About InterContinental Hotels Group.

InterContinental Hotels or IHG is a British multinational hotel company with its headquarters in Denham, UK. IHG is one of the world’s leading hotel companies; they have 726,876 rooms in more than 5,000 hotels in nearly 100 countries around the world. IHG has a broad portfolio of hotel brands, including InterContinental Hotels & Resorts, Hualuxe Hotels and Resorts, Crowne Plaza Hotels & Resorts, Hotel Indigo, Even Hotels, Holiday Inn Hotels & Resorts, Holiday Inn Express, Staybridge Suites and Candlewood Suites and Kimpton Hotels & Restaurants.

The origins of InterContinental Hotels Group can be traced back to 1777, when William Bass established the Bass Brewery in Burton-upon-Trent (United Kingdom). The Bass business still thrives, and has developed into one of the UK’s leading breweries. Bass made its first significant move into the hotel industry in 1988, buying Holiday Inn International. By 2003 the business had changed from being domestic brewer to a hotel group listed on both London and New York stock exchanges.

Here are some of its figuers:

  • Number of hotel rooms: 726,876
  • Number of hotels: 4,963
  • Operating in nearly 100 countries around the world
  • Listed on the London and New York stock exchanges
  • More than 90 million IHG Rewards Club members

IHG and the key strategies to achieve international growth or expansion:

IHG’s follows three key rules to develop its international strategy: technology management to satisfy clients all over the world; location strategy management  in around 100 countries; and the management of a diversity of operation modes, such as international franchising, management contracts and equity modes. In the following paragraphs we focus on each of these points.

1.- Technology

In the internationally competitive environment of today, InterContinental group has become one of the world’s leading hotel chains. One of the key success factors was the increase in the application of technology. Nowadays, technology plays an important role in gaining customer satisfaction and helps tend to the needs of all of their clients.

Over the past few years Intercontinental group has had to update its technology to handle the growing number users all over the world. In addition the technology has long been a positive strategy to facilitate new business with more customers, such as personalization, internationalization, and a rewards system where they can enjoy loyalty programs.

2.- Global operations

InterContinental Hotels & Resorts has grown from a small company to an internationally known hotel brand. According to InterContinental’s annual report 20-F 2014 from an internationalization perspective, the company already has a presence in the entire world with a total number of 4.096 franchised (514984 rooms) and 9 owned and leased hotels (192,121 rooms) with five-star establishments located in nearly 100 countries in the world with local knowledge derived from over 60 years of experience. Each hotel offers its own style, from timeless elegance to urban chic and luxury tropical beaches making it ideal for travellers.

 3.-Multiple operating modes

Hotel chains can expand by using a variety of different growth strategies: franchise agreements, management contracts, hotel ownership, leaseholds, mergers and takeovers, joint ventures or a combination of the above. IHG typically operates under one of three different business models; owned, lease managed or franchised.

They predominantly franchise IHG brands to, and manage hotels on behalf of, third-party owners. Their asset-light strategy enables the business growing generating high returns on invested capital. Most of the studies and research argue and have demonstrated that systems that are not based on capital transitions, particularly franchise agreements, are the strategies that hotel chains prefer when carrying out expansion programs.

They franchise and/or manage hotels depending largely on the maturity of the market, owner preference and, in certain cases on the particular brand. For example, in the US, a mature market, they operate a largely franchised business, working together with their owners to deliver preferred brands. By contrast, in Greater China, an emerging market, they operate a predominantly managed business. They adapt this business model by market as necessary, for example, they also have managed leases (properties structured for legal reasons as operating leases but with the same characteristics as management contracts), partnerships and joint ventures.

IHG_cuadro1Source: Annual Report 2010

In 2014, over 90 per cent of the operating profit was generated from management and franchise contracts. This business model is effective as it generates benefits with limited volatility and allows the firm to focus on the growth of its revenue with limited capital.

Here we find the three methods differences:

IHG_cuadro2

 

Source: http://www.ihgplc.com/