MGBBT0UBN Case Study: Premier Inn Hotel Chain Business Analysis

This case study delves into the organizational structure and business environment of Premier Inn, a prominent UK hotel chain. It examines the hierarchical structure of the company, highlighting its benefits such as specialization and a clear chain of command, as well as its drawbacks like slow decision-making and departmental isolation. The study employs SWOT and PESTLE analyses to evaluate the internal and external factors influencing Premier Inn, particularly in the context of the Covid-19 pandemic. Strengths like brand reputation and weaknesses like competition are discussed, along with opportunities arising from increased travel demand and threats posed by ongoing health concerns. The analysis covers political, economic, social, technological, legal, and environmental factors impacting the hotel's operations, concluding that while Premier Inn's organizational structure offers advantages, it also faces challenges in adapting to the evolving business landscape shaped by the pandemic and other external forces.

Level 0 Guide – Case Study
2021/2022.
Understanding Business
Organisation
1

Table of Contents
1 Introduction.............................................................................................................................3
2 Organisational Structure of Premier Inn Hotel.......................................................................3
3 Business Environment Analysis of Premier Inn Hotel.............................................................5
3.1 SWOT Analysis..................................................................................................................5
3.1.1 Strength.....................................................................................................................5
3.1.2 Weaknesses...............................................................................................................6
3.1.3 Opportunities............................................................................................................6
3.1.4 Threats.......................................................................................................................6
3.2 PESTLE Analysis................................................................................................................6
3.2.1 Political Factors.........................................................................................................7
3.2.2 Economical Factors....................................................................................................7
3.2.3 Social Factors.............................................................................................................7
3.2.4 Technological Factors................................................................................................7
3.2.5 Legal Factors..............................................................................................................8
3.2.6 Environmental Factors..............................................................................................8
4 Conclusion ..............................................................................................................................8
5 Reference ................................................................................................................................9

1 Introduction
Business organisation can be defined as an entity formed with an aim to carry on
some commercial activity with a view to earn profits. These companies are formulated
according to the laws governing the various systems and workings of a business. A
hospitality business organisation refers to a service industry which deals with food and drink
services, theme parks, lodging, travel and tourism etc. It comprises of hotels, restaurants, tour
agencies, entertainment, attractions and many more (Hall, Prayag, and Amore, 2017). This
case study is based on the Premier Inn hotel of UK. It is a chain of hotels operating in number
of locations with over 800 hotels. The firm was founded by Whitbread in the year 1987. The
hotel deals in serving prominent food and rooms along with supporting their various charity
partners. The pandemic Covid-19 has effected the sales and profits of almost all the sectors of
the world including the hotel industry. According to various researches, it would take a lot of
time to recover itself and attain the same position as it was before the emergence of
pandemic. The case study analyses the organisational structure of Premium Inn Hotel and the
impact of various internal and external factors on the hotel due to Covid-19 by using various
environmental analytical tools.
2 Organisational Structure of Premier Inn Hotel
Organisational structure of a business decides the flow of work in an organisation. It
determines the accountability, authority and responsibilities in the business and brings
coordination in the various roles and employees. Premier Inn hotel must follow the
hierarchical structure in which the whole management and team workers are various levels
according to their roles and holds various responsibilities and powers (Mehta, Kumar and
Ramkumar, 2021). It is pyramid shaped structure containing a chain of command with flows
from top to bottom. At top level, there are owners and then directors followed by the
executive officers and then managers assisted by leaders and then the lower level employees
of the company. By implementing this structure, the firm will be able to coordinate all the
activities at all levels where everyone will be aware of their own roles and responsibilities.
The employees will be clear about the person to whom they are accountable and the level of
performance expected from them.
3

Ill
ustration 1: Hotel Organisational Chart, 2016

Benefits of hierarchical structure to Premier Inn
There are various advantages of following the hierarchical structure to the firm.
 Specialization- In hierarchical structure, the areas are divided into various divisions
according to their works which brings specialisation of tasks in the employees of
Premier Inn. This helps in building efficiency in the various jobs performed by them.
 Clear chain of command- A pre set structure helps the employees of Premier Inn in
analysing who is accountable to whom and what are their responsibilities. This helps
in eliminating any sort of confusion related to tasks and creates a well informed
communication channel through which the information is provided to the right person
in appropriate time interval (González-Mansilla, Berenguer-Contrí and Serra-
Cantallops, 2019).
Drawbacks of hierarchical structure to Premier Inn
 Slow decision making- There are various levels in which the information has to pass
through before being received by top authority. This slows down the decision making
process as it creates hurdle in getting full information in a desired time period.
 Creates isolation- This structure builds a level of cooperation among the members of
a department but isolates them from communicating with other departments
efficiently. It reduces interdepartmental coordination which hampers the growth of a
Premier Inn Hotel as the desired information does not pass among various sections
(Hassanien and Dale, 2019).
3 Business Environment Analysis of Premier Inn Hotel
Business environment of Premier Inn Hotel can be defined as all those internal and
external factors which influence the functions of an organisation. It includes various forces
like customers, competitors, employees, political, technological conditions etc. It also helps a
firm in analysing various opportunities and threats of the business prevailing in the market.
5

3.1 SWOT Analysis
SWOT Analysis is an analytical tool used by the companies to access the four major
aspects of the business. It evaluates the strengths and opportunities of Premier Inn which can
be used to combat its threats and weaknesses (Nhamo, Dube and Chikodzi, 2020). It
examines the internal environment of the company. Here is the SWOT Analysis of Premier
Inn considering the impact of Covid-19.
3.1.1 Strength
Strengths are the internal attributes of the firm which differentiates it from its
competitors and provides a competitive advantage over them. The fame hold by Premier Inn
hotel is its biggest strength. The service and taste provided by the business can help it in
recollecting its customers in the after Covid-19 situation. The premium quality room service
is also its one of the biggest strength. The hotel takes care of the cleanliness and sanitation of
the rooms and makes sure that its premises are not attached by the virus. This will give a
feeling of health safety to the customers.
3.1.2 Weaknesses
Weaknesses are the factors which brings a disadvantageous situation to the company.
Competitors are the biggest weakness of the Premier Inn. Various hotels are launching
various schemes to attract customers towards them which can affect the demand for Premier
Inn hotel. Also after pandemic, the number of booking can increase by a great number and it
will not be possible for the hotel to provide rooms to all of them (Edwards, 2021). Some of
the hotels of Premier inn are located at such locations where there is difficult to provide
provide proper sanitation to the customers, so they have to put a stop on their opening which
will affect their profits.
3.1.3 Opportunities
Opportunities are the elements which an organisation can use to take the competitive
advantage of the situation. Lock down during pandemic has created a feeling of frustration
among the people and now they would like to relax themselves by planning some vacations.
This a good opportunity for the Premier Inn to attract customers in its hotel by providing
attractive schemes.

3.1.4 Threats
Threats are the factors which hinders a firm in taking the advantage of the
opportunities. Premier Inn is already facing losses due to the lock down situation and still the
affect of the pandemic has not gone which means the customers are still fearing from going
out of their homes or to the vacations (Spencer, and et, al., 2021). This will increase the
losses to the hotel. Also the company is in fear that if even a single case of Covid appears in
the hotel, it will effect the reputations and sales of the firm in the form of customer loss.
Because people will not come to the hotel.
3.2 PESTLE Analysis
PESTLE Analysis is a strategic tool which is used by the firms to analyse the impact
of external environment of the activities of the firm. It breaks down the opportunities and
risks into various external factors for Premier Inn. Here is the PESTLE Analysis for the hotel.
3.2.1 Political Factors
It considers the impact of government decisions on the firm. The decision of the Lock
down taken by the government negatively impacted the revenues of the Premier Inn hotel.
But if the national authorities decides to lower down the rate of taxes for the industries
affected by Covid this will help the hotel in increasing their profits through which they can
cover there losses.
3.2.2 Economical Factors
It comprises of the various economy related effects on the firm like inflation rate,
taxation rate etc. Changes in the value of currency can positively as well as negatively impact
the attractiveness of the city for vacations in which its branches are located. A lower rate of
currency can attract more tourists towards it which can bring an opportunity for Premier Inn
to attract them to its hotel (Volgger, Taplin, and Aebli, 2021). The pandemic has brought a
big loss to the hotel and ruined the whole economy. Government has taken various steps to
boost up the economic condition of the hotel industry which will help in improving the
economy of Premier Inn. For example, the government of UK is providing subsidy to the
people for eating food in hotels.
7

3.2.3 Social Factors
It includes various related to public which impact the sales of the company like
customers choice, preferences etc. After Covid people are moving out of their homes for the
vacations which is favourable for the firm in attracting the customers but the hotel may not
be enjoy this opportunity to the full as they would not be able attend all their customers due
to shortage of rooms.
3.2.4 Technological Factors
It evaluates the impact of technology on the organisation. Writing posts on blogs is a
new technique used by the firms but it can both harm and benefit the reputation of Premier
Inn. Positive reviews will grab the attention of the customers and negative reviews can
hamper its reputation (Turner, 2018). Covid -19 has made people more technology
oriented and now they check the reviews of the hotel regarding their sanitation and
cleanliness facility. Good comments for Premier Inn helps it in attracting more
customers.
3.2.5 Legal Factors
The factor helps in analysing the impact of various laws and rules on the business.
Hike in the wage rate has negatively affected the profits of Premier Inn as they had to
increase the salary of its staff members. But is will positively impact its operations by
increasing the number of customers because increase in salary will leave people with more
disposable income and higher spending power. After Covid, the government has put lot of
restrictions on the entry of the foreign customers which will negatively impact the sales of the
hotel. But on the other hand, it is also beneficial for the hotel as its present customers are less
prone to the effect of virus coming from the other countries.
3.2.6 Environmental Factors
It analysis the impact of environmental factors on the business. Premier Inn hotel is
using energy saving bulbs and other equipments which make them environment friendly. But
the threat of contamination due to virus is negatively impacting the firm in the form of loss of
customer as people are fearing that they will got contaminated and are not moving out of
there houses (Hassan, 2021).

4 Conclusion
It can be concluded from the above case study that the organisational structure of
Premier Inn hotel helps the firm a lot in taking the advantage of the opportunities prevailing
in the market as its employees are clear about their roles and responsibilities and are
specialised in their tasks. But this structure sometimes becomes a hindrance for the hotel as
the required information takes a lot of time to be delivered to the desired person. Also it
hampers the coordination of different departments. The pandemic Covid-19 has created a lot
of disturbance for the firm. Since the emergence of pandemic, the whole hotel industry has
sawed a full stop on their operations. Now after the decision of government of opening this
industry, Premier Inn is trying to gain customers with the help of its premium services and
fame. There are various factors like competitors from which the hotel has to combat for
increasing its profits.
9

5 Reference
Edwards, J., 2021. Economic Feedback Loops: Crisis Communication Methods and
Exhibited by the Travel and Tourism Industry During the COVID19 Pandemic.
In Pandemic Communication and Resilience (pp. 179-188). Springer, Cham.
González-Mansilla, Ó., Berenguer-Contrí, G. and Serra-Cantallops, A., 2019. The impact of
value co-creation on hotel brand equity and customer satisfaction. Tourism
Management. 75. pp.51-65.
Hall, C.M., Prayag, G. and Amore, A., 2017. Tourism and resilience: Individual,
organisational and destination perspectives. Channel View Publications(Bristol,
UK).
Hassan, A. ed., 2021. Tourism Products and Services in Bangladesh: Concept Analysis and
Development Suggestions. Springer Nature.
Hassanien, A. and Dale, C., 2019. Hospitality business development. Routledge.
Mehta, M.P., Kumar, G. and Ramkumar, M., 2021. Customer expectations in the hotel
industry during the COVID-19 pandemic: a global perspective using sentiment
analysis. Tourism Recreation Research. pp.1-18.
Nhamo, G., Dube, K. and Chikodzi, D., 2020. Counting the cost of COVID-19 on the global
tourism industry. Springer Nature.
Spencer, A. and et, al., 2021. Virus Outbreaks and Tourism Mobility.
Turner, N., 2018. Yes, You Can Innovate: Discover your innovation strengths and develop
your creative potential. Pearson UK.
Volgger, M., Taplin, R. and Aebli, A., 2021. RECOVERY OF DOMESTIC TOURISM
DURING THE COVID-19 PANDEMIC: An experimental comparison of
interventions. Journal of Hospitality and Tourism Management.