A hotel organisation if consider developed their international portfolio, to develop in a new market should be one of the methods to increase the competence in the whole worldwide. This report aims to briefing look the InterContinental Hotels Group how to entry into a new hospitality market which the country is Russia. The report will use the eclectic theory which includes three parts they are ownership advantages, location advantages and Internalisation advantages.
During recent years, the economic crisis has slowed down the development of the international hotel market in Russia and the CIS countries from the year of 2010. With the Russia’s economy has been booming in these years, it has encouraged the important sums of foreign direct investment entry into the country. Meanwhile, the growing numbers of the business travellers are recorded in the major’s markets of Russia also lead the western style hotel development and the infrastructure development of the hotel room increased in a considerable situation.
Because of the Moscow and St. Petersburg well supplied with branded hotels, the investors are interested in turning to these regions to expand their works. Except for the development on the branded hotels with the increasing businesses travellers in the main cities in Russia, the international operators are keen to enter the ‘millioniki’ cities in provincial of Russia, but the most of company do not have a single hotel under the international standard of the Russia.
Another major force for hotel development in the certain countries has become the fourth coming world sporting events in the Russia, one is the 2014 Winter Olympics and the other is the coming Football World Cup in the year of 2018. The coming soon 2014 Winter Olympics host in the city of Sochi, this is provide a chance to the international hotel operators develop their business in the Russia.
And the recent victory of Russia takes the responsibility to host the Football World Cup in 2018 is also a great opportunity for brand quality hotels build the new attractive commerce in the several regions in Russia. The InterContinental Hotels Group is the largest hotel group all over the world; the company aims to create Great Hotels for Guest Love. The company own the 9 hotel brands and the more guest rooms than any other hotel company in the world that is more than 672,000 rooms in over 4,500 hotels in nearly 100 countries and territories around the world.
The goal of the company is making the brands the first choice for guests and hotel owners. At the same time, IHG set up the strategy is to build the hotel industry’s strongest operating system focused on the biggest markets and segments where scale really counts. The successes of the InterContinental Hotels Group depend on the five winning ways of the company that “do the right thing”, “show we care”, “aim higher”, “celebrate difference” and “work better together”.
With the company always keep doing the business by using those five points, the development of the IHG looks very considerable and show out the confidence to their investors and co-operators. With the developing and excellent performance of the InterContinental Hotels Group, the company always stand out and received lots of international awards of each year, in the recent two years, the company won quite a few following awards: Holiday Inn ranked highest in guest satisfaction among mid scale hotels in the J. D.
Power and Associates’ 2011 North America Hotel Guest Satisfaction Index Study (USA); Holiday Inn Hotels ; Resorts is named Best Mid-Market Hotel Brand in the World and in Asia Pacific for the 11th year in the 2011 Business Traveller Asia-Pacific Readers’ Poll; InterContinental Hotels ; Resorts is named Best Business Hotel Brand in the world, its second straight win, and Best Business Hotel Brand in Europe for the third year running in the 2011 Business Traveller Asia-Pacific Readers’ Poll and Hotel Indigo ranked highest in guest satisfaction among upscale full service hotels in the J.
D. Power and Associates’ 2011 North America Hotel Guest Satisfaction Index Study. All of these awards which received by the InterContinental Hotels Group are the evidence to show the company has the powerful capabilities to do the businesses in the hospitality market whatever in the independent country or all over the world. Ownership Advantages InterContinental Hotels Group set up the year of 1946; it is the biggest hotel management group in the worldwide.
The company owned 4426 hotels located in the over 100 countries around the world, the located city addresses across the America, Europe, Middle East, Africa and Asia, at the same time, InterContinental Hotels Group still has the 1190 hotels are building and going to open in the near future. In the total of 6000 hotels in the global hospitality industry, there is 85% hotels is authorized operation to InterContinental Hotels Group, about 14% is managed by the
InterContinental Hotels Group, and less than 1% hotel owns by the company. The InterContinental Hotels Group aims to become one of the world’s great companies, and the company developed until to now, the performances of the company shows that they have already achieve their goal. The considerable performance of the company is not reflected from the satisfaction of the customers in the annual report, it is also reflected form the awards which won by the company.
Every year, the company and the brand hotels of the InterContinental Hotels Group can get the various of awards, such as the IHG’s Report to the Community earned the International Association of Business Communicators 2008 Golden Flame Award; IHG selected as a recipient of Training Magazine’s Top 125 for 2010; InterContinental Hotels ; Resorts is named Best Business Hotel Brand in the world and so on, all the awards of the company are the evidence to show the capabilities of the IHG, also encourage the employees do the better job in the next a period of time. The vision of the InterContinental Hotels Group is “Become Great Hotels Guest Love”.
The company want to make the people feel good about what and how the hotels do, the company aims to delight guests, inspire the people, and the action is responsibly and generate financial returns for the owner of the hotels and the investors, therefore the InterContinental Hotels Group come up the requires that “create the great brands, using and win the great people, make the great values and find and use the great ways of working to make sure the guest love to stay with us, people love to work for us, owners love our brands and investors love our performance. ” All those elements get together creates the “Great hotels guests Love. vision of the InterContinental Hotels Group, and every brand hotel do the work follow the requirements and do the considerable performance. As one of biggest hotel company, InterContinental Hotels Group also take the social responsibility, it is well placed to implement its Corporate Social Responsibility (CSR) strategy across the business, and after discussion with the upper level management group and the new Senior Vice President who will lead on Corporate Social Responsibility, InterContinental Hotels Group decided to make the social responsibility will concentrate on the global environment and the local communities.
The CSR strategy of the IHG includes the different sides and set up and achieve the key objectives of each year, for example, during 2011, the company launched version 2. 0 of Green Engage, the system-wide approach to environmental management, and met the target to over 1700 hotels using Green Engage by the end of 2011, at the same time the company expanded the IHG Academy programme into 22 countries, including the first UK-based IHG Academy and so on.
According to the forward achievements, the company set up the new goals for the future such as to drive environmental sustainability, to have a positive impact on the local community and drive economic opportunity and so on. Location Advantages The Russia as the bridge of commercial communication combine with the Europe and Asia, InterContinental Hotels Group set up the hotels in Russia would be received more guests to choose their service and products, especially in capital city of Moscow and St. Petersburg.
InterContinental Hotels Group first entered into Russia was in year of 1988, it was the Holiday Inn Vingradovo in Moscow, and 13 years later, InterContinental Hotels Group is expanding into regional center and new fast growing cities with well-established business communities and tourist attractions such as Samara, Ekaterinbury, Chelyabinsk, Novosibirsk and others, currently, Russia receives up to 40 million tourists per year, also 1 and this number is anticipated to rise in both its domestic and foreign component, therefore, Russia owns the very considerable tourism resource and can provide the InterContinental Hotels Group set up the new hotel business to win the more guests over there.
From the report of Construction and Design of Hotels in Russia and the CIS of 2012, it is said that the hotel industry is one of the fastest and successfully developing industries in Russia with annual growth of 15% to 20%, with the Russia will host the Winter Olympics in year of 2014 and host the FIFA World Cup in year of 2018, there will be more market needs on the hotel and the events will bring more opportunities to the hotel industry develop their business. For the advantages about the supply chain for the hotel, it is due to Russian located link with a part of Europe and China, the Europe and Chinese market will both support the provide the enrich hotel resources for the company, also the company can doing the business combine with the religion, national and local culture to attract the views of the people, and some of cities just take short period of time of transportation to arrive in Russia from the big airport, the convenience transportation also provide more people to the Russia market. The following ities are the most considerable location for the company develop the new business which related to the economic development, the city size and the future development of the city, Saint Petersburg and Moscow as the biggest city in Russia, the population and tourists always very big, and Moscow as the capital city of the Russia, whatever the economy, culture or policy, they are both owns a good environment and more opportunities to provide to the company. Sochi, as the city which will host the Winter Olympics in year of 2014, it is also will increase the hotel market to catch up the needs of the market and showing out the city has the ability to take this big event. Internalisation Advantages
InterContinental Hotels Group modes of operating in Russia looks like in a very satisfactory situation to support the company develop the business in the area. In November of 2011, the IHG’s luxury InterContinental brands return to Russia after a decade away with the opening of InterContinental Moscow Tyerskaya. And the 203-room hotel will open on Russia’s most famous street and creating 260 new jobs for the local people, thus the city development from the economic and human resource shows that the Russia can provide to the company an acceptable environment to set up the business here, at the same time the new entered business will more encourage the Russia’s development on the side of economic, tourism, commercial communication and so on.
InterContinental Hotels Group as the international biggest hotel management company, it is not only have own brand hotel, also there is 85% hotels is authorized operation to InterContinental Hotels Group, about 14% is managed by the InterContinental Hotels Group, and less than 1% hotel owns by the company, this is also shows out the InterContinental Hotels Group however set up the own new hotels or take the responsibility to manage the hotels, the management ability would be always believable and powerful. In Russia, there is a very large company called Silkton Ltd. , this company always chosen by InterContinental Hotels Group to extend the hotel development. The Silkton Company provide the support to the InterContinental Hotels Group and build the hotels in Moscow Ryazanskiy, until to now, there are already have 6 hotels opened and 10 hotels are in the development pipeline.
While Moscow dominates Russia commercially, InterContinental Hotels Group is also capitalizing on the growing business and leisure markets across the country. Analysis from the Briefing Sheet For entry into the Russia market, InterContinental Hotels Group has three competitors; they are Hilton Worldwide, Premier Inn and Shangri-La Hotels and Resorts (See the Appendix1, 2, 3). Due to the InterContinental Hotels Group is the biggest hotel management company all over the world, the competitors of the InterContinental Hotels Group also is powerful and have strong capability. From the forward three competitors, the Shangri-La Hotels and Resorts may can be seen the most powerful competitor for the InterContinental Hotels Groups.
InterContinental Hotels Group and Shangri-La Hotels and Resorts both focus on the luxury hotels, and now, Shangri-La Hotels and Resorts is Asia Pacific’s leading luxury hotel group and regarded as one of the world’s finest hotel ownership and management companies, but the size of the company, Shangri-La Hotels and Resorts also cannot compare with InterContinental Hotels Group. Shangri-La total has 5 brands Hotels (See Appendix 3) and InterContinental Hotels Group has 9 brands Hotels, from the brand values, InterContinental Hotels Group is over a big part of the Shangri-La Hotels Group. Even the company size of Shangri-La Hotels Group is not big enough compared with InterContinental Hotels Group, it is also has the strong capabilities stand out in the Russia hotel market.
Shangri-La Hotels and Resorts will be the first time develop into Russia hospitality industry, as a new brand hotel entry into the Russia hotel market, it will be easier to attract the concentrate of the customers, also provide the previous and the customers who familiar with the brand to continue choose the hotel as the place to live in. However, InterContinental Hotels Group has already set up the hotels in the Russia, therefore if InterContinental Hotels Group want to achieve another successes and win the first enter brand Hotel Shangri-La Hotels and Resorts, InterContinental Hotels Groups need to think about more boutique and brilliant selling point to attract the customers, open a new customer group and provide the valuable service and products to keep the customers always prefer to choose the IHG brand hotel to live in. Conclusion To summarise, this report focus on looking at an international hotel organization develop the international portfolio in a new market.
InterContinental Hotels Group as the choice to consider doing with this project and talk about the advantages of the company why is chosen to set up the new business in a new market, using the Eclectic Theory which includes three areas they are ownership advantages, location advantages and internalisation advantages to talk about the evidence of company has the strong capabilities to enter into the new market. Meanwhile, InterContinental Hotels Group face to the three competitors at the same time and the most competitive one is Shangri-La Hotels and Resorts, therefore, even InterContinental Hotels Group as the biggest hotel company all over the world, it is still need to consider how to win the competition in a new market and make the sense of that Shangri-La Hotels and Resorts is the first time develop into the Russia hospitality market, InterContinental Hotels Group need more brilliant selling points to attract the people and create more values for the market and company.