InterContinental Hotels Group (IHG) is one of the most well-known hotel groups in the world, and offers a wide array of hotel brands and property types all over the world. The company has a 200-year history in the hospitality industry, which led IHG to its current position on the global hospitality stage. IHG’s story began in 1777, when William Bass opened a brewery in Burton-on-Trent, United Kingdom. The subsequent opening of railways, enhanced human mobility, and a dramatic turn toward urbanization enabled Bass to take his beer worldwide; by the end of the century, he had become the world’s largest brewer.mBy 1949, businessman Kemmons Wilson generated the idea of providing traveling families with comfortable and affordable accommodations they could trust when they went on a family trip — to Washington DC, for example. In 1954, Holiday Inn became the first hotel brand to authorize franchising. In two years’ time, Holiday Inn became the world’s largest hotel brand. Holiday Inn launched Holidex, the world’s first computerized hotel reservation system in 1965 and linked it directly with airline and travel agent systems in 1977.
In 1983, Holiday Inn launched Priority Club Rewards as the first loyalty program in the industry, which rewarded guests every time they stayed at a Holiday Inn property. UK-based Bass PLC (holding company of the legacy beer brand) took the full control of Holiday Inn by the early 1990s; soon after, in 1995, the internet era rushed into the hospitality industry when Holiday Inn accepted the world’s first hotel reservation over the internet.Starting in 2000, Bass PLC transitioned its focus from beer toward the hotel business. After IHG became a standalone company in 2003, IHG Academy was launched in order to help local people develop hospitality skills to achieve their goals and to feed excellent staff into the company. In an effort to adapt to the challenges of the modern world, IHG next focused on building sustainable hotel properties, particularly by installing the Green Engage system, which helped hotels to measure, monitor, manage and report on energy, carbon, water and waste on a global operations level. Simultaneously, IHG increased its emphasis on giving back to communities in an effort to improve its corporate-social responsibility.
Mission, Vision, and Core Values
IHG built its corporate brand on a promise to provide true hospitality for everyone through a group of unusual brands, and through unique, distinctive and memorable guest experiences delivered by skilled team members across the world. These experiences were to be followed up with a meaningful, reliable guest loyalty program (Annual Report, 2017). With hotel properties and corporate offices around the world, IHG’s diverse combination of nationalities, cultures, religions, races and belief systems contribute to the core values of IHG: to do the right thing, to show they care, to aim higher, to celebrate differences, and to work better together. All IHG employees share these values and help them coalesce as one team. The vision of IHG is to be one of the great companies of the world by creating great hotels guests love; with strong company values that all employees believe in, IHG will continue to make history in the hospitality industry (About Us, 2018).
Scope and Business Model of the Company
In general, IHG has 15 distinct hotel brands with more than 5,500 hotels and over 826,000 guest rooms in its worldwide system, which covers about 100 countries. Over 1,300 new hotels are in the development phase. As an asset-light business, IHG is both a manager and franchisor of hotel brands. By primarily franchising properties to — and managing hotels on behalf of — third-party hotel owners, IHG focuses on growing fee revenues and improving margins with limited capital investments. This strategy has enabled IHG to build preferred brands and strengthen revenue delivery systems at the same time.
Overall Business Strategy
Again, as an asset-light business, IHG’s strategy is to concentrate on attractive industry segments and ‘high-growth’ geographic areas, including major global cities that attract significant international travel. IHG has a five-step strategic model, involving building preferred brands and leveraging scale, improving its loyalty program, increasing revenue for its shareholders through low-cost, direct channels, 4) adapting its owner proposition, and enhancing its preferred portfolio of brands by emphasizing a targeted portfolio for both shareholders and consumers. IHG’s targeted portfolio includes attractive markets, highest opportunity segments, and a managed and franchised model. According to the the IHG Chairman in 2015, Patrick Cescau, IHG wanted to focus on becoming more agile and scaling up.
Value Proposition & Competitive Advantages:
IHG is focused on delivering a strong guest experience and providing superior value-creation through its brands, the scale of the company, its people, its systems, and its insights. A major part of IHG’s success is owed to its talented employees, who enhance guest experiences, maintain high levels of service, and deliver the IHG brand promise on a daily basis. As such, they put a high importance on attracting, preserving, and investing in its employees. IHG also has a diverse brand portfolio and strong loyalty program that allows the company to offer hotels that are geared to different segments, suit every consumer’s needs, and also appeal to potential owners. Their strategy to concentrate in attractive markets and specific “gateway” cities, along with the sheer size of IHG, has enabled the company to create operational efficiencies and take advantage of economies of scale. These strategies have resulted in higher profit margins and the ability to reinvest in their brands. IHG has a strong focus in developing robust technology platforms to completely transform the guest experience and make it more interactive through digitalization. IHG prides itself on its channel management systems, which the company uses to drive demand to its hotel brands and to deliver high revenues at the lowest possible cost. Additionally, IHG claims that their network of hotel owners around the world is one of their biggest assets.
