Strategic Management Marketing and

Analysis of IHG Group.

Introduction
This essay is about analysing changes in strategy and strategic
direction of an organisation for last 10 years. The changes will relate to
organisational structure, organisational culture, environment, and market
forces. All the business functions will also be discussed with business
strategies adopted by the organisation over the years. Intercontinental
Hotel Group (IHG) is selected for this essay as a case study. The
Intercontinental Hotel Group has evolved from a SME to a huge group of
hotel organisations consisting of different properties of hotels under its
umbrella of Intercontinental group. The hotel chains are multinational in
100 countries with 4,400 hotels and 650,000 rooms[ CITATION McC18 \l
1033 ]. The hotel and hospitality industry are influenced by customers’
needs, wants, and demands, their experiences, and develop strategies
to improve customer experience, and loyalty. The main purpose of
Intercontinental Hotel Group is to develop good relationship with their
customers, employees, and staff members. The hotel s operated in three
different ways including manager, franchiser, and leased basis. It hotels
under this group are Holiday Inn, Intercontinental, Hotel Indigo, Crowne
Plaza, Candlewood Suites, Stay Bridge Suites, and Holiday Inn Express.
The organisation has been running loyalty programme of hotels in the
industry that has 48 million members from all around the world and it is
known as (Priority Club Rewards) and it is one of biggest in the
world[ CITATION Est16 \l 1033 \m The08].
This essay is about analysing changes in strategy and strategic
direction of an organisation for last 10 years. The changes will relate to
organisational structure, organisational culture, environment, and market
forces. All the business functions will also be discussed with business
strategies adopted by the organisation over the years. Intercontinental
Hotel Group (IHG) is selected for this essay as a case study. The
Intercontinental Hotel Group has evolved from a SME to a huge group of
hotel organisations consisting of different properties of hotels under its
umbrella of Intercontinental group. The hotel chains are multinational in
100 countries with 4,400 hotels and 650,000 rooms[ CITATION McC18 \l
1033 ]. The hotel and hospitality industry are influenced by customers’
needs, wants, and demands, their experiences, and develop strategies
to improve customer experience, and loyalty. The main purpose of
Intercontinental Hotel Group is to develop good relationship with their
customers, employees, and staff members. The hotel s operated in three
different ways including manager, franchiser, and leased basis. It hotels
under this group are Holiday Inn, Intercontinental, Hotel Indigo, Crowne
Plaza, Candlewood Suites, Stay Bridge Suites, and Holiday Inn Express.
The organisation has been running loyalty programme of hotels in the
industry that has 48 million members from all around the world and it is
known as (Priority Club Rewards) and it is one of biggest in the
world[ CITATION Est16 \l 1033 \m The08].
This Essay is about the analysis of the Strategic Management Marketing of an organization.
INTERCONTINENTAL HOTEL GROUP (IHG) is selected for this essay. The Intercontinental
Hotel Group has evolved from a SME to huge Group of hotel organizations of different
properties of hotels under its umbrella of Intercontinental Group. The hotel chains are
multinational in 100 countries with 4,400 Hotels and 650,000 Rooms. The hotel and hospitality
industry are influenced by customers ‘needs, wants, and demands, their experiences, and develop
strategies to improve customer experience, and loyalty. The main purpose of Intercontinental
Hotel Group is to develop good relationship with their customers, employees, and staff members.
The hotel s operates in three different ways including manager, franchiser, and leased basis. It
hotels under this group are Holiday Inn, Intercontinental, Hotel Indigo, CrownePlaza,
Candlewood Suites, Stay Bridge Suites, and Holiday Inn Express. The organization has been
running loyalty programme of hotels in the industry that has 48 million members from all
around the world and it is known as (Priority Club Rewards) and it is one of biggest in the world.
Major Brands:

Strategic History of Intercontinental Hotel Group

The development and formation of Intercontinental Hotel Group has been through
various stages and gradually from a brewery store, the business entered in hotel industry by
acquisition strategy with Mitchell’s and Butlers breweries in 1960s that grew fast and the cash
flow of the business grew faster that made the owners of the company to form a hotel business
that started with merger and acquisition strategy with the hotel group of Holiday Inn in 1988 and
launched another hotel named Hotel Inn express. The pub business was growing side by side
when the company launched a new hotel to gain more growth in the industry known as Crown
Plaza hotels and resorts in 1994. The hotel group wanted to gain larger market share and globally
dominating in the hospitality industry.

In year 1997, a new brand of hotels was launched by Bass that was named as Stay bridge Suites
and it targeted the upscale market of hotel. The Stay bridge suites became the leading brand of
upscale market. In year 1998, intercontinental hotel company was acquired by bass and anew
brand was added to the portfolio of hotel. The acquisition strategy allowed the owners to increase
synergy of hotel running by Bass. In year1999, again acquisition strategy was used by
taking over 550 high potential UK sites and 3500 estates of strong pub. In year 2000, South
Pacific Corporation in Australia was acquired by BASS that ensured the position of Bass in the
Asia Pacific as the leading hotel Company. In the same year, the Bass Breweries was sold
for 2.3 billion pounds. This was the big step by Bass Company that they focused on
being an international business within hospitality industry from being a local Brewer.
The process did not complete overnight, and it took almost 10 years to settle in the market.
Bass name was sold off and the company was then started to call Six Continents PLC. This name
reflected the business well and showed the global expansion of the group. In year2001, the
smaller unbranded pubs were sold to 625 pounds. It funded the purchase of European
Posthouse Hotel Chains for 810 million pounds. The purchase of this company could be
converted to Holiday Inn brand in Europe and UK. In the same year, the company went on to
acquire Hong Kong’s Intercontinental hotel for 241m pounds.

This essay is about

analysing changes in
strategy and strategic
direction of an organisation
for last 10 years. The
changes will relate to
organisational structure,
organisational culture,
environment, and market
forces. All the business
functions will also be
discussed with business
strategies adopted by the
organisation over the years.
Intercontinental
Hotel Group (IHG) is
selected for this essay
as a case study. The
Intercontinental Hotel
Group has evolved from a
SME to a huge group of
hotel organisations
consisting of different
properties of hotels under
its
umbrella of
Intercontinental group. The
hotel chains are
multinational in
100 countries with 4,400
hotels and 650,000
rooms[ CITATION McC18
\l
1033 ]. The hotel and
hospitality industry are
influenced by customers’
needs, wants, and demands,
their experiences, and
develop strategies
to improve customer
experience, and loyalty.
The main purpose of
Intercontinental Hotel
Group is to develop good
relationship with their
customers, employees, and
staff members. The hotel s
operated in three
different ways including
manager, franchiser, and
leased basis. It hotels
under this group are
Holiday Inn,
Intercontinental, Hotel
Indigo, Crowne
Plaza, Candlewood Suites,
Stay Bridge Suites, and
Holiday Inn Express.
The organisation has been
running loyalty programme
of hotels in the
industry that has 48 million
members from all around
the world and it is
known as (Priority Club
Rewards) and it is one
of biggest in the
world[ CITATION Est16 \l
1033 \m The08].
IHG Current Business Strategy
The Intercontinental Hotel Group has been playing important role as a service provider within
the hospitality industry and the company’s operational strength is increasing day by day.
The hotel group has 130guests from across the world having 4400 hotels who visit the hotels
under the umbrella of Intercontinental Hotel Group. The Organisation is well-known and well-
reputed in the industry and it is covering all the segments of the market. The
organisation has been dealing with the customers in 29 languages through 10 call
centres worldwide and it has strived in the industry to become the market leader. Currently, the
Intercontinental Hotel Group has been able to maintain their operations to position
themselves through growth and development strategy and doing retailing as well in the hotel
section.
In 2020, IHG evolved key elements of strategy to further strengthen our ability to drive future
growth.
What has evolved is how we execute against our strategy, in terms of what we prioritise, the
behaviours we champion, and the purpose that guides us. Listening to stakeholders, we’ve
evaluated what’s most important, not just to IHG’s growth, but how we grow, taking into
account all we’ve learnt from dealing with Covid-19 and planning for a strong recovery over
time.

Future Strategy of Intercontinental Hotel Group

The current strategy of the business observed is growth and development despite of the
challenging economic situation of the world. In year 2009, Intercontinental Hotel Group took a deeper
look at the capabilities and operations of the business to focus on that is mattered the most to deliver
the customers and guests with good experience, love, and comfort. The major effort to achieve this
was done through aligning the employees and staff and measuring the important drivers of the business,
which result in a target-based programme in the hotel business to guide the behavior and
motivate the teams.

Competitive Analysis of Inter-Continental

Hotels Group (IHG)

The SWOT/ TOWS

analysis for Inter-
Continental Hotels Group
(IHG) is
presented below:
The SWOT/ TOWS analysis for Inter-Continental Hotels Group
(IHG) is presented below:

Strengths Weaknesses
1. Asset light business model 1. No economic hotel brand

2. Wide geographical presence with focus on 2. Poor information security systems

priority markets

Opportunities Threats
1. Fragmented branded hotel market 1. Sharing Economy in Hotel Industry
2. Increased international tourist travel 2. Unprecedented Events

Detailed SWOT Analysis of Inter-Continental Hotels

Group(IHG):
Strength:
1. Asset Light Business Model: The Company is implementing this by adopting predominantly
franchisemodel in US, managed model in AMEA and reducing owned hotels to 8globally. In this
way it is becoming asset free, cash generative and isreturning the surplus cash to shareholders
post strategic investments. Ithas returned £5.9 billion of funds to shareholders since 2004 till
date.
2. Wide Geographical Presence with Focus on Priority Markets: The group has presence in 100
countries with 766,837 rooms. It has87% of total open rooms and 89% of pipeline rooms in
priority markets ofUS, Middle East, Germany, UK, Canada, Greater China, India, Russiaand CIS,
Mexico and Indonesia. It has an established and strongpresence in the emerging
economies where spend on travel and hotel isincreasing. The lifestyle brands. Kimpton Hotels &
Restaurants has beenmade global and strategically positioned as an upper middle-
classlifestyle brand.

Weakness
1. Not highly successful at integrating firms with different work culture. As mentioned earlier even
though Intercontinental Hotels Group Plc is successful at integrating small companies it has its
share of failure to merge firms that have different work culture.
2. There are gaps in the product range sold by the company. This lack of choice can give a new
competitor a foothold in the market

Opportunity
1. New customers from online channel – Over the past few years the company has invested
vast sum of money into the online platform. This investment has opened new sales channel
for Intercontinental Hotels Group Plc. In the next few years the company can leverage this
opportunity by knowing its customer better and serving their needs usingbig data analytics.
 2. Opening up of new markets because of government agreement – the adoption of new
technology standard and government free trade agreement has provided Intercontinental
Hotels Group Plc an opportunity to enter a new emerging market.

Threat
1. Changing consumer buying behavior from online channel could be a threat to the existing
physical infrastructure driven supply chain model.
2. New environment regulations under Paris agreement (2016) could be a threat to certain
existing product categories.

The PESTLE/ PESTEL/ STEEPL analysis for Inter-

Continental Hotels Group (IHG) is presented below:

Political
In Asia, recently there have been many anti-government procession. Forexample, in Phnom Penh,
Cambodia. Ten of thousands of anti-government protesters march on Sunday in Phnom Penh,
Cambodia,which is one of the nearly 30-year rule of authoritarian Prime ministerHun Sen launched the
largest opposition activities.Recently, the negotiations between EU and Vietnam has been very
closeattention, especially for apparel and footwear companies. Part of thereason is that people in the
western country wore garments, many ofwhich are produced in Vietnam. For the hotel industry,
we also need a lot of clothing, all thisis from Asia country, because they have cheap labour, so high tariff
willgreatly increase hotel's spending.

Economic
Economic growth resumed towards the end of 2009, but at a slower ratethe period prior to 2008,
as demand was subdued by inflationoutstripping nominal wage growth, leading to a fall in the real
income ofhouseholds. The services industries grew steadily, if slowly, during thisperiod, activity in
these industries is now slightly above the levelpreviously seen in early 2008. By this growth, with
continued long-termeconomic uncertainty-exacerbated by the euro area sovereign debtcrisis-
particularly affecting construction in 2012. Although there has beengrowth across all industrial
groupings in 2013, activity in the productionindustries remains slightly below the trough recorded
in 2009. Theincrease in GDP since then is overwhelmingly attributable to services.(source: Office for
National Statistics)

Social
1. Influence of Cultural Differences:

Varying cultures are of great interest to customers as they want to travelto a specific destination to
experience a particular culture or use religionas a reason to visit a country to practice their faith and
beliefs. Thisrequires the culture of place to be preserved and reflected in the hotel,exactly what the
Indigo brand (revenue of $0.4B) of IHG is serving.

2. New trends due to change in demographics, lifestyle:

With the increase in world population and 12% of world’s population ofage above 60 years, there is an
increasing desire to travel. Moreover,IHG tends report suggests that millennial want personalized
experiencesand old age people are looking for humanity in travel.

Technological
A growing number of hospitals in California and other states are usingtelepresence robots to expand
access to medical specialists, especiallyin rural areas where there's a shortage of doctors.
(abcNEWS,2013) Inhotel, normally they always lack hands, in the future, this idea will veryefficiency use
in the hotel. Robust will help waiters take care of guestsany time.

Legal
In the US, it become legal for gay weddings in 15 states. In Hawaii,waiting for the governor to legalize
same-sex marriage bill was signedinto laws. So, it provides more tourism chance for US, and
it alsostimulate hotel development, hotel can provide more honeymoon roomor design more
honeymoon theme room, and also can provide somepromotion for them so that boost sales.

Environmental
EnvironmentalDifferent markets have different norms or environmental standards whichcan impact the
profitability of an organization in those markets. Even within a country often states can have different
environmental laws and liability laws. For example, in United States – Texas and Florida have different
liability clauses in case of mishaps or environmental disaster. Similarly, a lot of European countries give
healthy tax breaks to companies that operate in the renewable sector.

InterContinental Hotels Group PLC Porter Five

ForcesAnalysis for Services Industry:
(1) Threats of New Entrants:
1. By innovating new products and services. New products not onlybring new customers to the
fold but also give old customer a reason tobuy InterContinental Hotels Group PLC ‘s
products.
2. By building economies of scale so that it can lower the fixed costper unit.

(2) Bargaining Power of Suppliers

 1. By building efficient supply chain with multiple suppliers.
2. By experimenting with product designs using different materials sothat if the prices go up of
one raw material then company can shift toanother.

(3) Bargaining Power of Buyers

1. By building a large base of customers. This will be helpful in twoways. It will reduce the bargaining
power of the buyers plus it will providean opportunity to the firm to streamline its sales and production
process.

2. By rapidly innovating new products. Customers often seekdiscounts and offerings on

established products so if InterContinentalHotels Group PLC keep on coming up with new products then
it can limitthe bargaining power of buyers

(4) Threats of Substitute Products or Services

1. By being service oriented rather than just product oriented.

2. By understanding the core need of the customer rather than whatthe customer is buying.

(5) Rivalry among the Existing Competitors

1. By building a sustainable differentiation

2. By building scale so that it can compete better

Major Competitors:
Belmond Ltd.

Choice Hotels International, Inc.

Eldorado Resorts, Inc.

Extended Stay America, Inc.

Hilton Grand Vacations Inc.

Marketing and Advertising

Every year, the Intercontinental Hotel Group franchisees pay a certainamount in the central fund. This is
used on the behalf for promotions andmarketing to drive demand of guests for the brands of
IntercontinentalHotel Group. The sponsorships of brands, print ads, television ads,campaigns,
and PR related activities worldwide are some ways in whichthe fund could be utilized[ CITATION IHG18 \
l 1033 \m Kin08].

The essay discussed about

changes in strategy and
strategic direction of
Intercontinental Hotel
Group for last 10 years.
The changes related to
market growth,
organisational structure,
organisational culture,
environment, and market
forces etc. have been
discussed. It was seen
that the development and
formation of
Intercontinental Hotel
Group has
been through various stages
and gradually from a
brewery store, the
Conclusion
The essay discussed about changes in strategy and strategic direction ofIntercontinental Hotel Group. It
was seenthat the development and formation of Intercontinental Hotel Group hasbeen through various
stages and gradually from a brewery store, thebusiness entered in hotel industry and gradually became
the leadinghotel group in the world. Despite of the economic uncertaintiesand circumstances of the
industry, Intercontinental Hotel Group wentahead and maintained their growth and
development strategy at aconsistent pace, which gave them success. During the difficult time
ofeconomic downturn, Intercontinental Hotel Group took a decision andaction to improve the
operational efficiency in order to keep the pacewith their growth strategy. The sustainability in
the business wasachieved through effective marketing, sales, and HR team of
theorganisation. The future strategic directions of the business will be todrive demand, increase
marketing and advertising campaigns, andincrease sales force for more revenues and success in
future.
Conclusion

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C
ompetitive Analysis
of Inter-Continental
Hotels Group
(IHG)Competitive Analysis of Inter-Continental Hotels Group(IHG)