Due to this reason,
Hilton hotels are using premium pricing strategy for selling its service. A price skimming
strategy is a tactic in which a company sell its products at high price in order to attract those
people that wants excellent quality service (Hung, Shang and Wang, 2010). There are many
customers who do not like to use services of hotels that do not promise good quality of
service. As a result, under price skimming strategy business executives and wealthy people
are targeted for company products and services.
Hilton hotel charge premium price for its service and it justified its pricing policy by
offering quality services to the customers. In this industry companies must charge price for
their services as per industry trends. Hence, if prices are too high then Hilton hotel needs to
provide innovative service whose substitute is currently not available to the rival firms. If this
is not possible then by doing price discrimination firm can successfully retain its loyal
customer base. A hotel such as Hilton and Sheraton in comparison to peer firms always
focuses on bringing up innovations in their services so as to differentiate their offers and
justify their high prices (Enz, 2009). The hospitality industry provides a service that makes
their customers feel comfort in their rooms. Therefore, companies operating in this industry
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must provide quality services at such a level that a customer fined more comfort in hotel then
his home. This wills certainly justified premium pricing of services. If the quality is lower,
then firm can use differential pricing strategy in order to compete with firms that are offering
similar services to attract target customers. If firm does not want to follow this Strategy it can
improve its service quality. Normally, lower prices indicate poor service quality (Heo and
Lee, 2011). So, hotels must attempt to provide high quality of service to their customers in
order to enhance their customer base.
Therefore, premium price reflects good quality of services to the target market . It has
been seen that in this industry many companies use pricing strategy for building their special
image in the eye of customers (Tsai and Chen, 2011). If prices are reduced to large extent,
then original customers nay abstain from taking company service and a new class of
customers will be attracted. Similarly, if the firm increases price for its products, a new class
of customers will be attracted. Along with hike in price of product firm needs to improve its
service quality for rebranding a hotel (Bodea and Ferguson, 2014). The management is
responsible to determine pricing strategies with utmost care. Pricing strategy is usually used
to position company products especially when target customers are price sensitive. Hence, the
main aim of study is to identify efforts made by Intercontinental hotels for position their
products by using pricing strategy.
1.3 Aims
It is said that a researcher aim of study must be clear. So, that research directs in
specific direction. The objective of this study is given below.
 To comprehending the pricing strategies formulated and implemented by the
Intercontinental Hotel Group.
In order to achieve aim objectives are determined which are directed towards
achievement of pre determined aim. Methodology for research will be selected by
considering following objectives (Matzler, Renzl and Rothenberger, 2006).
1.4 Objective
 To identify the reasons due to which firms are using specific pricing strategy
 To understand the impact of pricing strategy on customers
2. METHODOLOGY
In methodology a strategy is followed under which a researcher employs techniques,
gathers data and subsequently processes it to get valuable information. For conducting this
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research, primary research method was used in order to collect the data from various sorts of
respondents. Primary research involves collection of raw data for the first time to support
research work. On other hand, secondary data refers to information that is already published
and collected from newspaper, journals and magazines (Orfila-Sintes and Mattsson, 2009). In
this primary research, questionnaires are used to collect the data from target audienece. Apart
from this other techniques that can be used in primary research are interviews, experiments,
observations and tests.
2.1Research Tools
There are two types of questionnaires for different respondents. These questionnaires
containing 11 and 13 questions and these were sent to general public and corporate
respondents. Questionnaire that contain 11 questions were given to 40 customers, out of
which 30 respondents give response to the received questionnaire. Questionnaire that
encompasses 13 questions was sent to a top manager of intercontinental hotel in order to
gather data from intellectual people. Different type questions were available in both
questionnaires in order collect required data. The numbers of samples in the research were
consistent with the requirement for a research to be valid (Bodea and Ferguson, 2014). The
questionnaires were given by the researcher to the respondents and he gives full guidance to
respondents while filling a form.
2.2 Bias
People from different geographies were used while taking a response in order to avoid biases
in response of respondents. Managers of INTERCONTINENTAL HOTEL provide valuable
information through questionnaire. Such kind of information earlier was not available to
researcher. Therefore, the researcher could not have been biased as he did not have any
information about Intercontinental hotel (Yeoman and McMahon-Beattie, 2010). Similarly,
for interpreting data graphs are used along with facts. As a result, the possibility of bias or
manipulation of data was eliminated.
2.3Ethical Issues
The researcher should communicate objectives of research into consideration to
respondents. Moreover, the respondents should be delivered deep understanding of
questionnaire into consideration. It is again stated that participants are volunteer and their
information is kept confidential (Becerra, Santaló and Silva, 2013). Ethical issues are duly
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followed when permission was taken from the management of the Intercontinental hotel. Non
compliance with ethical issues may affect validity of research.
2.4 Validity and Reliability
Validity and reliability factor of the research outcome is considered for making study
reliable. In respect to this, sample is collected and tabulation of results was done in such a
manner that reduces or eliminates chances of mistake. In addition, the questions had to be
drafted and presented according to requirements of study (Gursoy, Saayman and Sotiriadis,
2015). While answering the questions, respondents have to consider their feelings about
subject matter. So that accurate information is collected from the respondents.
2.5 Limitations
There main limitation of this research is that in this research only single firm is taken.
Due to this reason, in this research data is collected from single manager. It is possible that,
the manager of Intercontinental hotel may give inaccurate response than whatever scenario is
prevalent on the ground. Company selected desired pricing strategy; the manager can hide
details about fierce competition that is playing decisive role in ascertaining their prices
policy. Determined sample size has its own limitations (Jayawardena, et.al, 2013). General
people were taken as respondent of research. As a result, their answers are not accurately
directed towards perfect answer of question.
3. DATA ANALYSIS
The data analysis was divided according to the research categories used comprising of
customers and management.
3.1 Management
It was identified on discussion with managers of the Intercontinental hotel that said
hotel is three stars in nature. Management gives a statement that services they offer is average
service given in the hotel industry. The organization’s pricing strategy is considered to be
highly convenient in nature. It can be said that the prices charged are comparatively
reasonable as per industry standards. The organization has an option to reduce or increases
prices as per changing demand (Öüt and Onur Taş, 2012). The major advantages available to
the business unit are of its efficient customer care services, location, reasonable prices and
reputed brand image.
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3.2 Customers
In order to comprehend impact of a pricing strategy, the customers’ responses were
taken through distribution of questionnaire. From below image, it was clear that price is a
mirror of service quality. Both men and women were agreed on this statement in the survey.
Figure 1: Elements denoted by pricing
From chart it can be seen that in sample there are about 60% females and 40% males.
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From chart; it can be seen that people does not have any concern about hotels stars
status. In other words, it can be said that people agree that most of the hotels provides
services as per their star category.
Equally, in figure 2, it was found that majority of women respondents give priority to
the hotels that provide services to the customers at cheaper price. In research it was find out
that many males were also interested in taking service of the hotels that provides services at
cheaper price. However, majority of males prefer hotels that offer good quality service to the
customers. In research many women accept that they consider service quality factor while
selecting an option.
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Table 1: Are you concerned with stars on hotels
Are you concerned with
stars on a hotel
Men Women
Yes 5 7
No 1 2
In research 5 men state that they are concerned about star status of hotels. Only on
men said that he does not concern about star status of hotels. In case of women seven are
concerned with star status of hotels. Only two respondents are not concerned about star status
of hotels. Hence, it can be said that most of the respondents are concerned about star status of
hotels.
Which hotel is favourite?
Table 2: Which hotel is favourite?
Men Women
Hilton 2 3
Intercontinental 2 4
Holiday Inn 2 1
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Yes No
0
1
2
3
4
5
6
7
8
Are you concerned with stars on a hotel ?
Men
Women

In research it has been find out that equal respondents out of total male sample prefer
three mentioned hotels. But most of women prefer Hilton and intercontinental hotel followed
by 3 and 4 respondents. Only 1 woman prefers to take service of Holiday in.
Does hotel adverts make you trust and pay more?
Table 3: Does hotel adverts make you trust and pay more
Men Women
Yes 4 8
No 2 1
On analysis of facts it has been seen that majority of males and women trust on
advertisement presented by hotels through various channel of communication. Only 2 male
and one women does not believed in advertisement given by the hotels through various
channel of communication.
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Hilton Intercontinental Holiday Inn
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Which hotel is your favourite?
Men
Women
Yes No
0
1
2
3
4
5
6
7
8
9
Does hotel adverts make you trust and pay
more?
Men
Women

4. DISCUSSION
In survey it is find out that Intercontinental hotels set a price in alignment to price set
by hotels in relevant industry. If they failed to price their service about prevalent price level
in the industry they may lose their grip on market. If hotel price its services equivalent to the
price charged by four or five star hotel then its customer base can reduced. This will happen
because hotel will not be able to provide quality service which four or five star hotels provide
to their customers. If intercontinental hotel reduce its price then customers may think that
hotel is providing low quality service to its customers. By reducing price firm can attract
large number of customers towards its hotel. By following such kind of approach firm may
fail to cover its service offering cost.
This in turn results in reducing service quality which impacts level of customer
satisfaction. This statement was proved from answers received from respondents in research.
In survey it was also find out that customers have perception that pricing indicate quality of
service offered by hotel to its customers. Due to this reason Intercontinental hotel is in
position to attract those customers that give priority to quality at place of price.
5. TIME SCALE
Table 4: List of activities
Sr. No. Activities List of activities Weeks Preceding activities
1 A Supervisor discussion 1
2 B Preparation of proposal 1 A
3 C Submitting the proposal 2 B
4 D Acknowledgement by supervisor 1 C
5 E Literature review 5 D
6 F Data collection 4 D
7 G Data analysis 4 E,F
8 H Interpreting outcomes 3 G
9 I Preparation of project report 4 E,G
10 J Conducting review 2 I
11 K Finalizing the project 1 J
12 L Project submission 1 K
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