Intercontinental Hotels Group Analysis

cosmopolitan Hotels crowd AnalysisIntercontinental Hotel Groups is an international hotel c wholeer- step to the fore that has a goal that it always aims at achieving is that to create striking hotels that the Guests love.Intercontinental hotels group which is similarly known in short form as IHG has to a greater extent(prenominal) client entourage avail adequate under their banner than each other hotel group. IHG has grown from a very sm wholly beau monde to a massive bon ton handling heterogeneous branded hotel properties under its wings. IHG has more than 650.000 directions in everywhere 4,400 hotels crossways 100 countries the total waistband that ar do by client in the IHG properties is oer cxxx gazillion every year. 1(IHG website)With a bear view of what are its priorities, IHGs principal(prenominal) purpose is creating nifty Hotels Guests Love with everything done foc engrossd on the guest the cater. It have a bun in the ovenizes hotels in three d ifferent ways as a franchisor, a manager and on an bothow and leased basis. It also operates s level off leadership hotel brands InterContinental, Crowne sum, Hotel anil, spend student lodging, holiday hostel Express, Staybridge Suites and Candlewood Suites. It also manages the worlds largest hotel committal create mentally in the indus rise known as the, precedence ordering Rewards, which has 48 one thousand thousand members worldwide. IHG is molded or so these three regions The Americas Europe, Middle East and Africa and Asia pacific. 2(IHG Annual Report)1 Strategic Corporate Development History of IHGThe arrangement of IHG has foregone by dint of sundry(a) stages as any other companionship would have gone by means of which was interpreted successfully by William deep who had a brewery in 1777 slowly merely piecemeal entered in the hotel industry by achievement of a breweries like the Mitchells Butlers in the 1960s which grew considerably large which w hen the political relation realized issued orders in legislations that breweries providenot hold on a large itemise of bar cortege which then make inscrutable reduce the pubs it owned dramati mentiony which triggered a extensive amount of cash flow which gave inscrutable an ability to receive an international hotel business which started with the acquisitions of a few hotel groups like Holiday inn in 1988 also makeed the Holiday hostelry Express to be complementary color to the Holiday auberge brand, side by side cryptic grew his pub business side by side mystifyd The Harvester Chain of Restaurants in 1994 also launched its saucily brand of hotels known as Crown Plaza Hotels resorts climbing up to the upmarket hotel market.In 1996 bass tried to realize of Carlsberg Tetley which again was hampered by the UK government which helps Bass to come back on line concentrate on the hotels pubs divisions leaving breweries aside.A year later(prenominal) in 1997 the ho tel business focus becomes truly brand foc utilize because Bass had already change a few north American mid racing shell hotels that held back to the brand name of the hotels with franchising agreements. too that year Bass created launched a new brand of hotels known as the Staybridge Suites which was targeted at the upscale hotel market. Staybridge suites became the fastest brand in this upscale segment to reach 50 units in America.In 1998 Bass acquired the intercontinental hotel company, adding adding to its quite a little another upscale brand to its hotel portfolio. It was another considerable acquisition to cost saving synergies to the fold of hotel portfolio run by Bass.In 1999 Bass again acquired 550 handpicked high emf sites in UK also a strong 3500 strong pub acres from allied domecq.In 2000 Bass went on to acquire the Southern peaceable Corporation (SPHC) in Australia, which guaranteed Basss position as the leading hotel company in Asia Pacific. Later in the year Bass sold of his Bass breweries for 2.3 zillion pounds. This was the final step by Bass to completely focusing on being the international hospitality retailer from being a domesticated brewer a process which took a long head of 10 years to complete. oer the period of while Bass sold transfer name of bass and changed the name to Six Continents PLC. a name which it break outed into to study the orbiculate spread of the groups business.In the month of February 2001 Six Continents sold 988 of its littler unbranded pubs for 625 one million million pounds, which further funded the buying of the European Posthouse chain of hotels for 810million pounds. The acquisition of this company which had strategi shouty placed hotels could be converted to Holiday Inn concentrating the Holiday Inn brand in UK Europe. Later that year it went on to acquire Intercontinental Hong Kong for 241 Million pounds strengthening its position in the Chinese Asia Pacific markets.On 1st October 2002 Six C ontinents Plc announced its separation of the groups hotel soft drinks businesses (to be called Inter Continental Group Plc) from the retail business (to be called Mitchells Butlers Plc) of which 700 million Pounds of the proceedings returned capital to shareholders. The whole procedure of separation was completed on the 15th of April 2003. Intercontinental Hotels Group Plc (IHG) from then on is a distinct, trenchant company, listed in the UK US stock markets.In July 2003 IHG sold Staybridge Suites to Hospitality Properties self-reliance (HPT) entered into a 20year management agreement. Later in the year they added a midscale elongated stay brand Candlewood Suites to its portfolio.In the year 2004 IHG announced the introduction of a new brand, hotel Indigo which center on providing affordable boutique accommodation. In the same month, the group adopted new standards for sell and re-selling hotel rooms for guest stay through online travel companies.Following the success of the Up case market brand of Staybridge Suites North America IHG launched its extension of Staybridge suites to UK in April2005. Also in 2005 IHG went ahead(predicate) disposed of its soft drinks 100% holdings in Britvic Plc. With this governance IHG became a company with a pure hotel focus.In 2006 IHG went ahead sign(a) a joint venture with All Nippon Airways (ANA), resulting the side by side(p) projects IHG ANA hotels group japan will be the largest international hotel operator in Japan, the worlds second largest hotel market. The get by saw the introduction of three new brands created for Japan. ANA-IHG, ANA-Crowne Plaza ANA Holiday Inn.In the year 2007 IHG announces that a worldwide relaunch of the Holiday Inn brand family, comprising Holiday Inn, Express by Holiday Inn Holiday Inn Express. The re launch was done with the intention of giving it a refreshed contemporaneous brand image. All the hotels were supposed to have completed the re launch in 2010 with the 1st re launch taking place in 2008.In the year 2008 after the re launches of Holiday Inn taking place Staybridge Suites extended its brand more in UK the first Hotel Indigo opened in London.In 2009 the1500th hotel was relaunched over the 40% of Holiday Inn Holiday Inn Express.Strategy used from the start to the current time periodBass the main brain can the whole formation of the Intercontinental Hotel Group has played a study role in the slow but steady result of this company from a small company to a worldwide known company. Bass has grown this huge group through the basis of trial error round which he has experimented in various concepts of owning then selling then franchising finally managing properties. Bass has being following the linear model of growth through various acquisitions. InterContinental Hotels Group PLC was formed by the separation of Six Continents PLC (previously Bass PLC) on 15 April 2003. The restaurant and pubs part of Six Continents became Mitchells Bu tlers plc.However, IHGs brands trace their record back a lot further than 2003. Our Holiday Inn brand, one of the worlds closely recognized was created in the 1950s by Kemmons Wilson in the US. InterContinental, another of our brands was created by junk Am in the 1940s, when hotels were built in many of Pan Ams destinations. 3(ihg.com)Over the past few years, Intercontinental hotels group has maintained itself strategically to be more efficient and effective and make full use of their global status. A predominantly franchised and managed, fee-based business was the main focus of IHG.The scheme that IHG followed made their income stream predictable with a strong cash extension which allowed it to anticipate in growth because all their new hotels were funded by third-party investment funds.IHG went ahead and relaunched Holiday Inn in 2007 and although the unexpected economic circumstances that came by IHG during that time period, it went on and got on with the $1 billion progr amme because of the flavor of the heads of IHG that it was exactly the right time to go ahead with the relaunches. The relaunch went on to build back peoples perceptions of Holiday Inn. The guest wanting to try Holiday Inn with IHG with its value theyre giving the Brand once down another try and liking and accepting what they found. Guest satisfaction was going up and possessors could make up ones mind the Revenue per rooms out perform. These economic circumstances might reckon like a great reason to shy away from devising such big changes, but time will show that it is twain a very opportune and very effective initiative for this, our biggest brand, as quoted by the CEO of IHG Mr. Andrew Cosslett.3 http//www.ihgplc.com/index.asp?pageid=40Current strategy used by Intercontinental Hotels GroupBass the main brain behind the whole formation of the Intercontinental Hotel Group has played a major role in the slow but steady growth of this company from a small company to a worldwi de known company which currently has an operating strength of 4400 hotels with 130 million guests visiting a year and under its umbrella has and widely known and reputed hotel brands covering all the major segments of the market, also have a reservations body which consists of 10 call centers in 29 languages it has also strived to be the top leader in the market has been able to position itself through its strategy of growing doing sell in hotel sector have been able to position itself among the 6 largest hotel market, much more than any other company.Intercontinental hotel group has also been able to make the no.1 website for its guests investors in 13 different languages. They also have a global gross sales team of 8000 to conduct the sales of the hotels situated all over the 100 countries that they have their presence.Intercontinental hotels also has a fealty programme which offers priority club rewards which are largest in the industry for over 48milllion of the guests w hich has been planned so strategically that .It has been stated on IHGs website that We have go from investing heavily in hotel properties to return to our roots as a hotel franchise and management company with only a few owned assets. This change of focus has led to an industry-leading asset sale programme. Since 2003 we have sold 2.9 billion worth of property. Many of these hotels have remained under our brands with management or franchise contracts, thereby creating a future income stream for IHG 4 (ihg.com).Over the past few months, IHGs continued growth in new rooms has helped to put off some of the receipts lost from Revenue per room declines. tearaway(a) in coming revenue into the hotels had been a priority and its system is the cardinal to possessing this. Their system comprises of world class reservations centres, websites, global sales teams and Priority Club Rewards faithfulness scheme and delivered 68 per cent of rooms revenue to the hotels in 2009. Reducing the o verall cost base of IHG was crucial to managing through the downturn. IHG was already reducing costs to run the properties more effectively but with the economic downturn they steeped up the pace of change that was being gradually run. While they were reducing costs by taking better good of their way of operation as well their spread being worldwide, this also forced them to make reductions in the number of staff which unfortunately wedged jobs of IHG staff all over in the majority of properties. All these actions were taken in 2009 to reduce costs, while it was a very onerous period of the economic downturn it allowed IHG to save a lot of cash and continue its investments in those things that attract guests to come to its hotels and revenues to the owners. The great working relationship that IHG shares with the owners of their properties, both directly and through the IAHI, which is IHGs Owners Association, has also been major contributor to the quick recuperation also to the m assive expansion taking place. By working on board with the hotel owners, IHGs able to focus on the guest experience and on delivering bulky Hotels Guests Love. 5 (ihg.com).4http//www.ihgplc.com/files/reports/ar2009/files/pdf/2009_Annual_Report.pdf5http//www.ihgplc.com/index.asp?pageid=40The 48 million members of IHGs Priority Club Rewards programme remained loyal though the economic downturn and had been close offerive during the difficult times. Not only did these guests stay with IHG more often, they spent more when they did. A guests loyalty can never be taken for granted it is something that can take years to achieve and seconds to lose. So IHG had made sure they have continued to add utilitys to the loyalty programme right through the downturn, and made membership of it even more worthwhile. In 2009 it en involute six million new members into the programme thats a significant number of people whose first superior will now be to stay in one of IHGs hotels.IHGs future gro wth will be achieved predominantly through franchising and managing rather than owning hotels which in turn will drive down costs increase pay by the fact that all the investment in the hotels would be done by third parties. Approximately 641,000 rooms operating under the Group brands are franchised or managed and 5,800 rooms are owned and leased.The franchised and managed fee-based model is benignant because it enables the Group to achieve its goals with limited capital investment at an deepen pace. A further advantage is the reduced volatility of the fee-based income stream, compared with ownership of assets.A discern characteristic of the franchised and managed business is that it generates more cash than is required for investment in the business, with a high return on capital employed. before long 87% of continuing earnings before regional and central overheads, transcendent items, interest and tax is derived from franchised and managed operations.The Current Strategies followed by IHG Hotels Group 90% of deals gestural in scale markets and key gateway cities 10 signings of Hotel Indigo and Staybridge Suites outdoor(a) of North America 439 hotels opened globally. Increased proportion of revenue saving through IHG global reservations channels and PCR members direct by four parting points to an average 68% of global hotel rooms revenue in 2009 study procurement savings made Increased use of offshore accomplishment processing Technology infrastructure developed to jut out owner management and loyalty selling.Continued to cascade Great Hotels Guests Love in hotels and integrated officesMeeting ongoing resourcing requirements to match hotel growth in scale markets Managing employee intimacy Continued focus on attracting and retaining talent. 1,697 relaunched Holiday Inn and Holiday Inn Express hotels open around the world Industry-leading Priority Club Rewards (PCR) loyalty programme with 48 million members, contributing $5.6bn of global system rooms revenueGreen Engage sustainability management system developed (patent pending) rolled out to over 900 hotels by 31 December 2009Extensive consumer look undertaken to quantify green opportunity with consumers and(IHG annual report)3 emerging strategies to be used by Intercontinental Hotels GroupIHGs prime focus should be on growing faster by making its brands the first superior for both guests and hotel owners. We will do this by building the hotel industrys strongest operating system, focused on the biggest markets and segments where scale really counts. 5 (ihg.com).During these tough economic times, IHG had taken decisive action both to strengthen the efficiency of its businesses and to keep their runway with its growth strategy. IHG should continue to invest in its staff, its systems and its brands, while moving even closer in working relationships with its hotel owners and partners. With momentum and a united, winning whole step inside the business, IHG is well place d to make the most of the upturn when it comes. As quoted by the CEO of IHG Mr. Andrew Cosslett.IHGs AmbitionIHG should focus on its core purpose of creating Great Hotels Guests Love as the moto has always been, which is a growing crave to deliver among other key performance indicators (KPIs), closely enduring top quartile shareholders returns when thrifty against a broad global hotel peer group. For the three-year period of 2007 to 2009, IHG was fourth among its peers on Total Shareholder Return (TSR) and should always remain focused and try to come to the 1st position. Measuring IHG against a collection of specific KPIs aimed at delivering its core purpose, cascaded to the hotel level. Successful performance against various combinations of these metrics would result in higher profitability..IHGs Future StrategyIHGs strategy has seen significant development through 2009 as it moved to make its core purpose a reality, scorn challenging economic circumstances. In 2009, IHG took a h ard look at its operations and capabilities to focus on what really matters most to deliver Great Hotels Guests Love. It has backed this up with a major effort to align its staff and measure the most important drivers, resulting in a clear, target-based programme indoors the hotels to motivate teams and guide behaviors.IHGs strategy encompasses two key aspectsWhere does it choose to fight andHow will it win where it vies?The Groups underlying Where strategy is that IHG would grow a portfolio of secern hospitality brands in select strategic countries and global key cities to exploit the scale advantage. The How aspect of our strategy flows from our core purpose and our research at the hotel level as to what really makes a difference for guests. In support of this overall strategy there are key priorities like Where we compete and How we win. To help IHGs hotels and corporate staff measure their efforts in achieving Great Hotels Guests Love, IHG provides clear metrics aligned wi th the four How we win priorities against which progress is gauged. The Group strategy also translates into specific regional objectives and priorities. .IHGs Delivery SystemCUsersdDesktopUntitled.pngDriving demandIHGs operating system is made up of all the things we do to drive demand for our brands. This includes our advertizing and marketing campaigns, our 10 global call centres, 13 local language websites, an 8,000-strong sales force, Priority Club Rewards the worlds largest hotel loyalty scheme which has 48 million members and all the advantages that IHGs global hotel distribution and scale brings to brand awareness.Hotel distributionIHG has over 4,400 hotels in over 100 countries worldwide. Our brands are in the top 3 in 7 of the 12 largest hotel markets in the world.When people travel, they look for familiar brands they know from home, increasing the demand for hotels that operate under our brands around the world.Advertising and marketingEach year, IHGs franchisees pay a f ee into a central fund. This fund is used on their behalf for marketing and promotions to drive guest demand for IHGs brands. Brand sponsorships, television and print advertising campaigns and public relations activity across the globe are all ways in which the fund can be used.Priority Club RewardsIHGs Priority Club Rewards is the largest hotel loyalty scheme in the world, with 48 million members.Web presenceThe 13 local language websites take over 7.4 million bookings a year theyre a shop window for the hotels across the world under IHG,s banner, 365 days a year. www.holiday-inn.com is one of the industrys most visited websites, notching up 75 million site visits in 2005. The websites operate in the following languages Arabic, Chinese, Dutch, English, French, German, Hebrew, Italian, Japanese, Korean, Portuguese and Spanish.Reservation systemIHG,s 10 global reservation offices are available to take hotel bookings from guests 24 hours a day in 26 languages including Arabic, Canton ese, Dutch, English, French, German, Hindi, Italian, Japanese, Mandarin, Portuguese, Spanish, Tagalog and Thai. They deal with 700 transactions per minute.Sales forceIHG have a global sales force of more than 8,000 professionals throughout the world, talking virtually and selling the booking of hotels under our brands to individuals and companies.Considering the future strategy which is goin to be used to the growth achievement of IHG are as followsConsumer understandingAs one of the worlds largest hotel groups, IHG has gained worth(predicate) insights into where and how consumers seek hotel information and make reservations across various channels and from various local, regional and global sources. This information has shaped the way we engage with our customers and enabled us to drive up returns for owners. ball-shaped Reservations SystemAll IHG hotels benefit from the worlds most advanced reservation system Holidex Plus.The system links more than 230,000 terminals worldwide and processes over 130 million stays a year thats about 700 transactions per second. This is serviced by our 12 worldwide reservation centres which receive up to 14 million calls annually in 15 different languages.Global Distribution Systems (GDS)Our reservation systems also link with all the major GDS, the channel of choice for travel professionals and large corporate buyers. This gives us global around the clock access to the travel trade.IHG onlineOur websites continue to be a aggressive reservation channel. They offer a comprehensive, customer-friendly and secure booking service in 13 languages and provide a low cost of sale. We receive more than 5 million unique web visitors per month and also benefit from the lowest clicks-to-book rate in the industry.Worldwide salesIHGs worldwide sales team is more than 8,000 strong. As well as generating new revenue, the team also manages key corporate and agent accounts and provides local hotel sales support to maximise revenue and keep IH G hotels top of mind. 6 (IHG.com)Some Of the Future Milestones to be achieved Continue international roll-out of Staybridge Suites and Hotel Indigo Execute growth strategies in agreed scale markets Continue to leverage scale and build better strategic position during the economic downturnIncrease global sales force effectiveness Continue further procurement programmes to identify efficiencies array migration to next-generation revenue management IT systems Continue focus on owned and managed res publica margins and return on capital employed(ROCE), especially in our key InterContinental assets. Drive greater efficiency and simplicity through better use of technology Focus on developing skills to support the key goals for responsible business, guest experience and financial returns.Complete Holiday Inn repositioning roll-out Continue to simplify brand standards process to improve owner returns without impairing guest experience Continue to enhance experience for PCR members in hote ls and across global reservationschannels increase IHG business from PCR membersContinue to roll out the Green Engage sustainability management system to 100% of our owned andmanaged hotels and rotate into the franchised estate in all three regions and Focus on asylum within new and existing brands to deliver valued green colligate hotelsand services to guests.(IHG annual report)6 http//www.ihgplc.com/index.asp?pageid=293BIBLOGRAPHY1http//www.ihgplc.com/index.asp?pageid=162http//www.ihgplc.com/files/reports/ar2009/files/pdf/2009_Annual_Report.pdf3 http//www.ihgplc.com/index.asp?pageid=404http//www.ihgplc.com/files/reports/ar2009/files/pdf/2009_Annual_Report.pdf5http//www.ihgplc.com/index.asp?pageid=406 http//www.ihgplc.com/index.asp?pageid=293