The Effect of Globalisation on a Hotels Marketing Strategy

Name

Marketing essentials BMIH4005

Lecturer
 Table of Contents
Introduction.....................................................................................................................................1

Operations of InterContinental Hotels Group in competitive business environment.................1

Marketing choices & directions within marketing........................................................................3

The impact of globalisation on InterContinental Hotels Group....................................................5

Current Market................................................................................................................................5

Competitors.....................................................................................................................................6

Conclusion.......................................................................................................................................6

Bibliography....................................................................................................................................7
Introduction
InterContinental Hotels Group plc, is a British multinational hospitality company located in
Denham, Buckinghamshire, England. Being a multinational company, IHG owns several brands
including: InterContinental, Regent Hotels, Kimpton Hotels and Resorts, Holiday Inn,
Candlewood Suites and a few more. IHG has about 842,749 guest rooms and over 5,900 hotels
across nearly 100 countries [CITATION con20 \l 2057 ]. The industry in which IHG is competing
i.e., the hospitality and tourism industry is significantly impacted by the process of
globalisation. The modern concept of globalisation has facilitated a great shift in economic
activities among various regions and countries. Production and consumption activities have
become highly dispersed around the world. For detailed understanding, the marketing strategy
of InterContinental Hotels Group has been explained and how it is influenced by the process of
globalisation has been brought into light.

Operations of InterContinental Hotels Group in competitive business

environment
The competitive environment of businesses describes the dynamic external system in which
a business regulates in the presence of other competitors. An example of IHG’s competitive
performance can be stipulated by observing one of its brands – Holiday Inn. This hotel uses the
strategic management process for putting up against its competitors.

Strategic management: It is the process of drafting, implementing and evaluating cross-

functional decisions in enabling the achievement of long-term objectives [ CITATION Spe14 \l
2057 ]. Marketing is accepted globally as a life blood of any organisation. However, in terms of

hotel industries, strategic management can be considered at the same level as marketing,
which decides the future and prosperity of an organisation [ CITATION UKE181 \l 2057 ].

Improved responsiveness: InterContinental maintains competitive advantage with improved

responsiveness to customer needs. They accomplish this objective by the proper utilization of
technological forces; digital marketing, accessible website etc. The organisation’s innovations –
such as being the first company in the industry to offer its customers the ability to book

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reservations online – have accelerated desirable growth and provided the company with many
competitive advantages. IHG heavily relies on particular systems and technologies for the day-
to-day running of the business, especially in areas of high integration to the processes of the
business [ CITATION Bow11 \l 2057 ].

Marketing mix: The InterContinental Hotels Group also incorporates the marketing mix of 4Ps:
product, price, placement and promotion. IHG is a holdings company that creates the brand
and brings it to the market. The organization is expanding worldwide and it generates revenue
through selling the rights by franchising and managing the hotels along with owning hotels
globally [ CITATION IHG17 \l 2057 ]. IHG basically divides the market segments of the standard of
living of guests i.e. High scale, Luxury or Mid-scale and does the pricing accordingly. Pricing
strategy of IHG depends upon the brand – with which it is targeting the market segment.

Competitive advantage: Competitive business environment refers to the macroeconomic

dynamics which influence any industry or the companies within the industry [ CITATION Ara12 \l
2057 ]. With increased competition, services and products offered will improve as hotels toil to

get a large share of the market[ CITATION Web00 \l 2057 ]. IHG has always been able to hold its
position in the global economy with its great sense of competition. The competitive advantage
traces back to the following factors:

Biggest Hotel Loyalty Program

IHG has 92 million members worldwide, whereas its competitors like Marriott has 54 million
and Hilton has about 51 million. That’s a myriad of loyalty program members. Considering the
fact that all big brands including IHG, are launching major direct booking pushes aimed at
building up their loyalty numbers – IHG has a significant lead in that case [ CITATION Tin16 \l 2057
].

The World’s Largest Hotel Brand

IHG owns the world’s largest hotel brand Holiday Inn (3,651 properties around the globe). Due
to this reason, IHG is pretty well known among the targeted consumers in its industry [ CITATION
Int \l 2057 ].

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Biggest Number of Hotels in the Making

IHG already owns more than 5900 hotels with about 900,000 rooms worldwide. To top it off,
they are expanding in an aggressive manner. They had already around 37000 rooms to be
added under the brand of InterContinental Hotel Group – of which 45 percent is already under
construction [ CITATION Int \l 2057 ].

Staff Satisfaction

The employees are the main components of the hotel industries. Proper workforce motivation
strives the way towards satisfactory margins of profit as well as helps the organisation to
maintain better public relations in many ways.

Marketing choices & directions within marketing

A marketing strategy is a long-term, forward-looking approach incorporating an overall game
plan of any organization or any business with the primary goal of achieving a sustainable
competitive advantage by understanding the needs and wants of customers. IHG has been
adopting different marketing approaches through updated technologies. Advertisement
through mobile applications and websites include one of their core promotional strategies.

Segmentation: The market of hospitality industry is segregated on the basis of people’s

capacity. It is generally classified in five basic classes. The segmentation of IHG is categorised in
– luxury, upper upscale, upscale, mid-scale and economy/budgeted.

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Target market: IHG targets the group of consumers who possess the ability to pay for luxury
hotels. Though almost all the brands of IHG holds a satisfactory benchmark of great experience,
an even more specific targeting can be seen when the company focuses upper upscale class of
customers with Intercontinental Hotel, upscale with Crown Plaza, Hotel Indigo and Staybridge.
The company also focuses on the mid-scale consumers with its brands Holiday Inn Express and
Candlewood Suites.

Positioning: IHG is one of those few organisations which started the luxury hotels in the world.
Whenever the brand of IHG crosses the minds of guests, they picture luxurious hotels at
reasonable pricing. The company plays it smartly; they don’t just focus on the luxury segment of
the market but also provides luxury amenities to make the customers feel valued.

Market positioning is the most important aspect to any industry, whether it refers hotels or any
other market. It shapes the customers perception towards the brands of a particular company
and focuses on the relative distinguishment from competitors [ CITATION Kel13 \l 2057 ].

Integrated marketing communication:

IHG uses this process in mostly all the sectors of its promotional or marketing campaigns:
advertisement, personal selling, sales promotion, social media etc. IHG focuses on preparing
their internal employees to sell their products and services with excellent personal selling skills,
within the hotels.

Blue Ocean strategy: IHG also uses ‘Blue Ocean’ strategy in countries where there is less
competition. This strategy is referred to a market for a product where there is no competition
or very less competition [ CITATION Kim04 \l 2057 ].

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The impact of globalisation on InterContinental Hotels Group
InterContinental Hotels Group is significantly affected by the outcomes of globalisation. The
process of globalisation forces the company to change their business policies depending on the
cultures and norms of different countries across the world. Globalisation encourages an
organisation to create more brands considering different pricing strategies [ CITATION Bel01 \l
2057 ]. Furthermore, in this world of competition and globalisation – companies in tourism and
hospitality need to create customer-oriented brands that cater for individual needs and
experiences [ CITATION Kno04 \l 2057 ] . Being a leading company in its industry, IHG is able to
comprehend customer preferences and cultural differences more discretely and modify its
business approaches accordingly. International trade has been facilitated by globalisation; there
is facilitated flow of information, labour and capital across borders. When business executives
move from one place to another, they need to be fed and accommodated; this is business to
the hotel industry [ CITATION Ivy19 \l 2057 ]. Globalisation makes the battle for market share
more competitive in the hotel industries. This competition for market share has led to endless
initiatives (e.g. early booking discounts, free travel for children, three weeks for the price of two
in the low season), almost always relying on market stimulation by price discounting [ CITATION
Kno04 \l 2057 ]. For improving market share, IHG utilises franchise policies along with mergers

and acquisitions between its brands in different parts of the world. Managers in this industry
are now getting more advanced for coping up with the dynamic trends – which is another
instance of the impact of globalisation on the industry.

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Current Market
The hospitality industry mostly follows a rising trend when it comes to markets . Market
capitalization (or market value) is the most commonly used method of measuring the size of a
publicly traded company and is calculated by multiplying the current stock price by the number
of shares outstanding. Intercontinental Hotels Group market cap as of October 29, 2020
is $9.34B. Besides, observing some previous data on market size can help people to accurately
forecast IHG’s growth trend. A market overview report of 2009 is described below:

Market size: The global hotel market has an estimated room capacity of 18 million rooms. This
has grown at approximately 2% per annum over the years between 2004 to 2009 [CITATION
Int09 \l 2057 ]. Geographically, the market is more concentrated with the top 20 countries
accounting for more than 80% of global hotel rooms. The group’s brands have more leadership
positions (top three by room numbers) in the six largest geographic markets than any other
major hotel company.

Competitors
The competitors of IHG namely: Marriott International, Hilton Hotel, Hyatt Regency etc. are
classified as direct competitors. Because, the Airbnb mostly deems to be the indirect
competitor for not only IHG, but also the overall hospitality and tourism industry. Moreover,
Airbnb is recently looking forward to increasing their business operations by going on IPO. The
IPO will eliminate the obstacle from having ties with luxury experiences which hotels have this
competitive advantage.

Conclusion
IHG is one of the leading MNCs in its industry. It focuses on maintaining its position in the global
economy by tackling the market challenges emerged as a result of globalisation and also
considers its competitors’ movement. The real value of a hotel lies in its capability to persuade
and please consumers. IHG is preserving its value quite successfully, and it aims to keep up the
consistency in the years to come.

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Belau, D., Paratian, R. & Higgins, T., 2001. Human Resources Development, Employment And
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Bowie, D. & Buttle, F., 2011. Hospitality Marketing: Principles and Practice. Illustrated ed. s.l.:Routledge.

contributors, W., 2020. InterContinental Hotels Group. [Online].

IHG (InterContinental Hotels Group), 2017. The Uncompromisisng Customer: Addressing the Paradoxes
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InterContinental Hotels Group, 2009. Market and competitive environment. [Online].

InterContinental Hotels Group, n.d. IHGplc. [Online].

IvyPanda, 2019. The Impact of Globalisation on the International Hotel Industry. [Online].

Keller & Swaminathan, 2013. Strategic Brand Management. s.l.:Pearson.

Kim, W. C. & Mauborgne, R., 2004. Blue Ocean Strategy. Expanded ed. s.l.:Harvard Business Review.

Knowles, Diamantis & El-Mourhabi, 2004. The Globalization of Tourism and Hospitality. s.l.:Cengage
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Spender, J., 2014. Business Strategy: Managing Uncertainty, Opportunity, and Enterprise. s.l.:s.n.

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Webster, K., 2000. Environmental Management in the Hospitality Industry: A Guide for Students and
Managers. s.l.:Continuum .