Overview of InterContinental Hotels Group in China

Running head: ECONOMICS TLH314 Name of the Student: Name of the University: Author Note: 1 ECONOMICS Executive Summary: The objective of the report is to provide an overview of InterContinental Hotels Group (IHG) and the strategy it adopts and implements while entering the market of China. This particular report commences with a background description of the hospitality industry followed by a background description of IHG. The report also provides an insight into the SWOT analysis of the IHG. The report also provides background description of the emerging markets followed by a PESTEL analysis of the chosen emerging market, which in this case is China. Using strategic models and frameworks like Ansoffs matrix and Nykiel ’sfourteen hotel strategic growth option, the report also helps in identifying the option for strategic growth that would be most ideal for adoption in the chosen emerging market. This is followed by a justification and a practical application of the strategy. 2 ECONOMICS Table of Contents Introduction: .................................................................................................................................... 3 Background on Hospitality Industry (and Tourism): ...................................................................... 3 Background to IHG ......................................................................................................................... 5 SWOT Analysis of IHG .................................................................................................................. 6 Background to Emerging Markets .................................................................................................. 9 PESTEL of Selected Emerging Market ........................................................................................ 10 Hotel Strategy to Be Adopted and To Be Implemented Within Entering Market ........................ 12 Justification of Strategy: ................................................................................................................ 13 Practical Application of Strategy- 5to 10 Years Ahead ............................................................... 15 Conclusion ..................................................................................................................................... 16 References: .................................................................................................................................... 17 Appendices: ................................................................................................................................... 21 Appendix 1: Table Representation of SWOT Analysis ............................................................. 21 Appendix 2: PESTEL Analysis of China .................................................................................. 21 Appendix 3: Drivers of Economic Growth in China ................................................................. 22 Appendix 4: Diagrammatic Representation of Ansoff Matrix .................................................. 23 3 ECONOMICS Introduction: The report aims at providing an overview of the International Hospitality Management of InterContinental Hotels Group (IHG). The IHG is considered akey hotel brand across the world with the sole purpose of providing real hospitality to every individual through respecting, recognizing as well as creating remarkable guest experience (ihgplc.com 2021). IHG puts across hotel brands that is not only aimed at wider audience but also preferred by guests worldwide. Through the global reach, IHG also ensure service delivery to people, environment and the local communities across the world. As far as the growth is concerned, it has been found that in the present competitive market, IHG remains well positioned towards accelerating growth of the core business along with maximizing the returns on newer initiatives like the addition of newer brands to portfolio, continuing the expansion program of Crowne Plaza Hotels across China as well as newer locations within the developing economies for including Bali, Kuala Lumpur and EMEAA region. Background on Hospitality Industry (and Tourism): The idea of hospitality remained unchanged since creation of this word itself. It is derived from Latin word “hospes ”implying both stranger as well as visitor thus indicating the ingrained roots in the ancient history (Wich 2021 ). In the past decades, when the road networks had been scarce and the travelling had been cumbersome, strangers travelling to foreign land needed to rely on either the skills of campaigning or the kindness of the locals while looking for ashelter. During age of the pilgrimage and development of the key trade routes across Europe, it was mostly taverns and inns that offered primitive rooms to the weary travelers. The idea of hotel established for sole objective of hosting the guests did not however exist across Europe until 18 th century even when there had been technological progress and introduction of a faster and 4 ECONOMICS increasingly reliable transport mode ensuring the availability of the long-distance travel to the wider public. However, the influx of the foreigners into the key cities along with the need for accommodation resulted in the establishment of one of the first hotels with modern amenities. Following this, the sector portrayed an unbroken run for not only growth but also international expansion. Over past two-decade, international departures seem to have doubled from close to 600 million to over 1.4 billion in the year 2016. Thus, hospitality has slowly become not only one of the biggest but also one of the diverse industries employing millions distributed across various sectors. The figure 1below shows the international tourist arrival between the 1950 to 2030. Figure 1: Diagrammatic Representation of the International Tourist Arrival between 1950 to 2030 5 ECONOMICS Source: (Wich 2021) In recent times, the business within industry can be divided into four key categories like food and beverage, lodging, recreation, travel and tourism. Each category under hospitality umbrella seem to contain various operators and sub-sectors. The global scale of this industry however makes in tough in putting across conclusive overview. For instance, travel encompass all transportation mode made available to the travelers comprising of airplanes, vessels, coaches and taxis. All sectors however remain interconnected as well as reliant on one another with each one facing its own unique set of opportunities as well as challenges. Background to IHG The InterContinental Hotels Group Plc referred as the InterContinental Hotels or the IHG represents a multinational hospitality business was established in the year 2003 with headquarters in Buckinghamshire, England (ihgplc.com 2021 ). The group as an independent corporation operates hotels in three different manners, as franchisor, as amanager and as owned and leased basis. IHG primarily focuses on the main stream which is basically the luxury and the upscale segments of hotel industry and presents targeted brand portfolio tailored individually for meeting the needs of the guests. The worldwide network of the hotel owners acts as one of the greatest strengths of IHG. The success of IHG lies in matching the owners with the appropriate brands as well as markets and working together in using the resources and scale for driving stronger returns. From discussion to meeting over anew project to the planning of each facet of the operations of ahotel to its opening, IHG focuses on building the business. Once open, IHG supports the owners with outstanding brand specific resources which helps in driving the performance of the hotel employees thereby improving the satisfaction of the guest and an 6 ECONOMICS increased revenue. IHG also closely works with IHG Owners Association that represents interest of over 4500 owners of the hotel and worldwide operators. As per the records of March 31, 2019, IHG represents 5656 hotels and 842759 guest rooms across 100 countries. IHG has the purpose of providing true hospitality for the good along with an ambition of delivering industry leading growth of net rooms (ihgplc.com 2021). As far as the strategy is concerned, IHG makes use of scale as well as expertise for creating an exceptional guest experience as well owner return required to grow the brands necessary to grow the brands within the most valuable markets as well as segments within the industry. It also delivers aculture of retaining and attracting best people along with embracing opportunities for positively impacting the world. SWOT Analysis of IHG This aims at examining strengths and the weakness of the InterContinental Hotels Group along with the opportunities and threat. This is described below as follows: Strengths: 1. Global Presence: IHG operates across 100 countries and is considered as a key leading organization within the industry (Voegeli 2021). It comprises of more than 886,000 rooms worldwide. The key brands include Hualuxe, Crowne Plaza, Kimptom, Hotel Indigo, Even Hotels, Holiday Inn Express, Holiday Inn, Holiday Inn Resort, Staybridge Suite Hotels, Candlewood Suites Hotel and the Holiday Inn Club Vacations. 2. Profitability: The revenue of the InterContinental Hotels Group for the year 2019 was close to $2.08 billion (ihgplc.com 2021). This hotel group also delivered stronger underlying 7 ECONOMICS profit for the year 2017 thereby launching the highest number of hotels since the year 2009 that included countries belonging to AMEA and Greater China. 3. Effective Strategies for Recruitment: IHG seemed to have established stronger strategy of recruitment where it removed the generalist approach to HR and relocated recruitment function to the functional or the operational department. For example, the payroll function had been distributed to the payroll department and the recruitment at the line level had been handed to the department thus eliminating recruitment bureaucracy and the unnecessary delays. Weakness: 1. Controversies: IHG had been found to be surrounded by varied controversies in past. For instance, there has been a campaign of international boycott against the group in 2013 against its decision of opening luxury hotel across Tibet (Osborne 2017). It had also been accused of the price fixing and the standards of poor hygiene. Such controversies badly impacted the brand image. 2. Loyalty Program: The loyalty program of the group such as the IGH Reward Club and the Holiday Inn Priority Club drew various negative reviews from customers. It had been claimed by various customers that the points promised were not provided to the customers. Customers had been told that the points already had an expiry whenever they opted for redeeming it. But the reality was loyalty points did not have adate of expiry (Ollila 2015). 3. Weaker Level of IT Security: Close to 1200 IHG hotels had been infected with the malware that resulted in the stealing of credit card information as well as guest information like card number, cardholder and the internal code of verification (Kastrenakes 2018) 8 ECONOMICS Opportunities: 1. Newer Geographical Market: IHG ’sPartnership with India ’sSAMHI group assured the rebranding of 2000 rooms to the hotels associated with the Holiday inn express. In addition to this, IHG across China had been planning to add close to 300 hotels across China with the upcoming five years between the 2018 and 2023 (uschnews 2018). 2. Increased Products or Services: It was found in 2020 that close to 15 percent of the gross revenue of the InterContinental Hotels Group Plc had been derived from the non-room service and close to 13 percent from the food and the beverage (ihgplc.com 2021). Thus, introduction of increased level of food as well as beverage items had been worth exploring. Threats: 1. Presence of Competitors: Some of the topmost competitors of the InterContinental Hotels Group Plc has been Marriott, Accor Hotels Group and the Wyndham. The group however faces extreme level of competition from Hyatt, Hilton and the Choice Groups. 2. Impact of Global Crisis: 13 The economic lockdowns due to Covid-19 pandemic and global financial crisis impacted the InterContinental Hotels Group Plc severely. This resulted in massive loss during first quarter of the year 2020. This also resulted in job cuts across various nations. Besides, there are also various challenges associated with the macro environment that sometimes poses extremely challenging for the organization. 3. Recruitment across China: The major expansion in China led IHG to face big challenges since only a smaller percentage of Chinese graduates become willing to work for 9 ECONOMICS hospitality which resulted in skill as well as training gap not only amongst the restaurant staffs and the front desk executive but also with the key executive position like finance, sales and HR. From the above analysis it can however be claimed that the InterContinental Hotels Group (IHG) happens to be one of the least problematic amongst bigger hospitality groups across the world. This has primarily been due to the effectives in the operational management and branding. Moreover, the leadership of the group also happens to be established as well as long- lasting. Background to Emerging Markets Emerging markets represents economy of the developing nation which has become increasingly involved with the global markets along its growth. Countries classified as the emerging economy possess some but not all characteristics of developed market (Scott 2020 ). With progress the economy of the emerging market becomes increasingly integrated with global economy in terms of enhanced liquidity associated with the local debt and the equity markets, enhanced volume of trade as well as the foreign direct investment and the domestic development of the regulatory and the modern financial institutions. Some of the notable emerging markets includes, Mexico, Russia, India, China, Saudi Arabia, Pakistan and Brazil (Karolyi 2015). Put differently, an emerging market economy transitions from lower income, lesser developed pre- industrial market economy towards industrial and modern economy with higher living standard. Emerging markets usually does not have the kind of market development as well as regulatory institution which is usually found amongst the developed nations. Market efficiency along with strict accounting standards as well as security regulation does not remain at par with the advanced economies such as Europe, Japan and United States. Nevertheless, the emerging 10 ECONOMICS market seem to have physical financial infrastructure including the stock exchange, banks and unified currency (Marquis and Raynard 2015). One of the key aspects of the emerging market economy lie in the fact that they seem to adopt institutions as well as reforms similar to the developed nations that also helps in promoting economic growth. Moreover, economies of the emerging markets have the tendency of moving away from the resource and the agricultural extraction towards manufacturing and industrial activities. In addition to this, the governments of an emerging market generally pursue industrial as well as trade strategies like the export bound growth and the industrialization supported by import substitution, which helps in promoting industrialization as well as economic growth. PESTEL of Selected Emerging Market The emerging market chosen in this particular case in China. The PESTEL analysis of China are as follows: Political: One of the key political factors interfering with Chinese market has been the regulations of the government (Laruelle and Peyrouse 2012). The socialist government is identified for making certain unsettling immediate changes to the policies which seem to impact both the Chinese and the foreign traders. Therefore, creation of a long-term marketing plan almost becomes an impossible in China. Economic: Presently, Chinese economy seem to perform at all time higher with aGDP that surpasses the U.S. economy (Kang and Jiang 2012). The purchasing power of the consumer has been constantly rising with labor cost reaching the lowest across the world. Hence, the foreign brands seem to benefit from hiring the Chinese workers as well as selling to the Chinese consumers. Besides, the urbanized growth factor of China has also been helping the economy to 11 ECONOMICS expand thus becoming more consumer friendly which seems to be increasingly attracting the foreign brands for investing in the economy. Social: The cultural values seem to dictate amajor portion of social trends across China. Factors like growth in population and family size seem to dictate the operation of the market and hence italso makes sure that the social values are kept in line with the cultural needs. According to Laruelle and Peyrouse (2012), population growth and age distribution seem to fluctuate in China which also influences the social trends as well as cultural values. The social factors which seem to influence the business environment externally include religion, education, consumer lifestyle and immigration. As Chinese culture remains deeply tied to the communist political setting so goods seem to be often regulated with complete support from the population. Technological: The key technological barrier faced by China lies in the inefficiency in ensuring a safe and stable system of online payment (Chong, Chan and Ooi 2012). As the Chinese buyers focus hugely on avoidance of longer-term orientation and uncertainty so this problem seems to strengthens. China, however, sets adream of being aglobal leader in science as well as technology. For achieving this, the country launched a program on ‘mass entrepreneurship and innovation ’ in the year 2015. The program aims at spreading entrepreneurship across China. The country also aims at moving labor intensive economy to innovation driven economy. Environmental: The fast industrial development across China has resulted in negative influence on environment that led to the rise in the pollution levels and the decrease in the natural resources. China is also considered as one of the biggest carbon dioxide emitters along with other gases across the world. Therefore, industries planning for an expansion in China must 12 ECONOMICS incur additional spending on the environmental standards for carrying out productions. This will automatically raise the cost of production as well as reduce the margins of profit. Legal: China faces legal issues associated with the e-commerce framework. The country also possesses very little experience on the intellectual property tax as well as protection. It also do not have regulations supporting privacy and recognition of its digital structures, validation of the electronic contracts and the consumer rights. Another key issue which the country faces is the trade associated legalities since it is something that undergoes aconstant change and remains poised towards prohibition of an established neoliberal economy. It is however anticipated that import tax will reduce once the economy reaches its complete capabilities. From the above PESTEL analysis it can be concluded that, the market is anticipated to face some major growth in near future with some factors acting as the key drivers to growth. The government of China still happen to be the biggest factor dictating movement of country ’s economy. Hotel Strategy to Be Adopted and To Be Implemented Within Entering Market InterContinental Hotel Group plans to create a new premium brand for serving the Chinese consumers. This latest addition to the portfolio of IHG will cater to people primarily travelling for business. Hospitality industry in China is believed to be driven by various tailwinds which is also responsible for driving the country ’seconomic growth. This is shown in Figure 2 Appendix 3. The option for strategic growth which InterContinental Hotel Group might pursue and implement while entering market can be determined by Porter ’sgeneric strategies, Ansoff ’s matrix and the Nykiel ’s14 strategic options for hotel growth. Porter ’s generic strategy puts across how an organization seem to chase the competitive advantage around the targeted market. 13 ECONOMICS It comprises of three generic strategy which includes cost leadership, differentiation as well as focus (Gould and Desjardins 2015). IHG can choose either of the strategies for gaining competitive advantage. These strategies not only determine direction of an organization but also the efficiency above or below average of the industry (Gehrels and Suleri 2016). Ansoff matrix on the other hand, represents atool for strategic planning for providing framework to executives as well as senior managers for the future growth (Krys 2013). It comprises of growth strategies like the market penetration, product development, market development and diversification described in Figure 3, Appendix 4. This tool represents the way of growth through existing as well as new product or service. On the other hand, Nykiel ’sfourteen options for strategic growth represent growth strategies which are basically assessment of the enhancement opportunities. Ownership interest across hotels is generally prepared for encouraging operators for the creation of sustainable income. It helps in maximizing overall value of the hotel. The branding as well as management review forms part of options put across for strategic growth. According to Chan and Hsu (2016), the physical evaluation plays an important role in determining long-term value prospect of the hotel. Justification of Strategy: IHG can apply the Porter ’sGeneric model for the analysis of strategic implementation while entering China since it is associated with the issues of cost leadership, differentiation and focus. These activities work on how the organization is able to gain competitive advantage. IHG can follow this strategy through implementation of cost leadership, differentiation or focus. The strategy of cost leadership primarily stresses on the costing issues of the goods and services therefore it is necessary to guarantee low-cost policy. Pricing issues has become penetrative amongst the existing and the potential customers of the hotels of IHG. According to Garc ía-et al. 14 ECONOMICS (2016), there had been instances when existing hotels across China are not able to establish longer term relationship with the existing customers due to ahigher policy of pricing. It might be effective for IHG in applying alower policy of pricing for attaining target of the maximum sales. IHG can also differentiate its service for making itpart of its success. It is however necessary for IHG to identify the target customers prior to the implementation of the differentiation policy. This is because the target customers in the hospitality sector remains increasingly concerned regarding the service provided. Differentiation holds capacity of driving the effectiveness when the product prices seem to exceed the added expenses for taking service of the hotel. IHG can however consider as well as follow its target market. It can therefore offer lower as well as higher strategy for pricing through certifying the differentiated services. It must be based on requirement of the selected segment as well as resources as well as capabilities of IHG in China. According to Gannon, Roper and Doherty (2015), the management needs to be conscious about the potential and the existing needs of the customers, expenditures, income, awareness and attitude. On the other hand, IHG can adopt and implement strategies put forward by Ansoff matrix model. In this particular case, management of IHG should analyze the strategy for market penetration, diversification, market development and product development. The strategy of market penetration will allow entry of the prevailing product or service into the existing market. This scenario will allow IHG to lower risk as aresult of existing product into existing market. This will allow the application of the brand awareness, brand loyalty and the special offers. According to Ryan (2015), this strategy does not seem to be applicable for IHG in case of newer investment. On the other hand, management of IHG might be in asituation for accepting the strategy of market development. This particular strategy seems to consider new market with the 15 ECONOMICS existing product or service. The strategy seems to increasingly ideal for IHG as itmakes an entry in China, one of the emerging markets since IHG will be able to expand the business in the situation through making investment in China. In this manner, IHG will be able to cater to the business people. According to Salman et al. (2017), IHG can apply the strategy of service development for its active growth. Adoption of this strategy also allows the group to introduce facilities of free internet, game service and bar facility within reputable market. According to Della Corte (2016), this strategy does not seem to be suitable for new investment in China. However, in case, IHG opts for the strategy of business diversification then it needs to consider for both the resident and the non-resident customer package. It can be atoo risky strategy for IHG. While, in addition to the risk factor, the strategy is able to garner massive financial and non-financial benefits in the future with customers remaining in aposition availing newer service. As mentioned by Garc ía-Lillo et al. (2018), amongst all strategies, IHG is able to apply the strategy of market development for investment in China. Practical Application of Strategy- 5to 10 Years Ahead The Porter generic strategies happen to be the appropriately selected strategy for IHG. This particular strategy is quite helpful for the hotel group in lowering the assessment policy, strategy of differentiation and the niche policy of marketing for business class travelers that IHG aims at. Considering all the issues, the management of IHG can take into considering cost leadership and policy of price differentiation. Nevertheless, strategic implementation happens to be achallenging aspect for IHG since it takes into consideration the present process, structure as well as system for strategic implementation of management. As pointed out by Denizci Guillet and Mohammed (2015), the management of hotel group needs awareness about the leadership style. 16 ECONOMICS Thus, through implementation of the Porter ’sgeneric strategies, IHG is anticipated to gain as stronger position in China in the next 5 and 10 years. IHG will gain competitive advantage through use of the differentiation strategy. The minimum pricing will also enable IHG to target abigger customer group thereby enabling it to establish accurately in China. This will enable IHG to gain all business class tourist (Singala 2018). Conclusion: On aconcluding note, it can be said that international hospitality management has been undergoing change due to the various internal as well as the external threats. Based on the SWOT analysis of IHG shows its capability in carrying out operations in China. The PESTEL analysis of China also indicates certain positive aspects about tourisms and the hospitality industry. From the report, it can however be claimed that IHG ’splan for investment in China seems to be appropriate. The analysis indicates that IHG can experience greater prospects by expanding into one of the emerging markets which is China. The management of IHG however follow porter generic strategy for not only retaining market position but also gaining competitive advantage. This strategy will also be quite helpful for IHG in becoming amarket leader in China. 17 ECONOMICS References: Chan, E.S. and Hsu, C.H., 2016. Environmental management research in hospitality. International Journal of Contemporary Hospitality Management ,28 (5), pp.886-923. Chong, A.Y.L., Chan, F.T. and Ooi, K.B., 2012. Predicting consumer decisions to adopt mobile commerce: Cross country empirical examination between China and Malaysia. Decision Support Systems ,53 (1), pp.34-43. Della Corte, V., 2016. The strategic environment of hotel chains. In The Routledge Handbook of Hotel Chain Management (pp. 83-94). Routledge. Denizci Guillet, B. and Mohammed, I., 2015. Revenue management research in hospitality and tourism: A critical review of current literature and suggestions for future research. International Journal of Contemporary Hospitality Management ,27 (4), pp.526-560 Gannon, J.M., Roper, A. and Doherty, L., 2015. Strategic human resource management: Insights from the international hotel industry. International Journal of Hospitality Management ,47 , pp.65-75. Garc ía-Lillo, F., Claver-Cort és, E., Úbeda-Garc ía, M., Marco-Lajara, B. and Zaragoza-S áez, P.C., 2018. Mapping the “intellectual structure ”of research on human resources in the “tourism and hospitality management scientific domain ” Reviewing the field and shedding light on future directions. International Journal of Contemporary Hospitality Management ,30 (3), pp.1741- 1768. 18 ECONOMICS Gehrels, S. and Suleri, J., 2016. Diversity and inclusion as indicators of sustainable human resources management in the international hospitality industry. Research in Hospitality Management ,6(1), pp.61-67. Gould, A.M. and Desjardins, G., 2015. A spring-clean of Michael Porter ’sattic: The Canadian telecommunications sector as an exemplar of refurbished generic strategy. Competitiveness Review . ihgplc.com, 2021. [Online]. Available at https://www.ihgplc.com/en/about-us/our-strategy [Accessed 13 June, 2021] ihgplc.com, 2021. [Online]. Available at https://www.ihgplc.com/en/about-us/our-history [Accessed 13 June, 2021] ihgplc.com, 2021. [Online]. Available at https://www.ihgplc.com/en/about-us/how-our-business- works [Accessed 13 June, 2021] ihgplc.com, 2021. Annual report 2021. [Online]. Available at: https://www.ihgplc.com/investors/annual-report [Accessed 13 June, 2021] ihgplc.com, 2021. Annual Report and Form 20-F 2020. [Online]. Available at https://www.ihgplc.com/en/investors/annual-report [Accessed 13 June, 2021] Kang, Y. and Jiang, F., 2012. FDI location choice of Chinese multinationals in East and Southeast Asia: Traditional economic factors and institutional perspective. Journal of World Business ,47 (1), pp.45-53. Karolyi, G.A., 2015. Cracking the emerging markets enigma .Financial Management Association 19 ECONOMICS Kastrenakes, J. (2018). 1,200 InterContinental hotels were breached by credit card stealing malware. [Online]. Available at https://www.theverge.com/2017/4/19/15363800/ihg-credit-card- breach-details-lookup-tool [Accessed 13 June, 2021] Krys, C., 2013. Scenario-based strategic planning: Developing strategies in an uncertain world . Springer Science & Business Media. Laruelle, M. and Peyrouse, S., 2012. The Chinese question in Central Asia: Domestic order, social change, and the Chinese factor (Vol. 29). New York: Columbia University Press. Marquis, C. and Raynard, M., 2015. Institutional strategies in emerging markets. Academy of Management Annals ,9(1), pp.291-335. Ollila, J., 2015. Pros & Cons of IHG Rewards Club. [Online]. Available at https://loyaltylobby.com/2015/01/05/pros-cons-of-ihg-rewards-club/ [Accessed 13 June, 2021] Osborne., C., 2017.InterContinental Hotels Group admits data breach. [Online]. Available at https://www.zdnet.com/article/intercontinental-hotels-group-admits-data-breach/ [Accessed 13 June, 2021] Ryan, C., 2015. Trends in hospitality management research: apersonal reflection. International Journal of Contemporary Hospitality Management ,27 (3), pp.340-361. Salman, D., Tawfik, Y., Samy, M. and Artal-Tur, A., 2017. A new marketing mix model to rescue the hospitality industry: Evidence from Egypt after the Arab Spring. Future Business Journal ,3(1), pp.47-69. Scott, G., 2020. Emerging Market Economy. [Online]. Available at https://www.investopedia.com/terms/e/emergingmarketeconomy.asp [Accessed 13June, 2021] 20 ECONOMICS Sigala, M., 2018. Implementing social customer relationship: A process framework and implications in tourism and hospitality. International Journal of Contemporary Hospitality Management ,30 (7), pp.2698-2726. Voegeli, C., 2021. A Case Study of Knowledge Management Practices at the Intercontinental Hotels ’Group. Available at SSRN 3819409 . Wich, S., 2021.The Origins of The Hospitality Industry and What Lies Ahead. [Online]. Available at https://hospitalityinsights.ehl.edu/origins-hospitality-industry [Accessed 13 June, 2021] 21 ECONOMICS Appendices: Appendix 1: Table Representation of SWOT Analysis Strength 1. Global Presence 2. Profitability 3. Effective Recruitment Strategies Weakness 1. Impact of Controversies 2. Ineffective Loyalty Program 3. Lower IT Security Opportunities 1. Expansion into the new geographical market 2. Enhanced products as well as services Threats 1. Extreme level of competition from the competitors 2. Impact of Global Crisis 3. Recruitment in China Appendix 2: PESTEL Analysis of China Factors Analysis Political 1. Hugely unsettled political force 2. Firms need to follow both the formal and the informal rules put forward by government regulations that creates ahuge impact (Laruelle and Peyrouse 2012) Economic 1. Experiences ahigher GDP growth rate. 2. Immense availability of the skilled labors 3. Higher rate of inflation along with an increased growth rate. Social 1. Population growth and age distribution fluctuate in China thereby influencing the 22 ECONOMICS social trends and the cultural values. 2. Religion, education, consumer lifestyle and immigration are factors effecting the external business ambience. This accounts for close to 90 percent of the literacy rate . Technological 1. Technologically advanced country but with certain hinges 2. The inefficiency of the country lies in implementing a safe and stable system of online payment (Chong, Chan and Ooi 2012). Environmental 1. Focus on reducing the level of pollution and restricting the use of the natural resources. 2. Fast industrial development has made China one of the biggest carbon dioxide emitter. Legal 1. Has strict legal laws in relation to e- commerce. 2. Very little experience with regard to intellectual property tax as well as protection Appendix 3: Drivers of Economic Growth in China 23 ECONOMICS Source: https://www.ihgplc.com/-/media/gc-investor-event-slides-vf.pdf Appendix 4: Diagrammatic Representation of Ansoff Matrix Source: