External Report Strategic Financial Management, 9 điểm
The biggest threat is COVID-19 because it reduces demand and negative activity of hotels. The second biggest threat will be environmental changes affecting the operations and strategies of hotels.
Greatest opportunity would be technology. Technology has helped reduce costs, improve operational efficiency, and improve service and customer experience. AI and VR are playing an increasingly important role in hotel management, mainly due to their ability to perform traditional human functions at any time of the day. This means that hotel owners can save significant money, eliminate human error and deliver superior service.
4. 4
Executive Summary
By evaluating external factors influencing IHG, opportunities and threats have been identified and
ranked in priority.
Below are the main highlights1
From the above, 2 strategies have been recommended for future success2
Corporate: Strategic alliance with Tencent and more exposure to Asia Pacific market.
SBU: Focus on mid-market segment by adding more value, open new brands and pipeline
hotels.
Work count: 3648
1 See Opportunities and Threats
2 See Proposed Strategies
PESTLE: Technology and sociocultural changes give opportunities while COVID-19 and
environmental changing is growing threats.
Porter’s Five Forces: threats of new entrant are considered as weak forces, threat of
substitutes formed strong rivalry, existing rivalry, power of supplier and buyer also intensity
competition.
Markets & CSFs: Asia Pacific market growth, advance technology and growth of mid-market
segmentcouldbe goodopportunitiesbutslow recoveryinEurope,COVID-19,percentage of US
too high are danger.
Strategic Position: using scale and expertise to create the exceptional guest experiences are
key to allow IHG to gain benefit and against competitors.
5. 5
PESTLE Analysis (Based on the Hospitality Industry)
Political
COVID-19
Communitylockdowns,social distancing,stay-at-homeorders,travel andmobilityrestrictions.3
The speedat whichbusinesstravelersreturnfromavaccine in2021 isimpactingthe recoveryof
the US lodgingindustry.4
Reopenwithareducedcapacityand graduallyreduce the restrictionsoninternational and
domestictravel.
Impact: decreasedthe demandfortravel
Political Tensions
The political tensionsinChinaandHongKong are havinga negative impactonthe hospitality
industryglobally.5
IHG underpolitical tensions inHongKong,alongwith“toughertradingconditionsinthe U.S.and
China”leadingtoreducingby0.8% in RevPAR.6
Impact: decreasedthe demandfortravel.
3 https://www.tandfonline.com/doi/full/10.1080/19368623.2020.1788231
4 https://www.pwc.com/us/en/industries/hospitality-leisure/us-hospitality-directions.html
5 https://skift.com/2019/11/08/hotel-companies-are-feeling-the-pinch-from-political-tensions-in-china/
6 https://skift.com/2019/11/08/hotel-companies-are-feeling-the-pinch-from-political-tensions-in-china/
6. 6
Economic
Labor
The hotel industryisina good positiontobenefitfromthe strongeconomy,whichhas produced
near-record-lowunemploymentandrobustjobgrowth,aswell ascontinuedBaby-Boomerand
Millennialtravel spends.7
Currency
The strengtheningof the USdollaragainstotherinternational currencieshasmade the USan
attractive travel destination.8
Tax reform
The rise in disposableincome will boostthe hotelindustrysinceitwill encourage more people
to stay inhotels.Thiswill alsoboostthe employmentopportunitiesinthe industry.
Recession(COVID-19)
Numberof internationaltouristscouldbe decline by
around25% in2020, whencomparedtothe last
year.9
PandemichitshardestinLatinAmerica,whileAsia
Pacificismostresilient.
The Asia-Pacificeconomieshave faredbetterthan
otherregionsdue tothe outbreakof the virus. In
2021, the Asia-Pacificwill leadthe global recovery
with7.7% gross domesticproductgrowth.10
Chinaalone will make upalmostaquarterof global
GDP by the same year.11
In 2020, the WestEurope and NorthAmerica
experiencedsharpcontractions.The region'srobust
governmentspendinghelpedavoidasharperfall.12
7 https://www.globest.com/sites/carrierossenfeld/2017/11/29/regulatory-economic-and-disruptive-factors-in-the-
hotel-
sector/?slreturn=20210313105754#:~:text=Economic%20factors%20that%20benefit%20the,Boomer%20and%20M
illennial%20travel%20spends.
8 https://www.globest.com/sites/carrierossenfeld/2017/11/29/regulatory-economic-and-disruptive-factors-in-the-
hotel-
sector/?slreturn=20210313105754#:~:text=Economic%20factors%20that%20benefit%20the,Boomer%20and%20M
illennial%20travel%20spends.
9 https://hospitalityinsights.ehl.edu/covid-19-impact-hospitality-workforce
10 Passport- Global Economy, Financeand Trade Trends
11 Passport- Global Economy, Financeand Trade Trends
12 Passport- Global Economy, Financeand Trade Trends
7. 7
Sociocultural
Travel habit
The travel industryismore likelytospendover$200 ona hotel roomduringa leisure tripthan
non-industrytravelers.
13
Abouta quartertake at leastsix leisure tripsperyearandoverone-quartertake 10or more
businesstripsperyear.
Travelers prefertospendmore onactivitiesthatare closertotheirdestinations,andtheyare
more likelytoconnectwithlocalswhiletraveling.14
A newgenerationof travelers
Gen Z average spend from$29 billionto$143 billion fortravel.Withthis, the youngtravelers
becomesthe fastest-growingsegmentintourism.15
15% of Gen Z will choose anAirbnbwhile 57% will choose ahotel.16
GenerationZtravelersare taking2.8 leisure tripsperyear.17
13 https://skift.com/travel-habits-of-the-travel-industry/
14 https://skift.com/travel-habits-of-the-travel-industry/
15 https://www.forbes.com/sites/forbesbusinesscouncil/2021/01/21/gen-z-and-the-future-of-spend-what-we-
know-about-this-generation-the-pandemic-and-how-they-pay/?sh=558e9fa921eb
16 https://financesonline.com/hospitality-trends/
17 https://financesonline.com/hospitality-trends/
8. 8
18
Nearly90% of US Gen Z travelers are influencedbysocial media tomake travel decisions,
throughsearch or online connectionslike familyandfriends.19
56% of youngtravelerswanttostay in greenoreco-friendlyaccommodationsand 60% are
lookingformore eco-friendlymeansof transportwhentheyarrive.20
18 https://marketingtochina.com/how-chineses-travel-habits-have-evolved-and-actions-for-your-tourism-business/
19 https://www.hospitalitynet.org/news/4096765.html
20 https://www.telusinternational.com/articles/generation-z-future-of-travel
9. 9
Technological
Nearfieldcommunication(NFC)technology21
Robotsand infraredsensors22
The use of robotsto replace traditional tasksperformedbyhumans,therebyreducingcostsand
providinguniqueexperiencesfor customers.
Voice Search& Voice Control23
Includeseverythingfromusingsmartspeakersinhotel roomstoallowingcontrol of different
devicesinthe room.
Minimize time fortouristsinsearchingforhotels,restaurantsandotherentertainmentvenues.
Virtual Reality (VR)24
One of the key technologytrendsinthe hospitalityindustry
Most modernvirtual realitytourvideoscanbe viewedinawebbrowser,makingthemeasyto
access
Duringthe COVIDpandemic,leveragingvirtualrealitytechnologywill provide anadvantage over
competitors,because itoffersgueststhe abilitytoexperience elementsof the hotel orsee the
layoutof the restaurant before booking.
In 2019, numberof people usingVRis42.9 millioninthe US.25
The worldwide ARandVRmarketsize isforecastto grow 7.7 timesbetween2018 and 2022.26
21 https://www.aurecongroup.com/thinking/insights/aurecons-successful-hotels/technology-in-the-hospitality-
industry-exploring-the-very-latest-trends
22 https://www.revfine.com/technology-trends-hospitality-industry/
23 https://www.revfine.com/technology-trends-hospitality-industry/
24 https://www.revfine.com/technology-trends-hospitality-industry/
25 https://financesonline.com/hospitality-trends/
26 https://financesonline.com/hospitality-trends/
Short-range highfrequencywirelesscommunicationtechnology
Exchange data betweendevices
Mobile payments(bytouchingthe smartphone toa creditcard) an instant,secure process
Besidespayingandaneasierwayto getintoa hotel room, NFCtechnologycanalsobe usedto
personalizethe guestexperience atahotel or resort.
WithCOVIDalreadyingrainedinthe mindsof hotel guests,contactless canbe reallyimportanttoreduce
person-to-personcontact.
10. 10
AI27
Environmental
Problemof waste
The average hotel generates289,700 tonsof waste peryear,including79,000 tons of food
waste (9%of total foodwaste fromthe industry).28
CO2 emission29
Energyand waterusage
Energyis the secondlargestspendingamount fora hotel,accountingfor3% to 6% of a hotel's
operatingcostsand accountingforabout60% of a hotel'sCO2 emissions.30
Many resortsand hotelswaste alot of waterdue to longbaths andhuge pools.31
The UnitedNationspredicts thatthere isa shortfall inglobal watersuppliesby 40% in 2030.32
Hotelsaccountfor approximately 15% of total wateruse inthe UnitedStates,andthat use
accounts for11% of hotel operatingcosts.33
27 https://www.revfine.com/artificial-intelligence-hospitality-industry/
28 https://www.openaccessgovernment.org/hospitality-industry-
waste/51174/#:~:text=Hotels%20%E2%80%94%20produce%20289%2C700%20tonne%20of,food%20waste%20fro
m%20the%20sector).
29 https://www.bdcnetwork.com/hotels-are-taking-steps-curtail-their-energy-and-water-appetites
30 https://cris.brighton.ac.uk/ws/portalfiles/portal/485427/EurOMA-Full+paper+.pdf
31 https://study.com/academy/lesson/sustainability-environmental-issues-in-the-hospitality-industry.html
32 https://digital.hbs.edu/platform-rctom/submission/the-hotel-industrys-roadmap-to-solving-diminishing-water-
supply/
33 https://digital.hbs.edu/platform-rctom/submission/the-hotel-industrys-roadmap-to-solving-diminishing-water-
supply/
Directcustomerservice:Connie',adoptedbyHilton.The robotcanprovide touristinformation
to customerswhointeractwithit.Most impressively,itcanlearnfromhumanspeechand
adapt to the individual.
Chatbotsand Messaging
Data analysis:rawcritical conclusionsaboutcustomersorprospects.
The UnitedNationsWorldTourismOrganizationestimatesthatthe hotel industryaccountsfor
about1% of global greenhousegasemissions,andthe numberisexpectedtogrow as the
industrycontinuestogrow.Tomaintainthe 2°C temperature rise thresholdagreedtobythe
ParisClimate Agreement,the hotelindustrywillneedtoreduce emissionsby66% by2030 and
90% by2050.
11. 11
34
34 https://www.researchgate.net/figure/Energy-consumption-in-the-hospitality-industry_fig1_305721636
Conclusion
The biggestthreatisCOVID-19 because itreducesdemand andnegative activityof hotels.The second
biggest threat will be environmental changes affecting the operations and strategies of hotels.
Greatestopportunitywouldbe technology.Technologyhashelpedreduce costs,improveoperational
efficiency, and improve service and customer experience. AI and VR are playing an increasingly
important role in hotel management, mainly due to their ability to perform traditional human
functionsatany time of the day. Thismeans that hotel ownerscansave significantmoney, eliminate
human error and deliver superior service.
12. 12
Poster Five Forces (Basedon the Hotel Industry)
Threat of entry (Weak force)
Capitalintensive
The costs of settingupa hotel are high.35
Hotel start-upcost isestimatedaround£1,000,000.36
Usuallyabout40% of hotelsclose onaverage withinthe first5yearsof opening.
The average cost of startinga hotel inthe US rangesfrom $750,000-$1,000,000 for a small
motel,tothe national average of about$22,000,000 fora hotel withapproximately 115 rooms,
and highermuchfor high-endandluxuryhotels.37
Estimatedinitial investmentfor300 rooms:38394041
35 https://appinstitute.com/hotel-financing/
36 https://appinstitute.com/hotel-financing/
37 https://www.fixr.com/costs/build-hotel
38 https://www.franchisedirect.com/travelfranchises/intercontinental-hotels-and-resorts-franchise-07072/ufoc/
39
https://www.franchisegrade.com/franchises/marriott#:~:text=How%20much%20does%20a%20Marriott,range%20
of%20%2468%2C748%2C590%20to%20%24147%2C593%2C490.&text=The%20initi al%20cost%20of%20a,as%20tra
ining%20and%20territory%20fees
40 https://www.franchisehelp.com/franchises/hilton-hotels-and-
resorts/#:~:text=To%20open%20a%20Hilton%20hotel,a%204%25%20advertising%20royalty%20fee.
41 https://www.franchisegrade.com/franchises/hyatt-
place#:~:text=How%20much%20does%20a%20Hyatt,range%20of%20%2413%2C645%2C000%20to%20%2420%2C
604%2C000.&text=The%20initial%20cost%20of%20a,as%20training%20and%20territory%20fees .
IHG Marriott Hilton Hyatt
Low $76,741,115 $68,748,590 $29,162,700 $13,645,000
High $111,703,605 $147,593,490 $111,963,150 $20,604,000
$-
$20,000,000
$40,000,000
$60,000,000
$80,000,000
$100,000,000
$120,000,000
$140,000,000
$160,000,000
Investmentcost
Low High
13. 13
Large amountspendingon operatingtobringhighqualityservicetocustomers.
424344
Focus: Entrants wouldhave to commit to a substantial investmentfrom the start to
differentiate themselvesfromestablishedplayers
42 https://www.macrotrends.net/stocks/charts/MAR/marriott/operating-expenses
43 https://www.macrotrends.net/stocks/charts/HLT/hilton-worldwide-holdings/operating-expenses
44 https://www.macrotrends.net/stocks/charts/IHG/intercontinental-hotels-group/operating-income
IHG Marriott Hilton
2018 $3,755 $19,172 $6,999
2019 $3,997 $18,392 $7,474
2020 $2,547 $17,948 $7,795
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$'000
Operating expense
2018 2019 2020
14. 14
Brand Loyalty
Competingwithstrongbrandhotel suchas:
IHG rank in top3 brand portfolios
HolidayInnrank intop 5 most valuable brand
45
91% of consumerswhoare more willingtochoose hotelsbybrandsthatprovide relevantoffers
and recommendations.46
Focus: Entrants will struggle to gain brand strengthand gain customerloyalty
Sunkcost
Highstart-upcosts:
Cost of construction:
93-Room Holiday InnExpress:$84,748 - $119,157 (excludesland,contingency,utility
tap, andpermitfees)47
300-Room IHG: $62,530,660 - $84,600,23048
License andPermits:49
45 https://brandirectory.com/rankings/hotels
46 https://financesonline.com/hospitality-trends/
47 https://development.ihg.com/-/media/ihg-development/shared/brands/holiday-inn-express/holiday-inn-
express-development-brochure.pdf
48 https://www.franchisedirect.com/travelfranchises/intercontinental-hotels-and-resorts-franchise-07072/ufoc/
49 https://www.franchisedirect.com/travelfranchises/intercontinental-hotels-and-resorts-franchise-07072/ufoc/
16. 16
Threat of Substitutes (Strong force)
Availability
Airbnbcurrentlyhas4 millionlistingsworldwideandmore thanthe top five hotel brands
combined.51
A recentVrboreportfoundthat 71% of millennialsprefertostayin non-traditional rental
housingratherthanhotels.52
53
Short-termrentalsare more popularthanhotelsrightnow. Occupancy of hotel are around 39%,
while smallershort-termrental hotelshave occupancyat58% and thatof largerpropertiesis
about61%.54
Chinese touristsstayinhotelsbut are veryopentootheraccommodationoptionssuchas
homestays,hostelsandmotels.55
Focus: Potentialsto substitute of hotel by vacation rental is quite high.
51 https://thespaces.com/airbnb-now-bigger-worlds-top-five-hotel-brands-put-together/
52 https://www.forbes.com/sites/forbesrealestatecouncil/2020/10/22/temporary-changes-in-travel-result-in-
increased-demand-for-short-term-rentals/?sh=777b63ba70fe
53 https://www.cloudbeds.com/articles/hotel-vs-vacation-rental-recovery-what-the-market-data-shows/
54 https://www.cloudbeds.com/articles/hotel-vs-vacation-rental-recovery-what-the-market-data-shows/
55 https://marketingtochina.com/how-chineses-travel-habits-have-evolved-and-actions-for-your-tourism-business/
18. 18
Power of customer (moderate force)
Low switching cost
Wide range of hotel withdifferentcompetitive price.
57
58
Focus: Buyer have multiple choicesforhotelsat differentprice ranges
57 https://www.businessinsider.com/best-cheap-luxury-hotel-deals
58 https://www.today.com/money/17-best-cheap-hotels-u-s-
t151599?featureFlag=false&featureFlag=false#anchor-14AvidHotelOklahomaCity
232
299
311
455
479
530
MAN D AR I N
O R I EN TAL
TH E
H ER MI TAGE -
N AS H V I LLE
T H E B O U L D ER S F AI R MO N T K EA
L AN I
TH E R I TZ -
C AR L TO N
K I MP T O N( IH G)
BEST CHEAP LUXURY HOTELS IN THE US
2021
Price per night ($)
99
73
90
67
80
89
H O TEL L A
C R O I X
C H I C O H O T
S P R I N GS
R ES O R T
T H E R O X B U RY L AQU I N T A
( W YN D H AM)
AV I D ( I H G ) EAG L E R I D GE
THE BEST CHEAP HOTELS IN THE US
Price per night ($)
19. 19
Price sensitive
WhenIHG launcheddynamicpricinginChinalastmonth,the majorityof IHGproperties
remainedator belowtheiroriginal price.59
65% of hotelsinGreaterChinahave reducedthe cost of pointsandsome hotelsofferdiscounts
of upto 30,000 pointspernight.60
Power of Supplier (Moderate force)
Rivalry among existing competitor (Moderate force)
Growing market
Market size of the hotel industrydecreasedfrom$1.24trillion(2018) to $1.09trillion(2020) but
in2021 showssignificantgrowthto$1.22trillion.
Focus: After pandemic,competitorswill increase as market becomesmore attractive.
61
59 https://thepointsguy.com/news/ihg-dynamic-award-pricing-us/
60 https://thepointsguy.com/news/ihg-dynamic-award-pricing-us/
61 https://www.statista.com/statistics/1186201/hotel-and-resort-industry-market-size-global/
1.16
1.24
1.21
1.09
1.22
1
1.05
1.1
1.15
1.2
1.25
1.3
2017 2018 2019 2020 2021
Market size of the hotel and resort industry
(in trillion U.S. dollars)
Market size
A plentyof suppliers and lowswitching cost
Most of IHG hotelsare ownedby independentthirdparty whoare responsible fortheirown
independentsupplychainmanagement.Additional,IHGhas independentthird-partyowners
around100 countries.
Focus: Withhigh numberof suppliers,itis hard to seta dominant supplyposition.
20. 20
Brand
IHG brand value:increasedfrom$6,588m (2019) - $8,283m (2020)62
Top 4 mostvaluable brand63
Highmarket capitalization($13.05B – 2021)64
Focus: IHG isone of strong competitive and world’sleadinghotel companies.65
High aggressivenessof firms
66
Rankedthirdforhotelsglobally,behindHiltonandMarriottgroups.67
Focus: Competitionwill become more intense butnot too significant
62 https://brandirectory.com/rankings/hotels/table
63 https://brandirectory.com/rankings/hotels/table
64 https://www.zacks.com/stock/chart/IHG/fundamental/market-
cap#:~:text=Intercontinental%20Hotels%20Group%20has%20a,the%20least%20amount%20of%20risk.
65 https://www.ihgplc.com/about-us
66 Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD)
67 Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD)
21. 21
Barrier to exit
In termsof set upcosts, initial investment,highamountof property,highnumberof employees
(13.13 millionpeople inU.S– 202068
), barriersto exitare veryhigh.
Focus: Difficultto leave the industry, which increasescompetition,ascosts and risks are
higherthan profitsfrom other markets.
68 https://www.statista.com/statistics/978503/hospitality-industry-employees-
us/#:~:text=The%20U.S.%20Bureau%20of%20Labor,drop%20from%20the%20previous%20year.
Conclusion
Currently with the impact of COVID - 19, this can be a huge obstacle, but in the long run, after the
pandemicisstabilized,the hotel industry is definitely an attractive market for both existing players
and new players. Potential growth and profit after pandemic has shown by forecast of top hotel
businessessuchasMarriott, Hilton,Accorand IHG. However, threat of substitutes is quite high with
existing of short term rental companies such as Airbnb are rapidly taking share in an expanding
lodging market.
22. 22
Markets and CSFs
Industry Predictions –Global Hospitality
1. Global HotelsMarket
Valuationof the global hotel marketwas around$147.57 billionin2018 and isexpectedto
generate around$211.54 billionby2026, at a CAGR of about 4.6% during2019 -2026.69
The growinghotel industryleadstoanincreasingnumberof restaurantsandhotels,whichis
expectedtodrive the growthof the hotel market.
2. Hotel booking engine
70
Hotel bookingengine can easilyprocessrelateddatathroughbookingwidget,helpingusersto
significantlymanage theiroperations,reduce costsandincrease productivitywithease.
69 https://www.globenewswire.com/news-release/2019/03/08/1750501/0/en/Global-Hotels-Market-Expected-To-
Reach-USD-211-54-Billion-By-2025-Zion-Market-Research.html
70 https://www.transparencymarketresearch.com/hotel-booking-engine-market.html
0
0.5
1
1.5
2
2.5
2017 2018 2019 2020 2021 2026
Market size
Market size
23. 23
Accordingto a recentstudy, percentage of Europeans travelerswho are likelytobooktheirnext
tripthrough an online bookingengine is46.6% while around25% of travelerschoose booking
directlythroughaccommodation.71
3. Resumptionofactivitiesrecovery after COVID 19
72
71 https://www.hospitalitynet.org/opinion/4103717.html
72 https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/for-corporate-travel-a-
long-recovery-ahead
24. 24
SBU Predictions
1. Global Luxury Hotels73
2.Geography
74
Main marketare US, Europe and Asia-Pacific
As a result,the marketisseeinghighinvestmentbybrandedhotel giantsandindependent
hotelsinmicro-hotelsinNorthAmericanmetropolitancities,followedbyregional Asia-Pacific
and Europe region,due tohighdemand.75
The UnitedStatesis a large hotel market,however,the Chinese hotel marketis expectedto
grow at a rapidrate.
73 https://www.globenewswire.com/news-release/2020/11/13/2126443/0/en/Global-Luxury-Hotels-Industry-
2020-to-2027-Market-Trajectory-Analytics.html
74 https://www.maximizemarketresearch.com/market-report/hotels-market/47478/
75 https://www.maximizemarketresearch.com/market-report/hotels-market/47478/
The global luxuryhotel marketisestimatedtoreach $174.9 billionin2020, projectedtoreach
an adjustedsize of $209.3 billionby2027, growingata CAGR of 2.6 % inthe analysisperiod
2020-2027.
The global luxuryhotelsmarketisexpectedtoreacha projectedsize of US$47.7.3 Billionin
2020, andgrow at a compoundannual growthrate (CAGR) of 4.9% overthe nextdecade.
Chinasluxuryhotelsmarketisexpectedtoreacha projectedsize of US$42.1 Billionin2027.
25. 25
3. US
76
The Hotelsrevenue inthe UnitedStatesisexpectedtoincrease to113.4 billionU.S.dollarsin
2025.
77
In US, mid-markethotelsshowthe highestincrease by122% and account for the largest market
share (52.8% of total in 2025).
The secondsegmentisluxuryandupscale hotelswiththe growthby 102% and account for35%
of total in2025.
76 https://www.statista.com/forecasts/891190/revenue-in-the-hotels-market-in-the-united-
states#:~:text=The%20Hotels%20revenue%20in%20the,revenues%2C%20prices%2C%20and%20brands .
77 https://www.portal.euromonitor.com/portal/analysis/tab
0
20000
40000
60000
80000
100000
120000
2020 2021 2022 2023 2024 2025
Forecast Hotel Sale in US
Luxury and upscale Mid market
Budget Hotels Unrated Hotel
Hotels market - Revenue forecast in the United States 2017 - 2025
Published by Miklós Péter, Nov 13, 2020
This statisticpresentsthe revenue for the Hotels segment in the United
States in 2017, and provides a forecast thereof until 2025. The Hotels
revenue in the United States is expected to increase to 113.4 billion U.S.
dollars in 2025. An overview of all Mobility Markets can be found here.
The Mobility Market Outlook presents the key figures from the world of
automotive andmobility –sales,revenues,prices, and brands. Alongside
revenue forecastsfor150 countriesworldwide, Statista offers additional
insights into consumer trends and demographic structure of mobility
markets.
Revenue in the Hotels market in the United States from 2017 to 2025,(in
billion U.S. dollars)
26. 26
2. China
78
The Hotelsrevenue inthe UnitedStatesisexpected toincrease to$612,098 million in2025.
If China’sstill-nascentrecoveryisindicative of how sectorswillreturntotravel,thenother
regionswill probablysee aslowerreturn,basedontheirindustrial mix.79
80
In China,mid-markethotels show the highestincrease by107% and accountfor the largest
marketshare (50% of total in 2025).
The secondsegmentisluxuryandupscale hotelswiththe growthby 53% andaccount for 31%
of total in2025.
78 https://www.portal.euromonitor.com/portal/analysis/tab
79 https://www.mckinsey.com/industries/travel-logistics-and-infrastructure/our-insights/for-corporate-travel-a-
long-recovery-ahead
80 https://www.portal.euromonitor.com/portal/analysis/tab
0
200000
400000
600000
800000
2020 2021 2022 2023 2024 2025
Revenue forecast inthe Greater China
2020 - 2025
Sale
0
50000
100000
150000
200000
250000
300000
350000
2020 2021 2022 2023 2024 2025
Forecast Hotel Sale in Greater China
Luxury and upscale Mid market
Budget Hotels Unrated Hotel
27. 27
3. EU
81
82
81 https://revenue-hub.com/the-impact-of-covid-19-on-the-european-hotel-sector/
82 https://www.fitchratings.com/research/corporate-finance/european-hotel-occupancy-rates-will-not-recover-
until-2023-12-05-2020
In BestCase,the value perroom could decrease around5%-10% as of 2020. EBITDA can
recoverto levelsof 2019 by 2024;
In Most LikelyCase, the value perroomcoulddecrease around 10%-20% as of 2020.
EBITDA can recoverto levelsof 2019by 2024;
In Worst Case, the value perroomcoulddecrease around20%-30% as of 2020. EBITDA
can recoverto levelsof 2019 by2025 or longer.
28. 28
Opportunities and Threats
Prioritized Opportunities Prioritized Threats
1. Strong brand with diversityportfolio over100
countries.83
1. The global financial crisis and economic
lockdownshave bad impacton IHG.84
2. Introducingnon-roomservicessuchas more
foodand beverage itemsisworthexploring.85
2. The top competitors of IHG are Marriott,
Wyndham, Accor,Hiltonand Hyatt.86
3. Technology offersgreateropportunity todeal
withpandemicandimprovedbothexperience of
guestsandquality of services.87
3. With itslarge scale expansioninChina,IHGis
facinga major recruitmentchallenge asonly
under50% China'shospitalitygraduates choose
the hotel industrytowork.88
4. GenZ alsobecomesthe fastest-growingsector
intourism.89
4. Fast growth of vacation rentals can be high
potentialstosubstituteof hotel.90
5. High marketgrowthand strongrecoveryin
Asia Pacificmarket.91
5. Environmental change affectsthe whole
company’sactivities,operationsandstrategy.92
83 See Porter Five Forces – Rivalry amongexistingcompetitor
84 See PESTLE analysis
85 https://howandwhat.net/swot-analysis-intercontinental-hotels-group-
plc/#:~:text=In%202017%2C%20the%20hotel%20group,China%20(IHG%2C%202021).&text=IHG%20operates%20in
%20100%20countries,has%20over%20886%2C000%20rooms%20globally.
86 See Porter Five Forces – Rivalry amongexistingcompetitor
87 See PESTLE Analysis –Technological
88 https://howandwhat.net/swot-analysis-intercontinental-hotels-group-
plc/#:~:text=In%202017%2C%20the%20hotel%20group,China%20(IHG%2C%202021).&text=IHG%20operates%20in
%20100%20countries,has%20over%20886%2C000%20rooms%20globally.
89 See PESTLE analysis - Social
90 See Porter Five Forces – Threat of substitute
91 See SBU Prediction
92 See PESTLE Analysis –Environmental
29. 29
Strategic Position
Bowman’s Clock
IHG rank in top3 brand portfolios.93
HolidayInnrank intop 5 most valuable brand.94
Some of brands have price isquite highandhigherthancompetitors.
Double roomof Marriott Marquis inNew York is$214.3595
, IHG isaround $25096
.
Kingroom of Marriott in Tokyois$226.5097
, IHG is$274.5098
Highand one the mostluxury service brands:Six senses,Regent,Kimpton,Indigo,
Intercontinental Hotel &Resort.
However,Holidaysuiteshotel& spa hasboth low marketshare and low marketgrowth.99
There are some unique andeffectiveservicessuchasnew breakfastprogram.100
93 See Porter Five Forces
94 See Porter Five Forces
95 https://www.tripadvisor.com/Hotel_Review-g60763-d93507-Reviews-New_York_Marriott_Marquis-
New_York_City_New_York.html
96 https://travel.usnews.com/Hotels/b-IHG_Group_Hotels/New_York_NY/
97 https://cutt.ly/xb7ZqNe
98 https://www.booking.com/hotel/jp/intercontinental-tokyo-bay.html
99 https://www.slideshare.net/AlexKing124/intercontinental-hotels-75503415
100 See Internal report - Marketing
30. 30
Ansoff Matrix
Strategy Execution
Market Development International Expansion
- IHG continuestoexpanditspresence innew markets
inIndiawith strongsupplyof 45 hotelswill openin
the next2-3 years.101
- IHG plansto grow dramaticallyinnew marketswith
pivotto Asia.102
- IHG signsagreementwithAlephHospitalityto
expandpresence acrossAfrica.103
Thirdparty
Organic
Development
Franchisedhotels
Managed hotels
Owned,leasedand
managedlease
hotels
Market Penetration Ecolab and DiverseyPartnership104
IHG’s Way of Cleanprogram andIHG CleanPromise
developed todeal withCOVID-19.105
Loyalty program – IHG rewardclub.106
Updatedidentity107
Trip.com Group’sCtrip108
IHG also launcheditsfirstflagshipstore onChina's
leadingOnlineTravel Agency(OTA) platformin2020,
as part of partnershipwithCtrip.
JointAlliances
Organic
Development
ProductDevelopment Avid – the newestbrand to attract midscale travelers,
developers109
Atwell Suites
IHG's latesthotel concept,withfirststoresopeningin
the US in2021.110
Announcementof strategicpartnership AssetWorld
Corporation (AWC)111
fordevelopmore than1,200
roomsin Thailand
Organic
Development
Thirdparty
101 https://www.ihgplc.com/en/news-and-media/news-releases/2019/ihg-continues-to-expand-presence-in-new-
markets-in-india
102 https://tophotel.news/group-focus-ihg-plans-huge-growth-in-new-markets-with-pivot-to-asia/
103 https://www.hospitalitynet.org/news/4095223.html
104 https://www.ihg.com/content/us/en/customer-care/clean-promise-gc
105 See Annual Report and Form 20-F 2020
106 https://www.ihg.com/rewardsclub/content/us/en/home
107 https://www.ihgplc.com/en/news-and-media/news-releases/2021/ihg-hotels-and-resorts-sets-the-stage-for-
when-travellers
108 https://en.prnasia.com/releases/apac/trip-com-group-s-ctrip-launches-flagship-store-with-ihg-279991.shtml
109 https://www.hotelmanagement.net/development/ihg-launches-new-avid-brand-to-attract-midscale-travelers-
developers
110 See Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD)
111 https://www.hotel-online.com/press_releases/release/ihg-announces-strategic-partnership-with-asset-world-
corporation-awc-for-development-of-more-than-1200-rooms-in-thailand/
31. 31
Corporate Roles
SynergyManager
Organizationstructuredtopromote synergy
Responsible fordrivingthe Group'slong-termsustainablesuccess 112
Parental Developer
Creatinga strongand unique organizational culture113
Relyingheavilyonthe CEOand topexecutivestoplanandplan forthe future
International Strategy
Focuson the mid-marketpricedsegmentandhasa lowerrate of cityCentre outlets.114
ExpansionintoAsiaPacificwithstrongbranding, previousinternational success,strategic
partnerships,franchise andmanagedhotel.
IHG is one of the firstinternational hotel companiestointroduce franchisingtoChina
and has achievedgreatsuccess..115
Develop50%more hotel andresort projectsinVietnam.116
IHG maps expansioninThailand117
,IndonesiaandMalaysia.
112 See Annual Report and Form 20-F 2020
113 See Culture – Internal report
114 See Finance– Internal report
115 https://www.hotelmanagement.net/development/ihg-focuses-china-growth
116 https://vov.vn/en/economy/ihg-plans-to-develop-additional-50-of-hotel-resort-projects-in-vietnam-844081.vov
117 https://www.ttrweekly.com/site/2021/03/ihg-maps-expansion-in-thailand/
Conclusion
IHG is currently in a good strategic position. The strategy of market differentiation and development
through integration and expansion is the key to success. The corporate role and its international
strategies will also contribute to the achievement of the upcoming plans.
32. 32
Narrative of Strategies
IHG's key strategy is to leverage scale and expertise to deliver good guest experiences and owner
returnsinthe mostlucrative geographiesandsectorsinthe industry. Deliveredthroughaunique culture
that keepsandattracts the greatestpeople andvaluesopportunitiestomake a positive difference inthe
world.118
.IHG focusto expandingglobally,especially in Asia Pacific but the US remains its core market.
The main reasonisthat AsiaPacificisshowingthe strongestrecoveryfromthe global pandemic,and itis
possible that it may overtake Western Europe as IHG's second largest region in terms of value
revenue119
. With 450 planned projects, 206 of which are targeted for Asia-Pacific, IHG plans massive
development in new markets with a pivot to Asia120
.
Its development is particularly focused on China, its second-largest market, with China accounting for
32% of its pipeline roomsasof June 2020. 121
. EvenHotels,forexample,will be locatedwithinone of the
competitive zones for the 2022 Winter Olympics in Zhangjiakou. In addition, 11 more Even Hotels are
now being built in tourist areas. Other properties are among the hotels planned to open this year in
Greater China include Intercontinental Chongqing Raffles City, Holiday Inn Express Urumqi Station,
HUALUXE Xi’an Tanghua, Holiday Inn Hangzhou Chaoshan, Holiday Inn Resort Maoshan Hot-Spring,
Holiday Inn Dalian Hot Spring, and Holiday Inn Express Hangzhou Westlake East122
.
In the mid-pricedmarket,IHGiscontinuingtoestablishnew brandssuchasAvidand Atwell Suite.Thisis
aimed towards long-stay business travelers, who have remained resilient despite the COVID-19
disruption123
.
The company isalsoexpandinginthe luxury market,acquiring Regent and Six Senses properties to add
to its portfolio. It also created the Voco brand, which focuses on converting small businesses.124
. IHG
allegedly paid USD300 million for the premium resort company Six Senses in early 2019. Regent is a
super-luxury hotel chain that joined IHG in early 2018, when the company collaborated with Formosa
International Hotels Corp for a 51 percent stake in the company, valued at USD39 million.
In Market Penetration, IHG has a long history of adhering to strict cleaning practices, and in 2018 IHG
Way of Cleanprogram was launched in collaboration with Ecolab and Diversey, two global pioneers in
hygiene and cleaning technology and services. This program has been renamed "IHG Clean Promise,"
and it now includes extra COVID-19 protocols and advanced practices.125
. IHG is collaborating closely
with a team of medical specialists at the world-famous Cleveland Clinic126
to provide hotel personnel
with direction and tools for resuming work and integrating necessary steps to boost guest confidence
and trust in our cleanliness, hygiene, and safety procedures in this new environment127
.
118 See IHG Annual Report and Form 20-F 2020
119 See Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD)
120 https://tophotel.news/group-focus-ihg-plans-huge-growth-in-new-markets-with-pivot-to-asia/
121 See Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD)
122 https://www.ttgasia.com/2020/07/14/ihg-scales-up-presence-in-greater-china/
123 See Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD)
124 See Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD)
125 https://www.ihg.com/content/us/en/customer-care/clean-promise-gc
126 https://www.ihgplc.com/en/news-and-media/news-releases/2020/ihg-offers-a-fresh-take-on-clean
127 https://www.ihg.com/content/us/en/customer-care/clean-promise-gc
33. 33
In addition,IHGhasmodifieditsbrandinorderto betterexpress the company's message to consumers
and make it more appealing to them (a younger demographic of consumers, hotel owners, colleagues
and future talentaroundthe world). Thisisastage to prepare before guests are readytore-connectand
open up. 128
As part of a cooperation with the InterContinental Hotels Group, Ctrip, a global leading online travel
servicesprovider,todayofficially inaugurated the IHG Flagship Store on its platforms (IHG). This marks
Trip.com Group's Ctrip the first online travel agency (OTA) to collaborate with IHG to launch an online
flagship shop, allowing over 300 million Ctrip members in Greater China to join the IHG® Rewards
Club129
.Accordingtothe Chinese touristmarket,70% of passengersutilizeonline travel sites to acquire
information, with 58 percent reserving accommodations on sites like Ctrip.130
IHG Rewards Club is one of the Best Hotel Rewards Programs131
. With approximately 94 million
members worldwide, IHG® Rewards Club is the world's first and biggest hotel reward program132
,
provide abroad choice of current offeringsto consumers, such as earning points for every stay at 6,000
places across the world133
, “Spend a little, earn a lot”134
and all elite nights earned in 2020 have been
rolledoverto2021 and elite requirementsfor2021 have been reduced by 25%135
. From this, IHG brings
more experience and attractive to loyalty guests.
128 https://www.boutiquehotelnews.com/news/industry/ihg-updates-brand-for-2021
129 https://en.prnasia.com/releases/apac/trip-com-group-s-ctrip-launches-flagship-store-with-ihg-279991.shtml
130 https://daxueconsulting.com/ai-hospitality-china/
131 https://travel.usnews.com/rankings/travel-rewards/hotel-rewards/ihg-rewards-club/
132 See Internal Report
133 https://www.ihg.com/rewardsclub/content/us/en/home
134 https://www.ihg.com/rewardsclub/content/us/en/home
135 https://upgradedpoints.com/travel/hotels/ihg-rewards-club-loyalty-program/
34. 34
Proposedstrategies
Alliance –IHG and Tencent
MarketDevelopment/Marketpenetration
IHG should form a partnership with Tencent if it wants to develop in Asia Pacific, particularly Greater
China. IHG has a long and illustrious history in Greater China, with over 35 years of expertise and 300
hotels, making it the region's second-largest worldwide branded hotel firm136
.
IHG's three lifestyle brands each have their own distinct personality, allowing them to target certain
marketsegments.EvenHotels,forexample,caterstohealth-conscioustourists,whereas Hotel Indigo is
a boutique hotel focusedonlocal experiences. Kimpton, which was bought by IHG in 2015, has a strong
concentration on food and beverage, and this model might work well in the Asian market137
. Besides,
Asia Pacific is also the group’s second-largest region and Greater China is strengthened market of IHG
with141 signingsand57 openings in2020138
. Chinaisa long-termbetthatcan helpbalance the squeeze
in the US139
. Because of its well-known hotel brands and operation experience, IHG is appreciated by
Chinese firms.Aspartof IHG's aim to broadengrowthprospects,the firmincreaseditspartnershipswith
a number of owners and partners140
. IHG had over 68,000 labors, making IHG now becomes one of
China's major employers in the lodging business141
.
Tencentisthe world'slargestvideogame publisherand one of the world's most valuable corporations.
It isone of the most powerful social media,venture capital,andinvestmentfirmsinthe world142
.Ithasa
large system with with 1billion+ monthly active users143
. Previously, Suzhou Tongcheng Air Travel
Technology, a software and information technology business with RMB 68 million (USD 11 million) in
registeredcapital,isthe resultof apartnershipbetween Tencent and Trip.com.144
. Tencent has created
AI-tech Smart Hotel Rooms in Beijing. 145
. Tencent announced a collaboration with Shangri-La on
8/11/2020 to create smart solutions that would allow hotels to use facial recognition technology to
simplifyandspeedthe check-in process. 146
. Therefore, it is likely that Tencent would be interested in
also alliance with IHG.
As guests's education and income levels rise, there is a larger desire for more genuine and modern
lodging,services,andactivities. Consumers in China are enthusiastic about technology that makes life
136 https://www.ihgplc.com/-/media/gc-investor-event-slides-vf.pdf
137 https://www.traveldailymedia.com/ihg-aims-become-lifestyle-choice-asian-travellers/
138 See Annual Report and Form 20-F 2020 - Regional review
139 https://www.hotelmanagement.net/openings/ihg-sees-delay-not-a-stop-china
140 https://www.tandfonline.com/doi/full/10.1080/15313220.2020.1863169
141 https://www.tandfonline.com/doi/full/10.1080/15313220.2020.1863169
142 https://en.wikipedia.org/wiki/Tencent
143 https://intl.cloud.tencent.com/
144 https://www.chinatravelnews.com/article/143718
145 https://www.ecommercestrategychina.com/column/tencent-launched-smart-hotel-rooms-in-beijing-with-ai-
technology
146 https://thepassage.cc/article/714
35. 35
easier147
. Beside, Marriott is one of biggest competitors of IHG and they’ve partnered with Alibaba to
becomesthe firsthotel inChina had facial recognition at the check-in desk148
. Therefore, alliance with
Tencentcan make more competitive for IHG with check-in technology and Virtual Reality about rooms
to increase experience of guests.
In pandemic, touchless Interaction technology and Virtual Reality are really important and attractive
with travelers. Tencent Cloud has just released the International Anti-COVID-19 service package to
contribute inthe worldwidefightagainstthe epidemic.Moreover, Tencent is one of the biggest tech in
virtual reality149
. This can be a good potential for IHG to increase guests demand and support for IHG
CleanPromise togive guests greaterconfidence andsafety.Then,itcouldhelpIHGrecover rapidly from
COVID 19.
Furthermore, one of the most important culture of IHG is caring for communities and planet. IHG has
the IHG GreenEngage system,whichoffers over 200 Green Solutions — cost-effective and sustainable
activitiesthathotelsmaytake todecrease theirenvironmental impact150
.Meanwhile,Tencentisranking
the first in clean energy among cloud providers in China151
. Therefore, IHG and Tencent has common
strategy and it can make the alliance become more facilitate.
Tencent's revenue for the quarter ended June 30, 2020 was $16.210 billion, up 24.49 percent year over
year, and cash was $37.002 billion, up 35.3%152
. With strong growth, Tencent can have more chance to
invest technology for IHG.
153
154
147 https://www.forbes.com/sites/jennawang/2018/07/24/you-can-now-check-in-with-a-facial-scan-at-
marriott/?sh=63870d8b3f7a
148 https://www.cntraveler.com/story/marriott-alibaba-facial-recognition-hotel-check-in
149 https://www.scmp.com/tech/innovation/article/3077287/chinese-tech-giants-tencent-huawei-team-develop-
mobile-cloud-gaming
150 See Case Study - Sustainability
151 https://www.techinasia.com/tencent-beats-alibaba-clean-energy-rankings-among-cloud-providers-china
152 https://www.macrotrends.net/stocks/charts/TCEHY/tencent-holding/cash-on-hand
153 https://www.statista.com/statistics/223649/revenue-of-tencent-holdings-since-2007/
36. 36
SBU – Mid-priced segment
Product/MarketDevelopment
It has beenmentionedbefore that the outstandingdifference of IHG is focus more in mid-market price
platformbyheavilyinvestingin pipeline hotels, marketing and new brand. Over 60% of the company's
global revenue isearnedviathisarea155
.Asa result,it has allowed IHG can have the strongest recovery
from the global pandemic and more competitive with larger competitors such as Marriott and Hilton.
IHG’s mainstrengthis in the midmarket segment with the brand Holiday Inn. It is the market leader in
majormarketslike asthe UnitedKingdomandCanada,and second in the United States, trailing behind
Hilton.156
157
According to IHG's interim reporting, occupancy rates at its US midmarket outlets recovered far faster
than those initsluxuryoutlets,reachingover50% by the end of July 2020, compared to roughly 20% for
itspremiumoutlets.IHG'soutletnetwork alsoincludesahighershare of outletsinrural areas,whichhas
benefited the company as tourism has shifted away from city destinationsnhin.158
Besides,GenZisa newgenerationof travelerswithhighbuyingpower,sothe youthtravel becomesthe
fastest-growingsectorintourism159
. Ratherthana fancyhotel,GenZ touristssaidtheywouldspendthat
money on an experience160
. The majority of Gen Z is still on a tight budget; therefore, they prefer to
keep things simple. Moreover, IHG has updated its brand with a fresh look and feel to better tell the
storiesandattractive to young consumers161
. Therefore, mid-market segment could be good choice to
attract young travelers.
154 https://www.techinasia.com/tencent-beats-alibaba-clean-energy-rankings-among-cloud-providers-china
155 See Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD) December 2020
156 See Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD) December 2020
157 See Internal report - Finance
158 See Passport- INTERCONTINENTAL HOTELS GROUP PLC IN TRAVEL (WORLD) December 2020
159 See PESTLE Analysis
160 https://www.businesswire.com/news/home/20190924005207/en/Generation-Z-Takes-Flight-Youngest-
Travelers-Say-Spontaneity-Thrill-Seeking-and-Sustainability-More-Important-than-Luxury-Hotels-and-Airplane-
Comfort
161 See Narrativeof Strategies
37. 37
Winning Strategy
Selected Strategy – Strategic Alliance
IHG shouldalliance withTencentisthe chosenstrategy.This might solve IHG’s current issues and add
more value for hotels in Asia Pacific, especially in Greater China. This alliance will have IHG become
more competitive with larger competitors and more attractive with travelers, especially during
pandemic periods. In addition, the cooperation also contributes to better utilize and promote IHG's
strengths in the Asia Pacific market.
Key issue
Tencent is one of the biggest competitors of Alibaba which is current partner of IHG to lead
digital transformation.
Uncertainty of Tencent’s long-term commitments to development hotel technologies.
Realizing exposure of Tencent’s China users base to IHG’s services.
38. 38
Managing Change
Announcing alliance could be presented in Tencent’s Keynote Event or IHG’s AGM
Making planstobegin right away so that all departments and employees are up to date and
aware of new obligations and obligations
Managementwill have toclarifyexpectationsregularly and creating committees will ensure
staffs motivation and interests are continually aligned with IHG and Tencent
IHG and Tencentwill be restructuredtoguarantee thattheycan functionefficientlyand
complementone other'sdemands
IHG and Tencentwill need tofrequentlyreview performance of new check-intechnologywith
AI technique andVRtoexamine if additional investments are meetingreturnrequired
39. 39
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