Introduction

This aim of this research is to evaluate the organizational profile of IHG as well as its
business and industry situation where it is operating. For executing the analysis, relevant models
and theories were employed such as SWOT analysis, Porter's five forces, and PESTLE analysis.
By these, several appropriate SMART objectives were created, and relevant strategies and
implementation plans are employed for accomplishing them. This incorporated the utilization of
several models such as Ansoff's matrix and generic strategies.
Organizational Profile and Industry Analysis
Inter-Continental Hotel Group, IHG, the British hotel company operating in different
countries in the recent scenario is the highly dominant, leading, and superior group of hotels
around the globe. There are 5,603 hotels of IHG with 836,541rooms that stand strong with other
strong competitors (IHG, 2019). After changing from IHC to IHG during the early 20s, IHG
never falls down. However, its history started from the 17th century when the brewery was
opened by William Bass in Burton-on-Trent, UK (IHG, 2019). Following hotels are working
under the name IHG, which are IHG reward club, Candlewood Suites, Staybridge suit, holiday
inn resort, holiday inn club vacation, holiday inn express, hallux, even hotel, hotel indigo,
Kimpton hotel, intercontinental hotel and resorts, crown plaza, and holiday inn (IHG, 2019).
They employed more than 350,000 employees in around 100 countries. They are generating huge
revenues as per their big company size.
Porter Five Forces Model
Threats of New Entrants
Innovation is experienced by the new entrants in the Lodging along with introducing new
methods to perform actions (Cheng, 2013). Putting pressure on IHG using reducing costs, lower
pricing strategy, and offer customers serve as a new value proposition. All these challenges need
to be managed by the InterContinental Hotels Group by establishing strong barriers to secure its
competitive advantage.
Bargaining Power of Suppliers
In the Lodging industry, all companies are purchasing their required raw material from
different suppliers (Cheng, 2013). So, there is a high bargaining power of the suppliers. In the
Service sector, strong suppliers are using their negotiation powers compel firms to introduce
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higher prices in the field of Lodging. On the whole, the supplier’s high bargaining power will
lower the profitability level of Lodging.
Bargaining Power of Buyers
Every customer was to get the best offer at the minimum possible cost (Cheng, 2013). In
the long run, such power of buyer puts high pressure on the profitability of IHG PLC. The more
powerful and smaller customer base of the IHG PLC is, the higher would be the customer's
bargaining power, and they will be able to get more offers and discounts.
Threats of Substitutes
Whenever a new service or product fulfills the similar needs of customers in a changed
way, then the profitability of industry will suffer (Cheng, 2013). In the hospitality industry, the
threat of service or product substitute is high due to the presence of value proposition which is
different uniquely from the industry’s current offering.
Rivalry among the Existing Competitors
IHG is working in a competitive environment and gain a competitive edge in the Lodging
industry. This competition will impact the long-term profitability of the company.
Situational Analysis
Internal analysis through SWOT

Strengths Weaknesses
 It follows Asset light model of business  The information security system is poor
(Sohn, Tang, and Jang, 2013)  Hotel brand is not economic
 Possess broader presence  Moved down to third position globally
geographically with emphasis on
priority marketplaces
 Customer relationship and experience
focus (IHG, 2018)
 A brand portfolio which is occasion
wise
 Good digital outlook along with
implementation (IHG, 2018)
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 Successful engagement of the employee

 High RevPAR and strong financials
(IHG, 2018)

Opportunities
 Technology facilitated bookings
 Increased level of global tourist travel
(Jones, 2009)
 Fragmented branded hotel marketplace
Threats
 Unprecedented Events
 New entrants in the hotel industry
 High dependency level on
intermediaries (Jones, 2009)

Environment analysis with the help of PESTLE Analysis

Political
Terrorism acts and events were faced by London due to the extreme religious
organization (Gregorić, 2014) and this results in causing threat for the IHG industry as terrorism
activities result in lowering the number of visitors coming to that particular location. Overall,
because of the delicate stances of politics that are seen progressively, IHG’s corporate aspect is
concerned about the loss of profit in the future.
Economical
Some macroeconomic implications are there which have influenced the effectiveness of
development of business inside IHG, particularly in the UK. At the time of Olympics 2012,
within Europe, the hotels were booked to higher capacity; however, after and before the event,
they struggled a lot to attract customers. It ought to be acknowledged that the rate of inflation is
constantly increasing which resulted in lowering the possible tourist.
Socio-Cultural
In social factors, they are present different emerging trends, such as population growth,
role models, consumer lifestyle, consumer demographics, etc. (Gregorić, 2014). The number of
young customers is increasing day by day, particularly from regions such as Asia from where
they periodically visit the UK (Gregorić, 2014).
Technology
Advance booking is the new trend introduced by technology in the hotel industry
(Koutroumanis, 2011). IHG has managed to use plenty of social media platforms for the purpose
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of assisting customers in making advance booking for their trip with the help of their accounts
with the appropriate kind of privacy required. Depending on these implications, IHG's business
development is constantly prospering.
Legal
All the restriction values and immigration rules are taken into account whenever the
company visits different countries such as that of the UK (Gregorić, 2014). Along with this, the
legalities and performance of the company might be influenced by the employment laws and
consumer protection laws, which are prevailing inside the UK.
Environment
It is a feeling of pride to listen to what consumers say and then provide them for what
they are looking for, however, different locations of historic importance such as forests and
beaches may get impacted (Gregorić, 2014). Although there is a contribution of additional
emission of carbon to the environment, still IHG is struggling to make it a better place by
employing specific parameters to keep them away from damaging the environment.
Challenges and Objectives
Challenges
The situational and industry analysis in terms of IHG showed that some major challenges
are confronted by them, which are:
1. Market stagnation and saturation
2. High competition particularly in the global market
Objectives
For handling these challenges, IHG needs to concentrate on the following objectives:
1. To upsurge the impactfulness of marketing communication-based activities with the help
of extensive utilization of social media and online platforms.
2. To make strong emotional bonding with consumers with the help of the formation of
highly strong digital presence.
3. To extend its reach across every section of the international market with the efficient use
of e-commerce strategy and online marketing.
Segmentation, Positioning, Targeting, and Branding
The business expansion across the international market will motivate IHG to deal with
individuals from a different geographical, educational, and cultural background. So, it is
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important for IHG to divide the whole marketplace into various sections for successful
positioning and targeting of their brand.
Figure 1: STP analysis of IHG

Targeting

Segmentation Positioning

STP analysis

Target market
The market target by IHG group are usually those individuals who can afford these
luxury hotels (Balami, 2017). All of their brands are luxury brands that offer a great delight of
luxury. Mostly the upper-class individuals are targeted by them with stay bridge, hotel indigo,
upscale with the crown plaza, and Intercontinental hotel (Jones, 2009). And target Mid-scale
with holiday inn spree, holiday inn select, holiday inn express, Candlewood Suites, and holiday
inn.
Positioning
IHG group is considered among those groups who introduced luxury hotels across the
world. To date, the quality of services and products is never compromised by the brand.
Whenever someone considers the IHG brand, the thing that comes in mind is the affordable
luxurious hotel. However, IHG doesn't necessarily target the luxury segment of the market but
offer luxury amenities so that they have a feeling that they are important customers (Fleşeriu,
Cosma and Bota, 2014).
Segmentation

Market segments The groups brand Customer segment

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Luxury - The mix of leisure and

business, based on location,
usually with a high proportion
of international guests
(Balami, 2017).

Upperscale InterContinental. A business that comprises a

relatively high amount of
international guests (Balami,
2017).

Upscale Hotel Indigo, Stalybridge Usually domestic guests, both

suites, crown plaza leisure and business (Balami,
2017).

Midscale (Fullscale) Holiday Inn spree, Holiday Predominantly there are

Inn Select, Holiday Inn domestic guests, both leisure
(Balami, 2017) and business (Balami, 2017)

Midscale (Limited Candlewood Suites, Holiday Predominantly there are

services) inn express (Balami, 2017) domestic guests, both leisure
and business (Balami, 2017).

Budget/ Economy - Usually domestic guests

(Balami, 2017)

Market Entry Strategy for IHG

IHG is operating their business in three ways - a manager, as a franchisor, and on leased
or owned basis. They concentrate on the luxury, upscale, and mainstream segments of the
hospitality industry and possess a targeted brand portfolio that is tailored individually to cope
with the needs of guests and occasions (Vo, 2016). Their decision to give franchise or manage
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hotels on 3rd-party behalf depends heavily on the owner preference, market maturity, and in a
few cases, the specific brand. A mature market, like that of Europe and Americas, usually
follows the franchise model, whereas the managed model is utilized usually in the emerging
markets, such as that of China (Vo, 2016).
The summary of the main dissimilarities between their three main models are given
below:
Business Hotel IHG capital Employees
model ownership intensity
Brand
ownership
marketing
and
distribution

Franchised Third party Low Third party IHG

Managed Third party Low Third party
and IHG
Owned and IHG High IHG
leased

Marketing strategy
After stepping into the new marketplace, the focus of IHG is on utilizing different
innovative strategies for acquiring regular growth in the marketplace. Porter generic and Ansoff
matrix strategies are the most famous tools that can assist IHG in enhancing the popularity of
their services and products all over the world.
Ansoff Matrix

Basic Meaning IHG

Market penetration It assists organizations in So, business marketers attract

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increasing sales by using new buyers by offering them

prevailing offers in the additional benefits and
current marketplace (Kotler et schemes so that competitive
al., 2015). advantage can be achieved.
For enhancing brand image,
they are selling products to
new and existing customers

Product development It emphasizes on delivering It assists IHG to improve the

modified or new services or
products within the current
market (Kotler et al., 2015).
image of the product by
giving unique services, and it
improves the market share of
the business (Adina-Gabriela
and Daniela, 2016).

Market development It helps organizations to New programs are launched

introduce their products in
new emerging markets
(Kotler et al., 2015).
by IHG for giving quality
services and product to US
Army officials and their
family members (Balami,
2017).

Diversification Business tries to expand by This is actually a risky

adopting diversification, and strategy, so, businesses never
introduce new services and adopt it, and hence focus
products to increase market primarily on giving
share (Kotler et al., 2015). hospitality services

Porter Generic Strategies

IHG is actually a luxurious hotel, and it mostly targets the travelers of the middle class,
and therefore it adopts differentiation strategy. They are also charging premium prices for their
delivered services and products to customers (IHG, 2018).
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IHG’s proposed strategy assists them in achieving core competencies and gives the best
benefits to consumers as well as the firm. Additionally, further sustainable competitive
advantage is created efficiently by the business that aids them to get the required goals.
Furthermore, it is important for the organization to form strategic analysis so that the best
outcomes in the form of huge profits and market share can be obtained. However, it assists IHG
to extend their business activities and offer the best services and products to customers (IHG,
2018). The differentiation strategy is adopted by IHG, and so it gives unique services and
products to customers that encourage them to use their services and improves the profitability
level of the organization (IHG, 2018).
Figure 3: Porter generic strategies

(Source: Allen and Helms, 2006)

Marketing mix
The marketing mix is that tool which consists of factors such as products, promotion,
price, and distribution that will assist companies to accomplish all goals. The strategies of the
marketing mix of IHG is given below:
Product
IHG is the holdings company; it means that this is not producing products directly and
never contact customers directly. They develop a brand and launch it in the market. Some
multinational brands are functioning under IHG, and this chain is constantly expanding (Chen,
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Hsu, and Wu, 2012). Their revenues are generated by giving rights by franchising and managing
hotel worldwide.
Pricing
The brand is created by IHG by keeping in view to make connections with different kinds
of individuals. It divided the market into different segments by living standards, i.e. midscale,
luxury, and high scale, and maintain prices accordingly.
Place
IHG has its hotels in more than 100 countries globally. Most of their properties are in
South America, i.e. 3,781, and 498 hotels in Asia, and 642 hotels in Europe, Africa 23, Australia
35, and North America 40 (IHG, 2019).
Promotion
The publicity of hotels is usually through word of mouth. This is considered as the
quickest marketing way. However, IHG has sponsored different travel agents who promote their
services to different customers (Chen, Hsu, and Wu, 2012).
Implementation
Advertisement
The intensity of Internet advertisement by Intercontinental hotel group is more as
compared to any other channel such as a newspaper or TV. Social media such as Instagram,
email, YouTube, Twitter, and Facebook as the main sources used for advertisement. Here,
customers can see a pop-up advertisement, which is floating on their social media sites.
Personal selling
Personal selling is of great value particularly in the field of tourism and hospitality. The
reason is that whichever service is being sold in hotels is usually produced at the same place.
Hotels are also concentrating on their employee to market their services and products with
outstanding skills for personal selling.
Sales promotion
For the regular guest, the sales promotion must be used by the IHG hotel comprising of
the discount offer or package selling. Along with these, they also give various types of offers to
their valuable customers. The offers such as the promotion of the new brand, festive offers, along
with the offseason offer such as winter discount offers should be introduced by IHG.
Social media
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These days, the biggest invention is technology as it proved that everything is possible
now. Technology is the product or present era as everyone is making use of it. Even, people are
spending most of their spare time by using technology. That is why IHG must use social media
as an important communication source.
Conclusion
With time, the growth of the hotel industry is increasing globally. The analysis of IHG’s
history and current situation shows that the organization never failed to offer strong competition
to the market. It is working through a strong business sense. Marketing has an imperative role in
the success of the organization. The marketing strategy shows that IHG is striving to gain a
competitive advantage. The core strategy of IHG is creating strong brand value that served as a
strong competitive advantage to the group. The focus is equally building on customer loyalty and
got the largest number of members in the world. Through this strategy, the IHG group is
enjoying success around the globe. The analysis of IHG’s current marketing strategy, it is
recommended to follow franchising as the market entry strategy. Through integrated marketing
communication, the group will be able to make an impact in the new market.
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