The Holiday Inn in Six Continent

Group 4 : Aprilia Vilaning Khairunisa

Dhani Arinta Ahlul Janah Ekky Sabdina Supangat

Heppy Vallentina Arianingrum

dhani.arinta@yahoo.co.id

Overview

• Founder : Kemmon Wilson • Holiday Inn was founded to meet the need of

customers with offering motel features such as air-conditioning and icemakers while keeping room rates reasonable. (product differentiation from other motels)

• The 1st Holiday Inn : in Memphis, the main highway to Nashville, in 1952

• The service Holiday Inn offered appealed to the average traveler, who wanted a standardized product (a room) at an average price.

Growth of Holiday Inn

1957

• Wilson franchised the chain as Holiday Inn of America and it grew dramatically

1958

• there were 50 locations across the country

1959

• there were 100 Holiday Inns

1964

• there were 500 Holiday Inns

1968

• the 1000th Holiday Inn opened in San Antonio, Texas

1,233 hotels globally

Phase of Holiday Inns, Inc

1980

Changing business conditions and demographics saw Holiday Inn lose its market dominance

1990

Holiday Corp was renamed “Holiday Inn World-wide”

1990, Bass launched Holiday Inn Express

1994, Bass launched Crowne Plaza

1997, Bass created and launched a new hotel brand, Staybridge Suites by Holiday Inn

March 1998

Bass acquired the InterContinental brand, expanding into the luxury hotel market

2000

Changed the name to “Six Continents PLC”

2003

Created “InterContinental Hotels Group (IHG)”

Suppliers’ Power LOW

Commoditized products and services Backward integration for hotel chains seeking economies of scale and scope

Buyers’ Power MODERATE

Low switching cost to buyers with emergence of internet and online sales

Increasingly savvy travellers seek greater value for money

Increasing availability of options and choices

Barriers to Entry LOW Franchise model lowers cost of entry

Substitutes HIGH Many options available

for travellers

Degree of Rivalry HIGH

Large number of players in fragmented industry

Dynamic environment with rapidly changing consumer needs

Porter’s Five Forces Model

Why did Holiday Inn’s business model and strategies change over time?

• Consumers needs

• Not responding to another competitive advantage

• Profit decreases drastically

• Competitive advantage of competitor

Holiday Inn – Product Differentiation

Serve full services :

Terrace café restaurant

Kiosk

Tea tree SPA

Sport lounge

Room service

Banquet and Convention Hall

Product differentiation cont’d…

Stay Connected

Free High-Speed Internet Access, Fax and Photocopy Services

Bring the Family

Free to be a kid at Holiday Inn Hotels

Enjoy All the Extras

Fitness centers and swimming pools

What are the strategies behind the Six Continents Hotels current business model?

• Build the hotel industry’s strongest operating system focused on the biggest markets and segments where scale really counts.

Consumer Segmentation

Budget / Economy

Luxury

Upper Upscale

Upscale

Midscale (Full Service)

Midscale (Select Service)

Economy/ Budget

Limited Service Full Service

Luxury

Upper Upscale

Upscale

Midscale

• Focus on franchising and managing hotels, rather than owning them outright

Brand Staff Marketing and distribution

Ownership IHG Capital IHG Income

Franchised This is the largest part of our business: 3,783 hotels operate under franchise agreements

IHG IHG Third party Third party None Fee % of rooms revenue

Managed We manage 639 hotels worldwide

IHG IHG IHG usually supplies general manager as a minimum

Third party Low/None Fee % of total revenue plus % of profit

Owned and leased We own 15 hotels worldwide (less than 1% of our portfolio)

IHG IHG IHG IHG High All revenues and profits

In what ways is it trying to improve its competitive advantage?

• Building strongly differentiated brands that ensure we capture a high share of those people who say that brands influence their choice of hotel

InterContinental Hotels and Resorts → high quality, enjoyment of their stay

Crowne Plaza Hotels and Resorts → offering state-of-the-art business and

meeting facilities Holiday Inn and Holiday Inn Express

→ brand family Hotel Indigo

→ boutique and youngest brand Staybridge Suites and Candlewood Suites

→ for guests on longer trips

Question ???