Premier Inn: Analyzing the Competitive Business Environment

This report provides a comprehensive analysis of the business environment surrounding Premier Inn, a leading hotel chain in the United Kingdom. It employs several analytical frameworks, including PESTLE analysis (Political, Economic, Social, Technological, Environmental, and Legal factors) and Porter's Five Forces model, to assess the macro-environmental factors and competitive intensity affecting the hotel's operations. The PESTLE analysis examines the impact of government stability, economic shifts, social media influence, technological advancements, legal regulations, and environmental concerns on Premier Inn. Porter's Five Forces model evaluates competition, buyer power, supplier power, the threat of substitutes, and the threat of new entrants. Furthermore, a SWOT analysis identifies the company's strengths, weaknesses, opportunities, and threats. The report concludes by discussing the implications of these analyses on Premier Inn's operational environment, emphasizing the importance of social media marketing, technological adaptation, and competitive pricing strategies to maintain and enhance its market position. The report highlights the dynamic nature of the hotel industry and the need for Premier Inn to adapt to changing consumer preferences and technological advancements.

FUNDAMENTALS OF
BUSINESS

TABLE OF CONTENT
INTRODUCTION ..........................................................................................................................3
MAIN BODY...................................................................................................................................3
Competitive Business Environment ............................................................................................3
SWOT analysis of Hotel Premier Inn..........................................................................................6
Operational environment ............................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Business environment can be defined as a group of factors including the internal factors
as well as the external factors which affects the functioning and operations of a business. The
present report is based on the study of Premier Inn, which falls under the category of tourism
sector. The Premier Inn is headquartered in Dunstable, United Kingdom and was founded by
Whitbread in the year 1987 that was 35 years ago. It operates in a number of locations and is
considered as one of the leading hotel chains in United Kingdom. The present report aims to
cover the business environment with respect to the operations of the hotel Premier Inn. It also
includes the macro economic factors that affects the business operations of the hotel Premier Inn.
MAIN BODY
Competitive Business Environment
PESTLE analysis of Hotel Premier Inn
The PESTLE analysis is a framework used by companies in order to gain a breif
understanding of the macro environmental factors with respect to an organization. It includes the
political, economic, social, technological, environmental and legal factors which affects the
functioning of an organization. Similarly, all these factors with respect to the Hotel Premier Inn.
Has been explained below:
Political factors
Political factors can be defined as the factors relating to the political environment of the
nation in which the company operates and the impact it has on the operations of the business.
The Government stability and the open borders have led to an increase in the revenue of the
Hotel Premier Inn. The availability of open border has opened up ways for the foreigners to visit
the European nations. This has helped the tourism sector within the boundaries of United
Kingdom as the more the number of travellers, the higher will be revenue generation of the
tourism sector within the United Kingdom including the Hotel Premier Inn. However, it is

essential for the Hotel Premier Inn to abide by the several rules and regulations before providing
services to foreigners within their hotel. They need to check the visa and passport of the
travellers in order to validate their identify. (Sivakumar, 2021.)
Economic factors
It include the factors such as employment, inflation, exchange rate, interest rate and other
such factors which affects the business within the country. The services offered by the Hotel
Premier Inn are good quite premium and are offered to the customers at premium prices.
However, it has been noticed that people in the United Kingdom are shifting towards staying at
hotels that are quite affordable. The change in the perception of the consumers as well as a shift
in the demand has affected the revenue and profitability of the Hotel. Therefore, in order to
compete with other hotel brands in the market, it is important for the Hotel Premier Inn to
introduce a range of hotels that serves quality services and are pocket friendly for the consumers
of tourism industry.
Social Factors
Social factors refers to the culture and demographics of a country. Social factors affect
the operations and profitability of tourism industry including the Hotel Premier Inn to a great
extent. The technological advancement and the introduction of Social media influence the
consumer behaviour hugely. It has been identified the people get influenced when someone from
their friends, family, or colleagues are travelling or holidaying, it influences the behaviour of
their peers into planning their holiday and stays either within the country or outside the national
boundaries. This has helped the tourism sector in increasing their profitability as there is an
increase in the number of travellers. (Birahim, 2020). This also increases the profitability of the
hotels such as the Premier Inn.
Technological factors
The technological factors refers to the emergence of new technology that ease the process
of business operations. The organizations operating under the tourism sector are moving fast in
terms of technology. Therefore, it is necessary for the Hotel Premier Inn to implement the use of
advanced technology within the business operations in order to compete with other business
brands and organizations. Hotel Premier Inn needs to constantly improve the technology used by
them for the purpose of enhancing the operational efficiency and decrease in the cost of their
operations. Moreover, in order to increase their customer base, it is important for the Hotel

Premier inn to make sure they use advanced technology within the research and development
department in order to innovate new services and improve the customer experience.
Legal factors
Legal factors can be described as the tax rate, norms, rules and regulations that an
organization needs to follow in order prevent itself from any kind of legal action. Hotel Premier
Inn. is a famous organization that owns more than 800 hotels in a variety of locations and has
around 72000 rooms. It is available in several locations all over the world and therefore, needs to
abide by the rules and regulations pertaining to each country in which the Hotel Premier Inn
operates (Henry, 2021). Therefore, the Hotel Premier Inn needs to follow all the rules that are
subject to the copyright, product safety, health and safety of the employees and tax laws existing
within the region as well as the internationally.
Environmental factors
It includes those factors which promotes the practices of an organization that supports
environment and sustainability. In today’s world, the consumers are very much aware of the
negative consequences of business operations on the environment. Therefore, it has become
important for the organizations to make sure that the business operations carried out by them do
not harm the environment in any manner. This helps the company in attracting new customers
towards the brand and play an important role in contributing towards the environment (Hamilton,
and Webster, 2018). For the same reasons, the hotel Premier Inn has implemented the strategy of
5 R’s and reduce the use of plastic as much as possible.
Porter’s 5 forces model of Premier Inn
Porter’s five forces model is a strategy used by the companies in order to identify the
impact of the external factors in the market and also the level of competition within the industry.
The Porter’s Five Forces Model with respect to the hotel Premier Inn has been explained below:
Competition
The competition factor highlights the existing competition in the market. It has been
determined that the level of competition faced by the hotel Premier Inn is very high as there are a
number of hotels that offers the similar services to the consumers (Betti, and Sarens, 2020.).
Also, the services offered by Hotel Premier Inn are priced high as compared to other hotels
which makes the switching cost for the consumer as low, because they have the opportunity to
find similar services at reasonable prices.

Bargaining power of buyers
It can be described as the power of the consumers that affects the organizational
performance. The consumers of the Hotel Premier Inn hold the power to influence the prices of
the services offered by the hotel. This is so because, the consumers can easily switch brands and
get the services for a lower price, which influences the Hotel Premier Inn to provide the products
at reasonable prices.
Bargaining power of suppliers
This refers to the power of suppliers with respect to the price they charge for selling the
raw material to the company. The bargaining power of the suppliers is low as compared to other
factors. As the Hotel Premier Inn is a famous brand, it has the opportunity to source its raw
materials from a number of suppliers. Therefore, the suppliers cannot charge high prices from the
the hotel Premier Inn.
Threat of substitutes
It refers to those products which can replace the existing product of the enterprise. The
Hotel Premier Inn does not face the threat of substitutes. This means that there is availability of
similar services provided by different brand name but there is no availability of a pservices that
can replace the current offerings of Premier Inn because of its similar nature (Cravo, and Piza,
2019).
Threat of new entrants
This can be defined as new business enterprises planning to introduce themselves within
the market. The Hotel Premier Inn faces a low threat from the new entrants within the industry as
Hotel Premier Inn is a recognized brand and it cannot be replaced so easily by launching of new
brands within the industry.
SWOT analysis of Hotel Premier Inn
SWOT analysis is a framework that is used by several companies in order to determine
their internal environment that highlights its own strengths, weaknesses, opportunities and
threats. The SWOT analysis with respect to the Hotel Premier inn has been stated below:
Strengths
 Premium brands
 Enhanced services for customers
regarding the online booking.
Weaknesses
 Limited Global presence.
 Hygiene issues.

 Skilled and knowledgeable workforce.
Opportunities
 New market opportunities for
expansion.
 Technology.
Threats
 Competition.
Operational environment
The factors which have been identified with the help of PESTLE analysis and the Porter’s
5 Forces Model affects the operating environment of the Hotel Premier Inn. This has been
mentioned below:
 It has been identified with the help of PESTLE analysis, that in order to increase the
revenue of the hotel Premier Inn, it is important for the company to make use of social
media effectively. This is so, because, it has been determined that social media is itself a
great influencer in the lives of the consumers (Sivakumar, 2021). . The feedbacks, the
posts, the content shared by people on the social media affects the minds and influence
the consumers to a great extent. Therefore, if the Hotel Premier Inn implements the
strategy of social media marketing, and shares the contents and advertisements which are
captivating in nature and grabs the attention of the potential consumer, the revenue and
the profitability of the hotel premier Inn can be increased.
 The fast moving technological environment increases the operational cost of the hotel and
also leads to technological disruptions within the hotel. This means that it is necessary for
the Hotel Premier Inn. to implement advanced technology within its business process in
order to survive in the market but constantly shifting to new technology changes the
whole procedure of carrying out the business operations. It also asks for the training and
development programs for the employees in order to train them on how to use the
software.
 Since, the consumers of the Hotel Premier Inn are shifting towards the brands that
provide the customers with services at much more affordability (Azeez, 2019.). It affects
the revenue of the hotel as the number of consumers shift due to a shift in their demand as
well as their mindset towards the hotel.

CONCLUSION
From the above report, it can be concluded that the Hotel Premier Inn operates within a
dynamic environment that keeps on changing. Based on the PESTLE analysis, it has been
identified that the social media plays an important role in influencing the customers to a great
extent. Therefore, the Hotel Premier Inn needs to implement the strategy of Social media
marketing in order to gain new customers. Moreover, it is important for the Hotel Premier Inn.
to launch new services in the market which are priced at reasonable ranges in order to attract new
consumers towards the brand. The present report also includes the impact of the macro
environmental factors on the operations and functioning of the hotel.

REFERENCES
Books and Journals
Azeez, F.O., 2019. Impact of Selection Process on Organisational Performance: A Case Study of
Unilever Nig. Plc (Doctoral dissertation, Kwara State University (Nigeria)).
Betti, N. and Sarens, G., 2020. Understanding the internal audit function in a digitalised business
environment. Journal of Accounting & Organizational Change.
Birahim, S.A., 2020. Internal and external factors of Nestle and comparison with Unilever.
Cravo, T.A. and Piza, C., 2019. The impact of business-support services on firm performance: a
meta-analysis. Small Business Economics. 53(3). pp.753-770.
Hamilton, L. and Webster, P., 2018. The international business environment. Oxford University
Press.
Henry, A., 2021. Understanding strategic management. Oxford University Press.
Sivakumar, S., 2021. Study of Internationalization Process of Unilever. Available at SSRN
3939738.