Financial Performance Of InterContinental Hotels Group: Research Proposal

At the end of a module students will be expected to be able to:

1. Detailed understanding of the main frameworks and principles of research design
2. Broad awareness of the various quantitative and qualitative methods that are used to develop business research
3. Ability to apply research understanding to the development of a research proposal
4. Appreciation of the ethical practices involved in managing, conducting and disseminating research

The central purpose of this module is to prepare for the Capstone project. The module Research and the Professional is for those who are taking the Business Consultancy or Work-Based Learning project option (as opposed to theDissertation options). Students should become knowledgeable about what they want to do for their project, why they want or need to do it, what they will achieve or produce because of the study and how they will undertake the project (methods). This latter also includes learning about what methods are appropriate to the chosen study and any ethical issues involved.

The assessment is a proposal for the for the Capstone Consultancy or Work-Based Learning project that will demonstrate the above learning and hopefully provide a solid plan for the study. The output of research or the project may differ, and this will be made clear by the allocated supervisor once you start the Capstone Project.

Assignment Task

To produce a proposal for a suitable topic of investigation or project may include the following (as a guide):

1. Introduction including academic rationale, research question and the objectives
2. Literature Review
3. Research Methodology

InterContinental Hotels Group plc. that is also known as InterContinental Hotels is a British multinational company that is specialized in hospitality. The company is headquartered in Denham, Buckinghamshire. The hospitality business of IHG spread to over 100 countries consisting of 5000 hotels and 800,000 guest rooms in total. The brands that are included in IHG are Holiday Inn, Even Hotels, Candlewood Suites, Hualuxe, Crowne Plaza, Kimpton Hotels and Staybridge Suites. An average of 1.8 million visitors are attracted by IHG. The Hotel Group manages its businesses through marketing cloud management that was started in 2013.

They are aimed at ensuring customer satisfaction. IHG should have positive impact on people who interact with them. Their main business objective is to provide true hospitality to everyone. Their main target is to deliver hospitality responsibility effective. However, they are committed to grow hotels throughout the world in a sustainable way. Along with providing hospitality to people, the company also creates career building opportunities. They have various partners including local community stakeholders, non-governmental organizations, humanitarian agencies and other government bodies. IHG deals with a total of 80 digital marketing vendors. The company is committed to work with suppliers and partners. They deal with only those partners who are leaders in their fields. IHG have divided its suppliers and vendors into four broad categories including marketing, hotel, corporate and global technology. IHG uses a number of techniques to manage its businesses properly that led to an annual increase in profit. As a result, it re-launches a number of hotels and resorts brand. Holiday Inns have been opened in Indonesia recently. Additionally, it has also launched Kimpton Hotels and Restaurants in London.

This research proposal will mainly focus on financial performance of InterContinental Hotels Group plc. and discuss about the sources of financial income. The objectives of research are:

• To analyze the liquidity of InterContinental Hotels Group plc. in the last 10 years
• To evaluate the efficiency of InterContinental Hotel group
• To collect financial data over the last 10 years that will help in understanding management strategies for increasing business profit.

This project will be beneficial as information on trading activities of the business organization will be gained. It will even help in understanding the available liquid assets of the InterContinental Hotels Group that might be required as a security deposit. The financial performance will enlighten on how easily these liquid assets can be bought or sold without having much impact or no impact on price. Conducting research on the company’s last 10 years financial information, will help in knowing shares owned by the Hotels Group. These shares can be broken into liquid cash if situation demands so.

The project is aimed at finding financial performance of InterContinental Hotel Group. On completion of this project, information will be gained on how easily saved money of the Hotel group is converted into liquid cash.

The limitations faced while carrying out the research are that trial balance and yearly balance sheet of the related organization cannot be accessed to gain accurate financial information. Transaction and withdrawal of money due to specific reasons on a monthly basis was not found. This information would be required to find the financial performance of IHG.  

• What are the liquidity assets of InterContinental Hotels Group plc. in the last 10 years?
• What is the efficiency of InterContinental Hotel group?
• How financial data over last 10 years will help in understanding management strategies for increasing business profit?

Previous research on IHG achievements:

Various authors researched on the achievements of IHG in business in the year of 2017 has been justified in the annual report of IHG. The business strategy of IHG mainly focused on the satisfaction of its guests and owners. This led to the massive quality growth in business in 2017. They focused at shifting the dynamics within the hospitality sector of IHG. The chairman of the InterContinental Hotels Group said that they were able to open the highest number of hotels from 2009 including hotels in Greater China and AMEA. These openings led to an increase in huge amount of profit. According to their financial statements group revenue in the year 2016 was $1,784m along with operating profit of $763m globally. IHG’s system total gross revenue is around $25.7bn (InterContinental Hotels Group PLC, 2018). The profit gained by opening new rooms is +2.7% of the total profit. The hotel groups operate in total 100 countries while generating a revenue of $1748m in the year 2017.

Rationale

Analysis of liquidity, quick ratio and current ratio of IHG from the past performances:

As per the suggestions of the authors Legrand et al. (2014), the entire analysis of the liquidity behind the InterContinental Hotel Groups or IHG in the past 10 years should put forward few financial constraints like quick ratio and current ratio (Assaf et al. 2017). The term quick ratio defines how the InterContinental Hotel Groups PLC has the ability to achieve the short term obligations using their most relevant liquid assets. The calculations of the quick ratio for the company depends upon the total current assets and at the same time it disregards calculating the total inventories the company has. In addition to that, the result is thus divided by the Total Current Liabilities for the InterContinental Hotels Group of IHG PLC. This calculation of the quick ratio is implemented from the times of the quarter that has ended by the month of June in 2018. The outcome of the quick ratio as suggested by the authors Meena and Dhar (2016) by that time is somewhat between 0.78.The quick ratio for InterContinental Hotel Group or IHG PLC as suggested by the author does not indicate that the company can at the current time fully pay back the current liabilities. As per the facts and figures of the calculation of quick ratio suggests, the record of the past 10 years clearly shows that the highest it has been 1.41 and the lowest it has been was 0.40. The median of the quick ratio was 0.68. Amongst the 819 companies included in the Global Industry, the quick ratio of the IHG PLC had reduced lower than 71 per cent. Where the industry median ranges at a proper rate of 1.20, the IHG PLC reduces at 0.78 (Meena and Dhar 2016). Although the calculation of the quick ratio in this regard for the organization group of IHG PLC, it can be said that the rule is conservative since the inventories are excluded from the current assets.

The quick ratio of the financial statement for the IHG PLC proves that the organization is overtly leverages and it has been struggling to grow or maintain their sales. There are no additive reasons for this, but the reasons that authors have speculated might be the too faster payment of bills or the collection of the receivables to be extremely slow. In another overview, it can also be guessed that the inventories are taking up much time than usual for its conversion into cash and if it has to be sold quickly, it might happen that the organization is not finding it enough cash as a selling price and the selling of the entire inventory is happening at a lower price than the original book value for the inventories. Therefore, the inventories are justifiably excluded in quick ratio counting from the assets as they have been the ready sources for the immediate cash amounts.

The financial report of the past 10 years for the current ratio calculation as per the authors has been measured as per the ability of the company to pay the obligation for the short terms. The calculation of the quick ratio has been measured with the help of the total asset of the company divided by the total current liabilities of the organization (Rodica and Iulita 2017). The current ratio of the liquidity suggests that the company has several difficulties in meeting the obligations of the current state. The authors suggest that the InterContinental Hotel Groups has considerably good prospects for the long term, but there have been the current obligations that require borrowing against those prospects for meeting the obligations The entire calculation of the current ratio indicates that the company’s operating cycle has a sense of efficiency and it can also be said that the product for the organization can be exchanged into cash.

Scope and limitations

Research methodology is defined as the process of collecting data and information that helps in decision making.

Ontology: In ontology philosophy, the researcher is aware of the reality of nature. The researcher carries out research related to the topic by asking himself different questions. The researcher is more interested on gaining view of the world on the research topic. This research philosophy also deals with society concerns. The impact of society on surroundings is involved in the philosophy.

Objectivism: This is one of the ontology philosophy stance that includes social phenomenon and meaning of those phenomenon that defines them as separate factor from social actors.

Subjectivism: The social phenomena is created from consequent actions and perceptions of social actors concerned with their existence.

Positivism: It is one of the research philosophy that deals with only factual data that is attained through observation. The measurements that will be undertaken should be trustworthy (Walliman 2017). Researcher’s role is limited to data collection and interpretation of the data to reach desired conclusion. The research findings in case of positivism is usually quantifiable and observable (Aliyuet al. 2014). The process depends on quantifiable observation that lead to statistical analyses of data. Human interests are not included within the study in case of positivism. Positivism research philosophy mainly follows five principles. According to the principles, the research conducted should be able to predict and explain the data required. Hypotheses is developed using inductive reasoning that is tested while the research process is ongoing (Gray 2013). The ontology associated with positivism are universalism, ordered, real, independent and external (Gorski 2013).

Interpretivism: The main difference between interpretivism and positivism is that interpretivism includes human interest in the study. Researchers use interpretivism by assuming social life of people. The study of positivism is critiqued in interpretivism. The research philosophy emphasizes more on qualitative analysis. The philosophical position that is included in interpretivism are idealism, social constructivism and phenomenology.

In this particular research, positivism research philosophy will be followed that proceed with collecting real financial data of InterContinental Hotels Group in last 10 years. Accurate financial data can be collected from the balance sheets and trial balance of the business organization over last 10 years. Trial balance will give all the expenditures and profits of InterContinental Hotels Group annually. The information collected will be analyzed and hypotheses will be developed that will be tested during the research process.

Deductive approach is mainly followed in positivist study (Tumele 2015). The researcher have to focus on facts and the study can be independent of research. In other words, it can be said that positivist study is purely based on facts and data and considers the world to be objective and external (Smith 2015). In this particular assignment, positivism is used and therefore deductive approach will be followed.

Research Design:

Descriptive research design will be used in this particular assignment. The financial data that is collected relates to current issues that are being faced by IHC. The financial data that is collected will enable researcher to describe the current situation completely. Descriptive studies describes various aspects of the phenomenon. The studies will be helpful in finding efficiency of InterContinental Hotels Group. Descriptive studies are used for making observations on the financial issues that are faced by InterContinental Hotels Group.

Research Questions

Primary data collection method: When data is collected directly by the researcher for the first time it is called primary data. The methods might include surveys, interviews and other research techniques.

Secondary data collection method: When someone else collects data for purpose of other people research that data is known as secondary data. Data and information can be either collected through primary methods or secondary methods (Håkansson 2013). Primary methods include surveying various stakeholders while secondary methods consist gathering information from secondary resources like internet, journals and newspaper.

Secondary data can also be divided into quantitative and qualitative. Quantitative data are collected from statistical models, financial statements and statistics that will test hypotheses as well as explain observations. However, qualitative data include description about observations that includes circumstances and events. Information is collected through interviews, diaries and newspapers. In this particular research we will obtain quantitative secondary data from various financial statistics of the mentioned Hotels Group.

For this particular research, secondary data collection methods will be used. Internal sources like financial statements of InterContinental Hotels Group, company information as well as sales report will be utilized to collect accurate financial data. External sources like business journals, business magazines, social books and internet sources will be reviewed to acquire data.

Sampling:

Literature review was done reviewing three journals from where information gap was identified. The financial data is collected reviewing more than 15 business magazines that consisted information about the liquid assets, current ratio and quick ratio of IHG using random non-probability sampling method. 10 business journals were reviewed to find business activities of IHG in last 10 years.

There are two types of data analysis methods one is qualitative data analysis and the other is quantitative data analysis. As in this particular research we will use secondary data therefore qualitative data analysis will be used. It will involve better interpretation and critical analysis of facts and figures obtained from secondary sources. Data analysis of financial data of IHG will help to gain information about the efficiency in business operations of the particular organization, the efficiency in which the fixed assets of IHG is converted into liquid cash and lastly the profit earned by IHG each year.

Ethical Considerations: The ethical considerations that should be kept in mind while carrying out research are:

• The journals that will be used should be peer reviewed.
• Financial data of IHG should be collected only from published annual reports and financial statements
• The obtained data will be used only for academic purposes.

The total task will be completed in 12 weeks starting with selection of the topic and ending with submission of the final paper. Secondary data collection will take the highest time as a number of journals, financial statements and annual reports needs to be reviewed.

References

Aliyu, A.A., Bello, M.U., Kasim, R. and Martin, D., 2014. Positivist and non-positivist paradigm in social science research: Conflicting paradigms or perfect partners. J. Mgmt. & Sustainability, 4, p.79.

Assaf, A.G., Josiassen, A., Woo, L., Agbola, F.W. and Tsionas, M., 2017. Destination characteristics that drive hotel performance: A state-of-the-art global analysis. Tourism Management, 60, pp.270-279.

Bell, E., Bryman, A. and Harley, B., 2018. Business research methods. Oxford university press.

Chen, H.S. and Fiscus, J., 2018. The inhospitable vulnerability: A need for cybersecurity risk assessment in the hospitality industry. Journal of Hospitality and Tourism Technology.

Driver, R., Squires, A., Rushworth, P. and Wood-Robinson, V., 2014. Making sense of secondary science: Research into children's ideas. Routledge.

Gill, N.S., 2018. Relationship between diversity on the board of directors’ and firm financial performance (Doctoral dissertation).

Gorski, P.S., 2013. What is critical realism? And why should you care?.

Gray, D.E., 2013. Doing research in the real world. Sage.

Hair Jr, J.F., Wolfinbarger, M., Money, A.H., Samouel, P. and Page, M.J., 2015. Essentials of business research methods. Routledge.

Håkansson, A., 2013. Portal of research methods and methodologies for research projects and degree projects. In The 2013 World Congress in Computer Science, Computer Engineering, and Applied Computing WORLDCOMP 2013; Las Vegas, Nevada, USA, 22-25 July (pp. 67-73). CSREA Press USA.

InterContinental Hotels Group PLC. (2018). Annual Report. [online] Available at: https://www.ihgplc.com/investors/annual-report [Accessed 24 Nov. 2018].

Jauhari, V. ed., 2014. Managing sustainability in the Hospitality and Tourism Industry: Paradigms and Directions for the Future. CRC Press.

Khatik, S.K. and Thakur, V., 2017. Liquidity Management-A Case Study of Oil and Natural Gas Corporation Limited. T INDIAN JOURNAL HE OF COMMERCE, 70(2).

Legrand, W.I.L.L.Y., Sloan, P.H.I.L.I.P., Wagmann, C.L.A.R.A. and Rheindorf, L.A.R.I.S.S.A., 2014. From output to input: The road from energy and carbon Emissions to principles of sustainable hotel design.

Meena, A. and Dhar, J., 2016. An empirical analysis and comparative study of liquidity ratios and asset-liability management of banks operating in India. International Journal of Social, Behavioral, Educational, Economic, Business and Industrial Engineering, 8(1), pp.342-348.

Ohgaki, H. and Kleihues, P., 2013. The definition of primary and secondary glioblastoma. Clinical cancer research, 19(4), pp.764-772.

Rodica, ?.M. and Iulita, B., 2017. RATES OF FINANCIAL BALANCE. ASPECTS OF ECONOMIC PRACTICE. CASE STUDY. Social capital, 200, p.200.

Smith, J.A. ed., 2015. Qualitative psychology: A practical guide to research methods. Sage.

Tumele, S., 2015. Case study research. International Journal of Sales, Retailing & Marketing, 4(9), pp.68-78.

Walliman, N., 2017. Research methods: The basics. Routledge.

Zikmund, W.G., Babin, B.J., Carr, J.C. and Griffin, M., 2013. Business research methods. Cengage Learning.