TLH 314 sample

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Lahore University of Management Sciences, Lahore *

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AMC100

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Management

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Nov 24, 2024

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Introduction The hospitality industry has always been a challenging one and has seen massive growth over the years. In these modern days, the hospitality industry is also expanding globally, and for this reason, specialised strategy has been needed for the organisations. This report has been a detailed analysis of the international hospitality industry management. At first, the background of the hospitality industry has been analysed. Secondly, an organisation from the hospitality industry was described. After that, the SWOT analysis of the organisation and a market to the expansion of the operation of that organisation has been described. The PESTEL analysis and appropriate growth strategy for the organisation in the market have also been analysed. The forever interest of the human being for exploring the mother nature of the world and her immense beauty has led to many inventions and innovation in human civilisation. Human has always been fond of travelling. But moving from place to place has always been a critical one because the assurance of residence and food was always a matter of concern for the traveller. This immense need of people has led to the invention of a business which in the modern days is established as the tourism and hospitality industry. In the hospitality industry, people who travel to a foreign location or places far from their houses seek residence and gets foodservice and others in exchange for the relevant payment. This is the hospitality industry. In today’s world, the hospitality industry is an industry of immense growth and has led to the employment of thousands. The hospitality industry is also serving as one of the economic leaders of a nation. The historical flow chart of the tourism and hospitality industry is highly enriched, and it has a serial historical description. Like many other inventions in the world, the history of the hospitality industry also started from the Greek civilisation. The Greeks were highly fond of social gathering. For this reason, they established hotels which, as per the modern dialect, the hangout place for the male and in some cases, those places were used as brothel for the lower-class people. The second generation of development in the hospitality industry came from the Romans. The Romans were pioneered in many developments in human civilisation. They started the concept of hospitality organisations as they provided shelter and food service in the government premises of ancient Rome to the pilgrims and travellers. The concepts enhanced the modern day’s hospitality business approach. The British were behind the global expansion of the hospitality business concept. The modern gigantic hospitality organisation which we see today integrated with modern technology started in the 19th century. Now the top tier hospitality organisations possess all sorts of modern facilities that modern science has to offer. Reference – hotel industry – 2 SWOT analysis of IHG This is a detailed SWOT analysis of InterContinental Hotels Group Plc (IHG). It aims to examine the strengths and the weaknesses of InterContinental Hotels Group. It also aims to explore some of the opportunities and the threats facing the company. InterContinental Hotels Group plc (IHG), marketed as IHG Hotels & Resorts, is a British multinational hospitality company headquartered in Denham, Buckinghamshire, England. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index. Strengths

Profitability Lock (2021) reports that the revenue of InterContinental Hotels Group in 2019 was around $2.08 billion. In 2017, the hotel group delivered strong underlying profit growth and opened its highest number of hotels since 2009, including the most ever in both AMEA and Greater China (IHG, 2021). Global presence IHG operates in 100 countries and is one of the leading organisations in its industry. It has over 886,000 rooms globally. Its main brands are InterContinental, HUALUXE, Kimpton, Crowne Plaza, Hotel Indigo, EVEN Hotels, Holiday Inn, Holiday Inn Express, Staybridge Suites Hotels, Holiday Inn Resort, Holiday Inn Club Vacations and Candlewood Suites Hotels. Effective recruitment strategies IHG has established a strong recruitment strategy whereby it has got rid of the HR generalist approach and re-allocated the recruitment function to functional or operating departments. For example, payroll function was distributed to payroll departments and line-level recruitment was handed back to departments, thus eliminating the unnecessary delays and bureaucracy of recruitment. Weaknesses Controversies IHG found itself stuck in a number of controversies in the past. For instance, there was an international boycott campaign against it in 2013 for its decision to open a luxury hotel in Tibet. It was also accused of price fixing, and poor hygiene standards. These controversies affected the brand image badly. IGH Rewards Club The group’s loyalty programs such as Holiday Inn Priority Club and IGH Rewards Club have drawn numerous negative customer reviews. It was claimed by many customers that the points promised were not always given to the customers. Many customers were told the points have expired when they tried to redeem them. Loyalty points do not have expiry date! Weak IT security 1,200 IHG hotels were infected with credit-card stealing malware and guest information such as cardholder name, card number, internal verification code etc. were stolen (Kastrenakes, 2018). Opportunities New geographical markets Partnership in India with SAMHI group will rebrand 2000 rooms to Holiday inn express hotels. IHG in China is planning for 300 new hotels in China within the next five years 2018-2023 (USCHNEWS, 2018). More products/services 15% of gross revenue of InterContinental Hotels Group Plc in 2020 came from non-room services with 13% from food and beverage (IHG, 2021). Therefore, introducing more food and beverage items is worth exploring.

Threats Global crisis The global financial crisis and economic lockdowns affected InterContinental Hotels Group Plc very badly. It announced a massive loss in the first quarter of 2020. It also had to cut jobs in many countries. Macro environmental challenges may sometimes turn out to be extremely challenging for any organisation. Competitors The top competitors of InterContinental Hotels Group Plc are Marriott, Wyndham and AccorHotels group, with more competition from Hilton, Hyatt, and Choice groups. Hotel recruitment in China With the huge expansion in china, IHG is faced with a huge challenge as only half of graduates in China choose hospitality sector to work and there is a skill and training gap in front desk and restaurant staff, ‐ as well as key executive positions in HR, finance, and sales. Background to emerging markets There are distinct features of a mature market that are shown within emerging markets. Other markets that may or may not be established in the next as well as within past are also part of emerging markets. The emerging market has a high degree of productivity and fast expansion. In order to enhance the nation's economy, the primary goal of such a developing markets is to recruit both domestic and foreign investment. Buyers' incomes rise as a result of a better economy, which moves them into the working class (Leung, 2019). Organizations that wish to grow their business should invest in a developing market. The high value of the investment in international markets makes them a popular choice for investors. IHG has identified Vietnam like a new developing market in its latest research. Traveling to Vietnam is regarded to be quite safe. The beaches, riverside, Buddhism pagodas, and lively towns of Vietnam make it a popular tourist destination. When explore Vietnam, a person simply needs a backpack and expenditure around $40 and $50 per week to accomplish so. A seaside major city Vietnam, has long been a popular tourist destination. In addition to its gorgeous beaches, Da Nang also renowned for its rich history throughout Vietnam, the city of Da Nang is often regarded as the best area to raise a family. Tourists flock to Da Nang, Vietnam's northern part city, every year. Lush Mountain serves as a dramatic backdrop to its west coast position, making the sunsets even more spectacular. Reference – Vietnam as tourist destination -2 PESTEL of selected emerging market Political factor: There have been few demonstrations in Vietnam, which has helped keep the nation's political situation calm. People within Vietnam were protesting for the right to freedom of expression, and the Vietnam authorities was attempting to undermine them. The political situation within Vietnam has worsened and is now a serious concern, according to human rights monitoring group. Considering the government's best efforts, political corruption once at greater extent. Corruption is seen to be a problem in Vietnam, which is placed 119th out of 175 nations. All of these variables may have a significant influence on all of

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IHG's business, including its international and non-stated operations. Vietnam pursues a policy of building and maintaining good relations with any countries in the world regardless of their political outlook on global affairs. It is a member of the United Nations (UN), World Trade Organization (WTO), Association of Southeast Asian Nations (ASEAN), Non-Aligned Movement (NAM), and some other prestigious institutions. Though Vietnam had a bitter history with the United States, the relations between the two improved quite a lot in the last 20 years. Although Vietnam is involved in global politics, it is establishing strong ties with other nations. They have taken this opportunity of changing their travel document strategy to encourage more overseas tourists. Economic factor: Vietnam is the 46th largest economy in the world. Its nominal GDP in 2018 was worth $245 and is expected to reach $265 billion by the end of 2020 (Trading Economics, 2020). The country has made a lot of progress in poverty eradication and lifted 45 million people out of it between 2002 and 2018 (The World Bank Group, 2020). Its economic outlook for the next few years is positive and robust. It is interesting to note that Vietnam has come out as one of the largest beneficiaries of the trade dispute between China and the USA. However, it should also be noted that Vietnam has been struggling with high price increases for years. Effective travel industry regulations enable a yearly flow of 10 million tourists from throughout the world. The economic growth will benefit greatly from this assistance. After China as well as India, Vietnam is regarded as Asia's top beneficiary of FDI. The world's 46th-largest economy, according to the World Bank, is Vietnam (Suhardjanto et al., 2018). However, accommodation and transit costs in Vietnam are constantly growing. According to the research, Vietnam seems to be viable market for Hotels and other businesses. Vietnam's stated jobless rate is generally 2%, which is extremely low. Only with growth of IHG throughout Vietnam, these rates may be reduced and more people can find work. Social factors: The next element to discuss in the PESTEL analysis of Vietnam is the social environment. As of February 2020, the total population of Vietnam is around 97 million (Worldmeter, 2020). Buddhism is the major religion, and Vietnamese is the major language in the country. The life expectancy for men is 93 years, while 81 years for women (BBC, 2019). An emerging middle class is growing rapidly in the country and is expected to reach 26% by 2026 (The World Bank Group, 2020). Vietnamese people are generally friendly. Many tourists have shared online their interesting and memorable encounters with the locals. However, many tourists have also complained about being hassled, overcharged, and treated badly by the locals. Hotel benefits from the fact that Buddhism is still a prominent religion and a major culture in the nation. As a result of their fluency in the regional languages, IHG's executives and employees have a significant advantage in attracting new customers. The locals are warm and welcoming, and tourists enjoy exchanging ideas and stories with the locals about their travels and experiences. IHG can improve the impression of travellers in Vietnam by effectively managing its properties. Due to its small size, Vietnam has the capacity to do businesses with pleasure. Technology factor:

As a result of its steady economic growth, Vietnam is presently reorienting itself toward becoming a manufacturing centre. Integrity can be reduced in Vietnam so that the country can encourage foreign business and build a positive reputation across the world. According to a recent study, Vietnam is the eighth-largest IT service supplier in the world. With it now, IHG is able to effectively implement technological enhancements in their goods and services as well as attract more consumers, thereby increasing their revenue. The finance minister has implemented a number of initiatives aimed at strengthening Vietnam's position in the fields of communications technology. Legal factor: For investors, some legal aspects of Vietnam's microeconomic are more complicated. The unpredictable legal climate in Vietnam seems to be a major worry for both Vietnamese and international companies. Foreign businesses and hotels have been allowed to function and participate in Vietnam, whether through some indirect investment, by the Vietnamese government. IHG is now able to become a separate legal entity. As a result, IHG will be able to simply extend its service offerings. Environment factor: Hanoi represents Vietnam's most famous city within Southeast Asian region. People in Vietnam have a greater understanding. For the contributing to some local population in Vietnam, IHG may implement efficient pollution-control methods. The Vietnamese people's primary priority is to maintain their environment safe and healthy. Hotels and some other businesses in Vietnam must take remedial actions to ensure that their establishments are secure against natural catastrophes. In order to transform Vietnam's agricultural economy into a service industry, tourism is regarded the most important aspect. Tourism and healthcare are at risk from the present COVID-19 outbreak, though. Reference – business environment for hotels in Vietnam- 8 Examine the strategic growth options that the InterContinental Hotels Group would be best to pursue Ansoff Matrix This Ansoff matrix method was among the most important strategies for identifying potential markets that will lead to increased opportunities for income profits in the business. This strategy is focused on the development of unique and creative goods and services within market in order to meet the demands of a diverse variety of commercial participants. Tourism, airlines, and lodging organisations are included with the IHG. There are several business environment aspects that have an influence on such a firm ’s profitability and development, including resorts, meals, hotels, as well as other lodging establishments. IHG group, though the use of this Ansoffmatrix, modifies the technology, organisational management, client service strategies, developments, and concepts in order to gain market share. With the implementation of different industry strategies, the firm is able to provide clients with efficient and productive services together in competitive market environment. The development of any new hotel products and services, as well as the entry together into growing market, has been the most successful method of entering a foreign market (Dawes, 2018). This model for the IHG has four dimensions, which are as follows:

Market penetration This is the approach whereby the present services and items of the business are offered to consumers using efficient marketing methods, and it is also known as market penetration strategy. This strategy, which involves providing clients with substantial discounts and coupons, is amongst the most successful methods of generating profit and increasing sales. The small reductions offered on important events contribute to the growth of the sales volume while also satisfying the needs of current clients (Dawes, 2018). The usage of loyalty program cards is another strategy employed by the business to provide special offers to only certain clients. The decrease in the pricing of current services, as well as the provision of package including the vacation packages as well as family vacation package, simplify things for the different clients to travel as well as remain at the facilities in comfort as well as convenience. Market development In a changing market, market penetration is one of the strategies for promoting a company's operations and selling its current items to customers. In order to cater to the new consumers entering the industry, new shops and activities are being introduced into the market. Flights that provide new routes as a result of the regional growth of the present hospitality sector and in order to satisfy the needs of new clients in the organisation serve as a model for the market development. Customers must be provided with a variety of services and customised commodities, including super luxurious accommodations and package during special events at a hotel, among other things. Product development The introduction of creative and unexpected goods and services to their consumers, as well as the provision of fresh creativity in response to the demands of various clients 8 is considered as product development. The introduction of new destinations by both the travel organisation, as well as the upgrading of hotel services, is among the methods that may be used in the organisation. By using extensive brand and product identification, a new product may be successfully developed and introduced. It is amongst the most inventive methods of generating large profits and accelerating the development of a company. Diversification Diversification seems to be the addition of a new offering to an existing firm in the hotel industry in order to provide services to a wider range of clients. Diversification examples include the merging of guest experience with small kitchen facilities and the expansion of a firm's supply chain into a larger geographic area. Another approach that may be used in a company is the addition of additional services. For example, an established tourist business might develop its own luxury hotel, which would benefit both the firm and its customers. When it comes to addressing the needs of different market clients, the IHG can provide an excellent tourist service. Reference – using Ansoff matrix for business growth in emerging markets – 5 Porters generic strategies One of the primary goals of the concept is to achieve competitive advantage through the use of suitable techniques. The cost leadership, differentiation, as well as focus strategies are the three core tactics on

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which the method is generally focused. IHG may get a significant advantage by cutting their costs, offering a diverse consumer experience portfolio, or focusing on a specific area of their business. This Porter ’s generic cost leadership approach assists in establishing a strategic advantage through decreasing the cost services. Cost leadership Cost leadership approach assists in establishing a strategic advantage through decreasing the cost services. This cost leadership plan is now the most important strategy for IHG across all consumer markets. This approach contributes to the expansion of market dominance by focusing on individuals from the middle class. According to the PESTLE study of Vietnam, the number of middle-class individuals is rapidly expanding . IHG's primary goal is on making its goods as inexpensive and accessible as possible to people all around the world. In addition to decreasing the price, the IHG hotels may provide numerous discounts and offers in order to retain their revenue and overall performance. Differentiation To attain their large increases and success objectives, IHG use this method in conjunction with their premium-pricing plan, which they call "cost leadership." This approach assists IHG in extending their client base via the provision of new goods and services to its existing customers. They are primarily concerned with differentiating their services though the innovation, as well as with the well-being of their customers. In addition, managers may utilise their brand mark to distinguish themselves from their competition. This has created a brand public image in the minds of customers. Focus approach The primary objective of this approach is to urge IHG to concentrate on their capabilities in order to increase the number of customers who are targeted. As a result, firms are able to better service specialised market segments and increase their prospects in market research. The IHG should implement this method at low price while yet offering customers with the greatest value possible. Hotel services are delivered in accordance with the requirements of the customers under this model. Most of the attention is focused on the customer preference tastes, customer experience designs that are easy to attract customers. This allows for the revision of brand strategy as well as the development of continuous quality improvement product design. Reference – using porter generic for business growth in emerging markets – 5 Nykiel’s fourteen hotel strategic growth options  Horizontal Expansion- IHG will be targeting every aspect of the Vietnam Hospitality industry gradually.  Geographic Expansion – IHG will start from a diversification focus at first then gradually adopt a market penetration strategy.  Product Hybridisation – Bringing continuous innovation to the offerings of IHG.  Specialisation-Specialist – Employing local and global experts to ensure maximum efficiency.  Product Tiering – Maintaining cultural integrity while developing the value proposition.

 Product Re-Branding – Develop a market strategy where local people can relate. Non- Franchising- Avoiding franchising to ensure full authorisation of the operation.  Franchising– Such approach to be taken only when strategic incapability.  Brand Collection – Acquire local brands under its subsidy.  Management Contracts- Appointing skilled and talented locals to the management.  Global Positioning – Uphold its global brand value in every operation. Reference – using Nykiel’s fourteen strategic options for business growth in emerging markets – 2 Justification of strategy The efficient growth of IHG within a competitive business including Vietnam may be achieved through the development of a strong reputation and the reinforcement of programmes that generate high profitability and customer loyalty inside the business, respectively. By effectively expanding the scope of solutions for additional clients, the IHG hotels may implement effective price policies including cost leadership strategies for its consumers (Omsa et al., 2017). The International Hotel Group (IHG) is quickly 10 expanding its company with the assistance of financial management in order to better serve its clients. Recently, its IHG organisation announced a cooperation and partnership with the Vietnamese government to improve and expansion of the firm's operations in the country. Using modern technology and methods, the IHG may attract new clients to the company while still meeting the requirements of existing customers. The practical implementation of Ansoff technique with Porter's sales promotion may support the company in its efforts to grow its operations. Profit as well as growth within company may be increased by the use of many strategies including product development, market penetration, market development, and diversification, among others. The implementation of the porter generic strategy as the growth approach will shape the value proposition of IGH in a more efficient way. The future of the hospitality industry fully lies in technology. The customers are not just anymore satisfied with good room and good food (Hussey, 2001). Apart from the regular luxurious offerings, the customers also seek the integration of the newest technology in the overall service, such as; artificial intelligence, augmented reality, voice control command, efficient feedback system. In the next 5 to 10 years, the hospitality industry will incur these changes. Keeping it in mind, IGH also needs to develop its value proposition. To make the organisation strategically capable, the approach taken by the porter generic strategy should be backed up by the process of Nykiel’s fourteen hotel strategic growth options. The implementation of the Ansoff Growth Matrix will help IGH to capture great value from the market. Here the approach was taken by IHG whether market development or product diversification needs to back by critical market research and development. The contemporary challenges will be constant factors. The organisation needs to make the structure strategically capable, and following Nykiel’s fourteen hotel strategic growth options can make the process easy for the project managers. The manager needs to have the foresight to understand changing market demand within the 5-10 years and develop the growth approach as per it.

Reference – strategic growth in emerging market – 3 Conclusion It concludes with a discussion of the many worldwide business tactics that IHG might use to expand and develop its company in the present business climate. Several tactics must be used by the IHG organisation for learning and success in Vietnam, including new products and services and expansion, in order to achieve the desired results.New clients may be attracted to the firm by using the Ansoff matrix approach and Porter's business development tactics to organise the company. Successful marketing management for the development of company operations into other sectors of the firm was used to conduct a SWOT as well as PESTLE analysis of IHG's organisation.The company's strong profitability are due in large part to the different marketing methods and staff planning it employs. The research also evaluates several business techniques for firm learning and success. After a 5 period of analysis, the IHG numerous business ideas are finally put to use. Reference IHG (2021) Annual report, available at: https://www.ihgplc.com/investors/annual-report (accessed 25 March 2021) Kastrenakes, J. (2018) “1,200 InterContinental hotels were breached by credit card stealing malware” https://www.theverge.com/2017/4/19/15363800/ihg-credit-card-breach-details-lookup-tool (accessed on 04 July 2018) Lock, S. (2021) Revenue of the InterContinental Hotels Group (IHG) from 2007 to 2019, available at: https://www.statista.com/statistics/273254/revenue-of-the-intercontinental-hotels-group/ (accesse d 27 March 2021) USCHNEWS (2018) “Intercontinental Hotel Group to Add 300 China Hotels Within Five Years “ http://uschnews.com/ihg-to-open-300-more-mainland-china-hotels-within-five-years/ (accessed on 04 July 2018)

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