The following comprehensive strategic plan focuses on the Intercontinental Hotel Group (IHG). Recommend the board of directors to adopt a diversification strategy in order to increase profitability and grow its presence in globally and emerging markets. This paper will further evaluate the company strategic direction with the mission, vision statement and corporate social responsibility. Follow with a SWOT analysis to identify the internal and external situation, financial ratios are used to determine the company's financial health. Finally, provide possible strategic alternatives with recommendation and strategic implementation plan.
InterContinental Hotel Group (IHG) is an international hotels group was found in 1967 and headquarter is located in Denham, United Kingdom. It operates in three business models, as franchising, managing and owning hotels and resorts. The company operates its hotels under nine brands, Hotel Indigo, Crowne Plaza, InterContinental, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites, Even and Hualuxe hotels and resorts brands, in over 100 countries around the world. IHG has approximately 661,159 hotels rooms and has approximately 1,100 hotels in its development pipeline. It has more than 4,506 hotels and is the world's largest hotel group by number of rooms. (IHG Annual report 2012).
The company operates a diverse portfolio of brands across multiple segmentation, which cater for multiple price segments from the upscale 5 star properties focusing on the international business traveler, to the 4 star properties catering both to the business traveler and the leisure traveler down to the midscale targeting both domestic business and leisure travelers (IHG Annual report 2011). Most of its revenue generates from royalty fees of franchises and management fees from the hotels it manages. IHG only owns 11 hotels worldwide, less than 1% of its portfolio (IHG Business Model). IHG mainly focus on providing expertise in hotel management, IHG systems and marketing leaving investment in property to its partners as it is far more capital intensive. This type of operating structure enables IHG to invest in other projects to generate a higher profitability and focus on developing its brands image. Strategic Direction
IHG Mission Statement is "Growing our core business in the largest markets where scale really counts and also in key global gateway cities and resort destinations" (IHG Investors). IHG Vision Statement is "to become one of the world’s great companies"(IHG Investors). In addition, Social Corporate responsibility is a core value of IHG business strategy. Company has formed partnership with the Oxford and Cornell University for sustainable development program. In 2011, IHG has collaborated with National Geographic to support sustainable tourist destination. (IHG Corporate Responsibility) The following paragraph will further explain IHG current strategic direction related to their mission and vision statements. Market Development
IHG re-entered the US market after the recession and formed partnership with Las Vegas Sands Corp., bringing The Venetian and Palazzo Resorts into the InterContinental system. According to UNWTO report 2011, "China is ranked top three on International tourist arrivals and is expected to become the world’s largest tourist destination country by 2020." IHG is one of the pioneers in the China market; it has developed over 152 hotels and established their brand as the largest International Hotel in China. IHG has launched Hualuxe hotel brand, its first hotel brand specifically designed to target the Chinese market. The group has developed the upscale brand, eyeing an opportunity for it to be introduced to 100 Chinese cities in the next 15-20 years, as well as in international cities (Hotelier Middle East). IHG also see the growing consumer demand for healthier travel in USA in 2012; they have launched EVEN hotel, a...