The Intercontinental Hotel Groups Report
Date of Submission
Hotels are one of the most significant sources of income to the tourism sector as they provide accommodation to the tourists and guests and food and drinks which assure them of a comfortable life in their stay. Basing the report on United Kingdom’s hotel groups, its market is highly demanding as the hotels in the UK are of upper and luxury segments. As first-class hotels have significantly developed, economic growth in terms of wealth has recently monitored closely. On the contrary, the hotels face a significant threat from the tourists who consider their budget and turn to cheap booking applications such as Airbnb. The hotel groups in the UK have turned to develop strategies that seem to curb the competition it is facing globally.
Intercontinental Hotel Groups, IHG consists of corporate hotels that merged in early times and are still linking currently to take the lead in the tourism sector in general. IHG has impacted the hotel, lodging, and accommodation sector and the hospitality and tourism industry. From the case study carried out, the report aims to lay out the current business strategy. The IHG has been using to take over the hospitality and tourism sector by using different tools and techniques. On the other side, it is crucial to look into the threats and opportunities that IHG faces to improve its operation and expansion globally despite the presence of current competitors like booking applications Airbnb.
The report also focuses on recommendations that the IHGs need to consider to ensure the achievement of the expansion strategy. The things need to assess changes in their organization’s structure, the people, systems, process, and culture.
1. Expansion Strategy.
Intercontinental Hotel Groups has brought back the growth and development strategy by tracing back in time through the founder of Bass Brewery in 1777, William Bass. He obtained the Holiday Inns Organization in 1988 and merged with Charrington United Breweries in 1996, which was the most significant merge ever seen in the world. The main aim of the expansion strategy in the early times was due to competitors like Whitebread, Allied Breweries, and even Newcastle.
As the IHGs continues to grow, the existing brands such as Holiday Inn Express and Holiday Inn, stay brands like Candlewood Suites and Crown Plaza have been a driving force to ensure the growth and development of the IHGs is noticeable and traceable. For instance, the brand Holiday Inn Express is the fastest brand that has been growing over time and tremendously. The brand launched a Formula Blue design. The American hotels have adopted the strategy extensively, attracting middle-class people who like to travel worldwide to escape the boredom of their homes.
As a luxury brand, Candlewood Suites needs to consider that some of its hotels, like Hotel Indigo, will have doubled and grown to be the largest luxury brand globally after three years. Nevertheless, the IHGs need to implement their skills and monitor the wave of tourism and hospitality to know the new brand to venture into.
In the aspect of expansion strategy, IHGs need to develop new, improved brands that outstand the existing ones. Current brands of IHGs include Voco, Atwell Suites, and Avid Hotels.
IHGs brand, Voco, is a Latin word that means to call together. Tracing back its launch in 2018 holds a unique characteristic of a boutique hotel that provides a splendid experience to travellers. Its uniqueness also lines with beauty therapy, where a spa-like shower is offered, and not to forget that fast internet connection through Wi-Fi. Voco has proved to take care of the environment by giving out micro-filtered water instead of bottled water to the guests. By doing so, the Voco brand has remained to be known as an environment saver. It has continued to show its concern and competence during the pandemic by fumigating rooms and cleaning the properties inside.
b. Avid Hotels
It is the newest brand that IHG’s launched back in 2017 in Europe. Being the fastest brand is growing, IHGs has taken the initiative to drive its growth to the United States of America and Mexico. Its characteristic is making the brand fasten the popularity and development of IHGs. It offers quality services such as designed rooms that provide the guests sound sleep, advanced technology like connected Wi-Fi, and guaranteed accommodation when the guests arrive. The brand is serving the IHGs considerably as those who like to travel annually or seasoned-like times can access the rooms quickly.
c. Atwelli Suites
The brand, introduced in 2019, is the newest IHGs’ brand, ensuring the guest can stay up for six nights. It is a brand that targets opening its first hotel in Miami due to the growth of international business matters and international travellers. The hotel will be located close to world-class shopping centres for easy access to free time enjoyment. The hotel plans to have an area for the main lobby and not to forget a bar. As international business people will be passing near the hotel, the study meeting room is not left behind as it will make the meetings carried out to be productive.
The brand will ensure its fastest growth as it will focus on the evolution of travellers. It will ensure that the travellers travel around the world to have fun and learn and develop new knowledge. The brand will grow in the coming year as over twenty brand owners are massively planning construction, especially in the USA. The owners keenly aim for places where the market is expected to grow: Texas, Phoenix, etc.
Other than brands, IHGs has implemented different tools and techniques to ensure that their growth is guaranteed despite rapid competition from cheaper booking Apps like Airbnb.
a. Management of the Employees.
For IHG to grow worldwide, its internal environment has to be well prepared and monitored closely. Employers need to have a conducive environment to ensure the growth of IHGs hotels. By giving the workers training and skills, promoting the workers when a job is well done, and respecting their rights, the condition of the hotels will be improved, and it will ensure the travellers accommodate the rooms every day.
b. Online Market Strategy.
IHG has been investing in cloud-based technology and has been able to know the progress of the hotels. IHGs recently developed a new digital enhancement to enable the guests and the hotel to be well connected. In 2020, the IHGs launched the first flagship store situated on the platform of the Chinese Online Travel Agent, and it ended up being a partnership for both of the companies.
After growth in China, there is a need for guests worldwide to book from wherever he or she is. The flagship store has given access to all Chinese residents in China to book or search the rooms from the IHGs hotels easily. The strategy has dramatically helped the IHGs hotels face stiff competition from those who use the Airbnb store to book cheaper rooms to accommodate.
In the phase of post- Covid-19, the chief executive officer stated that there would be a rise in the demand for IHGs hotels, giving the momentum needed to furnish the present hotels in China.
2. Threats and Opportunities.
Despite this expansion strategy to grow and develop rapidly globally, there is a significant threat that it has been facing over the years of its operation.
i. Introduction of Newest Geographical Market.
IHGs aim to partner with the SAMHI group based in India will ensure that the hotels can expand quickly and residents can book to stay in the hotels easily. The association aims at branding the 2000 rooms again into the Holiday Inn Express hotels, giving the rooms a retouch of lifestyle.
ii. Production of More Services.
Relying more on providing food and beverages to the hotels will trigger the rise of revenue of the hotels by thirteen per cent. It will also venture into providing drinks during lunch or dinner to ensure their optimum utilization.
IHG is facing a lot of competition from different hotel groups like Hilton Grand Vacations Inc., Eldorado Resorts Inc. Full House and Resorts Inc. Booking sites like Airbnb have dramatically affected the operation of the IHGs hotels in terms of booking rooms. The site offers fast access to updated prices of rooms, and the costs and the rooms provide the serenity of a guest to feel at home. By doing so, the IHGs hotels have to come up with well-structured rooms, giving them a touch of a home-like environment.
Currently, the top-notch competitors of IHGs are AccorsHotel groups and Marriot. The IHGs will not stop facing competition, and it has to come up with ways to curb the situation.
b. Crisis Globally.
After the crisis of Covid-19, lockdowns affected the economic growth of IHG hotels as there was a restriction of movements and closure of the hotels. The hotels have ended up operating under stiff situations, and many staff lost their jobs.
c. China’s Recruitment in the IHGs’ Hotel.
IHG has recently noted that from the total percentage of the graduates in China, only a half per cent of end up venturing the skills of hospitality has caused the hotels to decline in the staff. The staff ending up in hotels lacks training, and the situation is worsening even after the Covid-19 outbreak.
Despite this having new brands that rule the hospitality, lodging, and accommodation sector and the tourism sector, the hotels need to have a system that ensures they lead for a long time. The IHG needs to consider its organization’s structure, people, processes, procedures, and culture to ensure recruitment worldwide is effective, especially in China.
a. Organizational Structure
The hotels worldwide need to have a similar structure starting from the CEO of a hotel up to the prominent CEO of IHGs. Also, the IHGs have used the observation method through online platforms during the pandemic of Covid-19 to identify the trends of other hotels and know how to fit in the current wave (Arumita, 2020).
The introduction of HUALUXE as an IHG brand in China, the brand gives the China hotels a touch of Chinese culture, and it will ensure that the hotels are getting daily bookings from the Chinese residents. The culture and hospitality of the hotels make the new guests experience the environment of China (Hu et al., 2021). On the other side, the employers’ competence in conversing with the Chinese ensures their needs and services are met (Hu et al., 2021).
IHG hotels are diverting the investments to China at a higher rate (Hardingham, 2012). Recent studies have detected that many occasions have taken place in China, like World Expo in Shanghai in 2010 and even the 2008 Olympics in Beijing (Hardingham, 2012). Also, China has been considered the fourth country worldwide in terms of international destinations and expected to shoot up shortly. IHGs, in return, have to venture its operations in China to guarantee better revenue soon.
Many hotels worldwide have lost the economic growth pattern due to the current Covid-19 pandemic. However, the efficient localization strategy of the IHGs hotels in China has, in turn, ensured that people living near the hotels could access the hotels for accommodation (Hu et al., 2021). Most of the IHG competitors in other places have ended up closing down, and China Hotels have been able to recover back the losses than the others. Other IHG hotels in different continents have adapted the growth rate of China hotels to escape huge losses (Hu et al., 2021).
The IHG hotels in China is recommended to venture high into the innovation process in the hotels to ensure the guests enjoy the rooms (Bailey, 2012). Structuring the rooms with a touch of Chinese innovation gives the Chinese guests a home-like feeling, and they end up staying up to the maximum limit of accommodation.
Intercontinental Hotel Groups is a platform that has significantly shown its strength in the hospitality and tourism sector, mainly in China. As it continues to develop and invent new brands, it needs to ensure that the brands are worldwide recognized to curb competition from other hotel groups.
Arumita, A. (2020). Changes in the Structure and System of the Shopping Center Area Due To COVID-19. Available at SSRN 3590973.
Bailey, A. R., Shaw, G., & Williams, A. L. (2012). Uncovering innovation processes in the hotel industry.
Hardingham, S. (2012). Why China? A study of why foreign hotel companies are rushing to develop new luxury hotels in China.
Hu, X., Ma, C., Ren, L., & Chen, P. J. (2021). When in “China”, do as the Chinese do: a case study of IHG’s HUALUXE’S localization in China. Journal of Teaching in Travel & Tourism, 21(1), 91-103.
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