The report examines the background of Intercontinental Hotels Group and its business model. It also investigates how the company uses strategic plans to compete in its markets, and the benefits it derives from having these plans throughout the entire process. In summary, Intercontinental Hotels Group is a worldwide company that specializes in the hospitality and tourism industry. It has a clear vision, mission, and values, supported by efficient strategic policies to achieve its goals. Central to their operations is the implementation and monitoring of strategies, enabling them to adapt their approach as necessary.
Background of Intercontinental Hotels Group (IHG)
The history of the Intercontinental Hotels Group dates back to the 17th century, when William Bass established Bass Brewery in 1777. The business expanded across the UK and other areas, becoming the top Brewers by the late 18th century. In 1876, it officially registered its trademark as Bass Red triangle.
The company began its venture in the hotel industry in 1988 with the acquisition of Holidays Inns International. This was followed by several other international acquisitions. In 1998, the company acquired Intercontinental Hotel Company, along with its prominent hotels and resorts globally. In 2002, the group made the decision to separate its hotel and soft drinks businesses, creating a separate entity known as Intercontinental Hotels Groups Plc. The company then focused solely on the hotel industry and listed its stock on the UK and US stock markets in 2003. Today, the group boasts a portfolio of over 4,400 hotels worldwide, offering midscale and upscale services to its customers.
The chain’s primary focus is on owning, managing, and franchising hotels globally, operating under seven different hotel brands: InterContinental, Holiday Inn, Holiday Inn Express, Hotel Indigo, Crowne Plaza, Staybridge Suites, and Candlewood Suites. (“IHG at glance Factsheet”).
Evaluation of Strategic Plans for Intercontinental Hotels Group
It must be noted that almost all companies have a strategy, whether formal or informal, as having a strategy requires understanding the business and desired future achievements. K. Andrews (1971) supports this idea by defining strategy as “the pattern of major objectives, purposes or goals and essential policies or plans for achieving those goals”. The Intercontinental Hotels Group bases its strategic goals on its vision/mission, which outlines its purpose and objectives and declares that the chain’s ultimate objective is to “grow by making their brands the first choice for guests and hotel owners”. This ambitious statement continues to shape the group’s future operations, and all other plans are oriented towards the achievement of this ultimate goal.
The company’s vision and mission statement define its operational approach by stating its future goals. These goals are supported by the company’s values, which govern its behavior. Intercontinental Hotels Group adheres to values such as “Doing the right thing, Showing we care, Aiming higher, Celebrating the difference, and Working better together.”
The main objective of the chain is to achieve growth by becoming the preferred choice for both guests and hotel owners, while staying true to their values. All of their plans are designed to achieve this goal and their operations reflect this wherever they are located. The group has clearly stated their intentions and is working diligently to ensure that these objectives are successfully met. (Our Strategy and Annual report)
Intercontinental Hotels Group’s Strategic Plans
According to Kenneth Andrews, the organization must have necessary plans to achieve its overall objective. The International Hotels Group has clearly stated that their strategy is to create the most powerful operating system in the hotel industry, with a focus on large markets and segments where scale is crucial.
The group has explicitly stated their intention to concentrate resources on the most rewarding opportunities in order to achieve their core strategic objectives. They have broken down their core strategy into specific strategic priorities, allowing them to effectively allocate energy and resources. They have also outlined the strategic initiatives they intend to implement to support the achievement of their goals. (Source: Our Strategy and Annual Report)
- Improving the performance of their brands. Brand recognition and enhancement is an important part in many industries especial in hotel industry and the intercontinental Hotels Group has made a lot of effort in trying to improve their brand recognition and loyalty.
- Generating excellent returns from their hotels Of course for any business to continue to operate, it must have the financial backers who own it and they too require a return on their investment. The Intercontinental Hotels Groups has made a major priority to generate good margins for their investors. c. Putting their market scale and knowledge to good use
- It is part of their priorities to use their presence in the market and knowledge to their advantage and continuously developing more hotels to their portfolio using their brand names. This experience and knowledge enables them to make their presences notable in each market hence they choose brands that are suitable to each market.
- Strengthening our organisation Building the capacity and capability of those (the people) who will be responsible for running of the business is fundamental for any business success and Intercontinental Hotels Groups has made this strategy as a priority. This is coupled with binding solid partnership within the group and stakeholders worldwide.
- Corporate Responsibility strategy Corporate Responsibility has become the focal strategy in many businesses in recent years and it is sensible to see that a group like Intercontinental Hotels Group has put that at the heart of their business operational policy.
Intercontinental Hotels Group’s Strategy Implementation Approach
Implementing a strategic plan is crucial, but it is equally important to be able to transform it into achievable plans and successfully execute them for the business’s success. Many businesses struggle with implementing their strategic plans, which ultimately determines their success or failure. The Intercontinental Hotels Group recognized this challenge and therefore established policies that facilitate the smooth implementation of their strategies worldwide. One key technique they employ is having belief in their core values and trusting that their strategies will guide them in attaining their goals.
They prioritize communication as their primary tool for effective understanding and achieving their goals. This communication process also includes engaging with different stakeholders at various stages. They also strive to ensure that their hotels are conveniently accessible to customers, in line with their vision of becoming the preferred choice for guests and enhancing customer satisfaction.
This is why Hilton Hotels & Resorts strengthens their distribution network and offers Priority Club Rewards to customers in order to build relationships with them. They believe that maintaining a high quality of services is essential for upholding the standard of their brand and fostering long-lasting loyalty. Ensuring a good return on investment is crucial for future operations, and thus, the company has been employing various measures to incentivize more guest visits to their hotels, thus enabling them to achieve their strategic objective.
The company emphasizes the importance of continuously improving their processes in order to increase efficiency and effectiveness. They utilize a variety of advertising and marketing methods to reach a larger customer base and have also embraced the internet as a booking platform, offering websites in 13 different languages. Additionally, they have a well-distributed sales force that can assist with bookings in multiple languages, ensuring quick service. The development of their employees’ skills has provided them with a competitive edge.
They achieve this by employing various personnel development methods to ensure their services meet the highest standards. Additionally, building strong relationships within their team is a strategic approach to ensure long-lasting partnerships. They also collaborate with different stakeholders, including at the community level in various regions of the world, to maintain high standards as a socially responsible company. Effective tools such as communication and engagement are utilized to fulfill this commitment.
Advantages of Strategic Planning
The Intercontinental Hotels Group is content with their current achievements, which stem from their beliefs and practices. These accomplishments are a result of their overarching goals and the strategies employed to attain them. In their Annual Report 2009, they outline how they accomplished their strategic objectives and their plans to continue this success in 2010.
This demonstrates their commitment to their strategic plans and their ability to modify them as needed to meet the challenges of 2010 and beyond. Their strategic plans have significantly enhanced their dedication to guests and owners, making them a powerful force during the economic downturn that has been difficult for many businesses. The chairman and chief executive have both emphasized these commitments in the 2009 annual report, as they have paved the way for future success in the business. (Our Strategy and Annual report).
In conclusion, I have discussed the strategic plans of the group and how they have proven beneficial. However, it is important to provide recommendations in the following areas to further enhance value. Considering the escalating competition, it is advised for Intercontinental Hotels Group to bolster its distribution network by incorporating social networking sites. This aspect has become crucial in various industries, including the hotel industry, as it facilitates connective links between individuals.
The mobile internet communication sector is growing rapidly, so it’s crucial for businesses to expand into multiple regions and establish a strong brand presence. Incorporating this strategy into their expansion plans would be advantageous. As markets in America and Europe become saturated, it’s highly recommended for businesses to enter Latin America, Asia Pacific, the Middle East, and Africa. It’s crucial for businesses not to be left behind in entering these emerging markets gaining traction.
The use of discounting as a competitive strategy in the hotel industry is becoming more prevalent due to economic uncertainties. To effectively respond to this, it is important for the group to develop a strategic plan for dealing with rival companies’ discounting strategies, especially when entering new markets.
To maintain competitiveness in pricing against competitors, it is essential to establish effective cost management practices to achieve optimal results through efficient resource utilization at minimal expense. The influence of natural disasters, like volcanic ashes, on businesses worldwide has been observed. Therefore, it is prudent to advise the group to formulate a strategic plan to handle such uncertainties and contingencies.
