Marketing Strategic Analysis Report on Intercontinental Hotel

10 October 2016

Executive Summary This report is a strategic analysis report for The InterContinental Hotel Wellington (ICW). The ICW is branded from the largest global hotel company in the world, The InterContinental Hotels Group (IHG). The ICW is Wellingtons only internationally branded 5 star hotel and is in the luxury hotel market. It offers rooms for business and leisure travellers however the majority of its visitors are business men. The target market for this hotel is the wealthy older male, the male: female ratio at the hotel is 2. : 1. This report will provide an in-depth analysis of the internal and external factors at play which affect The ICW’s marketing capabilities. The market analysis, competitor analysis and macro-environment analysis will be used to perform a TOWS analysis, and make recommendations for the business to grow. These recommendations include becoming the market leader in the hotel industry for sustainable business practices, and increasing competitiveness by gaining an award of Excellence from Hospitality New Zealand.

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Introduction This report aims to scan the macro and micro environments of the hotel industry in Wellington in order to come up with recommendations for The InterContinental Wellington for future growth strategies. There is a limitation on the amount of data available for the hotels customer base so an observational analysis was completed, and assumptions/ approximations have been made on the ages of the customers.

Mission statement: “With a portfolio of preferred brands in the best developed and emerging markets, our talented people are focused on delivering Great Hotels Guests Love and executing a clear set of priorities to achieve our Vision of becoming one of the great companies of the world,” (ihgplc, 2012) Situational Analysis Market Analysis The overall aim of the market analysis is for InterContinental Wellington to gain knowledge and insight into the hotel industry and hotel market. Wellington tourism industry

Research done by Colmar Brunton, concluded that Wellington is currently New Zealand’s most popular destination, (Positively Wellington Tourism, 2012). Tourists’ spend NZD$1. 2 billion annually in Wellington and tourist numbers are increasing, 14% more Australians arrived into Wellington in 2011 which is six times the national growth, (YouTube. com, 2012). With this high spending from tourists Wellington’s hotel industry is set to benefit from these increases in tourist numbers. Increases in tourist arrivals correlates to increases in the accommodation sector, of which the hotel industry is a sub-sector.

Direct economic effects of tourism on the hotel industry include directly increasing room sales in the hotel sector, (Stynes, 1997). ICW: Business and brand The Intercontinental Hotel Wellington is part of the global company, The InterContinental Hotel’s Group, (IHG), (IHG, 2012). The InterContinental Hotels and Resorts brand is a global business unit for IHG. It is aimed at delivering value to its customers by expressing the knowledge and understanding of each destination it is operating in, this is achieved by providing authentic cultural experiences for guests, (IHG, 2012).

The InterContinental Concierge program ensures guests are provided with unique local experiences which increase the enjoyment of their stay, (IHG, 2012). The InterContinental global brand image is one of responsible business practices; this involves preservation of the natural and cultural heritage of local communities, and environmentally sustainable business practices which aim to manage water, waist and energy usage in an efficient manner, (InterContinental, 2012).

The InterContinental Wellington (ICW) is an internationally branded 5-star hotel, and the only one in Wellington which is a major point of difference from its competitors, (WellingtonNZ, 2012). It is a hotel based in the centre city of New Zealand’s Capital city and is luxurious, contemporary (modern), and exclusive, (Appendices, Appendix A). It attracts a high proportion of wealthy customers who are predominantly older males; the male to female customer ratio is approximately 2. 3: 1, (Appendices, Appendix A). Current Target market

The global InterContinental brand’s main target market is male, wealthy and married with kids, (Internationalist awards, 2008). Furthermore this market segment wants to gain value from their travel experiences with authentic, local experiences, (Internationalist awards, 2008). This is also reflected in the Self-made Observational Analysis in Appendices, Appendix A; where it was observed that the majority of The InterContinental Hotel Wellington’s customer base was male (male to female ratio of 2. 3: 1). The travel patterns of this target market include business and pleasure travel roughly ten times a year, (Internationalist awards, 2008).

The age of the market is approximated at between 45 and 64 years due to the observational analysis in appendices, appendix A, (This is a rough estimate as there is no statistical data). This age group are known as the ‘baby boomers,’ (Charbonneau et al, 2012). The accepted retirement age in New Zealand being 65 years old also supports the estimation of the age of target market, as a high number of the customers at The ICW are business travellers, so are most likely not at retirement age yet, (Work and Income NZ, 2012).

This is an attractive target market segment for ICW because of the higher income levels of this age group, (The Coast, 2012). Potential customers Customers seeking luxury and prestige Over recent years, there has been increasing dynamic growth within the luxury product and service market, with these products reaching a larger range of consumers, (Hennigs, Siebels, Wiedmann, 2007). As shown in Appendices, Appendix A, The ICW is a luxurious establishment. It offers its customers a lavish lobby area which is the first impression customers have as they walk through the door.

As shown by the Academy of Marketing Science, the number of consumers purchasing luxury products and services is increasing, giving ICW an opportunity for further growth within this market, (Hennigs, Siebels, Wiedmann, 2007). Environmentally conscious consumers In an increasingly ecologically conscious market place consumer perceptions are changing and buying behaviours are affected by the environmentally sustainable image of businesses, (Emerald Insight, 2012).

Modern businesses are increasingly looking for ways to decrease their impact on the environment. As well as this, many businesses seek to increase their environmentally friendly image to consumers. The Intercontinental global brand focuses on the idea of responsible business and lessening environmental impacts by managing water, waist and energy more efficiently, (InterContinental, 2012). This presents an opportunity for ICW, to attract customers who are environmentally conscious.

Competitor Analysis Competitors Strengths and Weaknesses Table The Wellington Hotel industry is highly competitive so in order for The ICW to be successful it is important to undertake a competitor analysis, which identifies information on microenvironment competitors, (Charbonneau et al, 2012 p63). Microenvironment competitors are product alternatives to The ICW which members of the target market may decide to choose, (Charbonneau et al, 2012 p63).

Outlined below are The ICW’s closest competitors which represent product alternatives for The ICW’s target market. Competitor’s strategies, strengths, weaknesses, competitive advantages, pricing and Qualmark star rating will be analysis on the next page in figure 1. Company| Current Strategy| Strengths| Weaknesses| Competitive Advantage| Pricing and Ratings| The Bolton Hotel, Wellington| The Bolton Hotel aims to cater to its guests in a boutique and luxury manner and to be the only 5 star hotel in Wellington of its kind. -Hospitality New Zealand Award winners; best re-developed accommodation hotel 2005, Excellence in Marketing 2006, Excellence in Customer Service 2006, (Hospitality NZ, 2011), and Certificate of Excellence 2012. -Ranked number 1 hotel in Wellington, (Trip Advisor, 2012). -Onsite restaurant, Artisan, won restaurant of the year 2010, 2009 Team Gold Award winner and 2011 Beef and Lamb Excellence Award. -New Zealand’s first car stacker making guest parking quick and efficient, (Bolton Hotel, 2012). These help to position The Bolton as the market leader for boutique luxury hotels in Wellington. | -Is the only one of its kind in the world as it is a boutique hotel, so it does not reach a broad target market easily and is solely responsible for its marketing on a national and global scale. | -Bolton Hotel has a product advantage as it is well known locally in Wellington and nationally in New Zealand for being a high class, luxury, boutique hotel. – It has a five star rating and has won numerous hotel and restaurant awards over the past 8 years. -Qualmark 5 star rating and Enviro- Gold rating for environmental sustainability. -Pricing from NZD$199. 00, (New Zealand, 2012). | The Rydges Hotel Wellington| To be the landmark hotel in Wellington which offers a mid to upscale hotel product to corporate travellers, couples and families alike. | -Hospitality New Zealand Award winners; Excellence in Marketing Award 2009, (Hospitality NZ, 2011). Finalists; Excellence in Customer Service, Best Accommodation Hotel, Excellence in Marketing Award, 2012, (Hospitality NZ, 2012). -Premium member of Conventions and Incentives New Zealand.

This has positive marketing implications as this membership enables The Rydges Hotel, Wellington, to reach out to a broader target market of business travellers, (Conventions NZ, 2012). -Rydges Hotels and Resorts is an international brand meaning marketing is delivered to a much broader target market through a network of hotels, resorts and the associated advertising/marketing campaigns. -Wellington’s newest and largest hotel built en route from the railway station to the city, (Studio Pacific Architecture, 2007). | -Formally branded with the InterContinental Hotel Groups company, Holiday Inn.

This could have negative implications including the risk of their hotel being associated with the Holiday Inn brand and the financial loss of the changing image such as loss of customers and the costs of advertising the new brand/ownership, (Studio Pacific Architecture, 2007). | -Rydges Hotel has a marketing competitive advantage. -Excellence in Marketing Award winners 2009, finalists 2012. -Premium member of Conventions and Incentives New Zealand. -Part of International Rydges Hotels and Resorts brand. -Its premium inner-city location means a higher exposure to a large target market of business and leisure travellers. -Qualmark 4+ star rating and Enviro-Bronze rating for environmental sustainability. -Pricing from NZD$149. 00, (New Zealand, 2012). | The Amora Hotel Wellington. | -To focus on superior comfort, luxury and contemporary styling. Providing business class accommodation and superior service, catering for business conferences and leisure travellers, (Amora Hotels and Resorts, 2012). | – Hospitality New Zealand Award winners; Best New/ Redeveloped Accommodation Hotels 2011, (Hospitality NZ, 2011). -Trip advisor Certificate of Excellence winner 2012. -Award winning Grill restaurant on site. -Largest hotel ballroom in Wellington. No booking fee and flexible cancellation policy. -Location offers great value in the centre of the city near Te-Papa Museum, and Wellington Festival and Conventions centre, (Amora Hotel Wellington, 2012). -Part of an international brand meaning higher brand recognition on a national and global scale. | -The Amora Wellington was branded on febuary 1st 2011, formerly the Duxton Hotel Wellington, (Wellington NZ, 2011). -The challenge of changing the Hotels brand image in the consumers/custom-ers perspective. | Marketing advantage: -International branding which has positive marketing implications on a national and global level.

Product advantage:-In the centre city. -The largest hotel ballroom in Wellington for events on a large scale, therefore reaching a large target market of business and leisure travellers. | -Qualmark 4+ star rating. -Pricing from NZD$149. 00, (New Zealand, 2012). | James Cook Hotel Grand Chancellor Wellington. | To provide a luxury standard and friendly, professional service to discerning business and holiday travellers, (Grand Chancellor Hotels, 2012). | – Hospitality New Zealand Award winners; Excellence in Customer Service 2003. -Partnership with Air New Zealand Environment trust: Shows good practice. Qualmark Enviro- Silver rating. -Silver Earthcheck certification from EC3 Global: Shows good practice. -Community outreach and charity fundraising. -Part of an international hotel brand. (Grand Chancellor Hotels, 2012). | -Located a short work from the centre city so cannot compete as competitively with more centrally located hotels, (Grand Chancellor Hotels, 2012). | Marketing advantage:-Environmentally sustainable business with two Enviro- business accreditations. This means that the business is more positioned to attract customers who are environmentally conscious. -Qualmark 4+ star rating and Enviro-Silver rating. -Pricing from NZD$220. 00, (New Zealand, 2012). | InterContinental Wellington’s competitive advantage Internationally branded The ICW is part of IHG, the largest hotel company in the world. This provides The ICW with numerous competitive advantages. With being part of a large global corporation like IHG, there is a large source of capital for supporting the business in its operating and marketing capabilities, (AXA, 2005). Marketing efforts carried out by IHG on a global scale benefit The ICW.

This is because the marketing material is distributed over many global markets so global brand recognition of IHG is high, leading to a high brand recognition for The ICW. This is a competitive advantage which is sustainable into the future because IHG has good past performance and is expected to continue operating into the future. This therefore provides surety for ICW and its customers that the brand image, the services provided and the overall business will remain operating into the future and continue to deliver value to its customers through exclusive, luxurious, 5 star hotel accommodation.

In conclusion The ICW being part of the largest global hotel company provides customers with brand recognition and the chance for them to become accustomed to the high class services provided, thereby increasing the chance they will visit in the future. Macro-environmental Analysis Economy The business cycle. The New Zealand Economy is currently coming out of a recession. One News, reported that New Zealand is experiencing slow but gradual economic recovery from the recession, (2012). Comparatively, a new IMF report indicates modest growth within New Zealand’s economy, (Stuff. o. nz, 2012). With the business cycle in recovery there are positive indicators that consumer confidents will begin to rise again, as an improvement in production will result in increasing income levels, seeing an increase in the spending of discretionary income within the hotel industry, (Charbonneau et al, 2012 p61). Household income levels. Research undertaken by Research New Zealand, shows that households earning over $70,000 are less effected by the economy and changing business cycle than those households earning less than $40,000, (Research New Zealand, 2008).

This shows that the higher income bracket is less likely to be effected by economic recessions. The target market for ICW is this higher income bracket so this is of potential for market growth strategies. Demographic market opportunities The number of New Zealand male residents aged between 45 and 64 (ICW’s target market) has increased 65. 8% from the period 1991 to 2011 as shown in appendices, appendix C. This presents an opportunity for growth for The ICW, within the domestic tourist market.

Baby Boomers, those born between 1946 and 1964, represent a large proportion of the population, and their numbers are increasing! They also represent ICW’s target market because as shown in appendices, appendix A, the majority of customers at The ICW are aged between 45 and 64 (approximation). Socio-Cultural factors and the role of the media Sustainability Awareness. In an increasingly environmentally conscious market place consumer perceptions are changing and buying behaviours are affected by the sustainability of businesses, (Emerald Insight, 2012).

In a study done by Research New Zealand, it was indicated that 83% of New Zealanders see the idea of sustainability as important and that 28% of New Zealanders follow the issue closely, (Research New Zealand, 2007). This is an important idea for The ICW because it shows the idea of sustainability is becoming more important in society and sustainable business practices should be implemented to keep up with this. There is rapid growth in the market of environmentally concerned consumers and this represents a growth opportunity for The ICW, (Research New Zealand, 2007). Impact of social media.

Social media as a tool for marketers allows product brands to interact with users over a period of time, it has been shown to increase brand awareness and dialogue with customers, (Huffington Post, 2012). Social media such as Facebook, Twitter, blogs, LinkedIn and YouTube are valuable ways to add value to business and the increasing trend of the use of social media in the context of business is an important idea for marketers. This is because as consumers become more technologically savvy and use social media more, it becomes easier to find out information on a company and what other people think about particular products and services.

An example of The ICW using social media to their marketing advantage is the Facebook page which includes information on promotions, events, customer reviews and has received 496 ‘likes,’ (Facebook, 2012). TOWS Analysis Opportunities and Threats Opportunities| Why? | Threats| Why? Strategic Plan? | -Become the market leader in sustainable business practices In the luxury hotel segment. Thereby expanding target market. -Increase competitiveness in the Hospitality New Zealand Awards for Excellence program. | – This is an pportunity for The ICW because consumers are becoming increasingly aware of sustainability and to many this is an important issue. Environmental sustainability for the ICW would increase the positive associations with their brand and an environmentally friendly business image. This would build upon the current Qualmark Enviro- Gold rating for sustainable business practices. -This would increase their competitive advantage as this is an area where The ICW lacks in comparison to its competition. Every one of The ICW’s competition have won awards through this program over the years.

Most distinguishingly The Bolton Hotel which has won 4 of these awards. This is a potential opportunity to increase the marketing capabilities of The ICW because receiving an award from this program would create positive media attention and would be a title benefitting the business for years to come. | – The ICW’s competition increasing their sustainable business practices. -Competitor Hotel affordability. | – There is nothing stopping competing hotels such as The Rydges and The Amora from increasing their environmentally and business sustainability practices to receive the Qualmark Enviro- Gold rating.

This would undermine The ICW’s efforts to be the leading environmentally sustainable business. A strategic planning idea for The ICW to counter this is to act fast in securing the number one position for the most sustainable hotel in Wellington, hotel policies around sustainability would be improved and positive media attention would help to get the message to consumers about The ICW’s increasingly sustainable business practices. – If The ICW’s competition were to present the market with more competitive pricing strategies to try and undercut The ICW, this could result in a loss of customers.

To counter the possibility of this The ICW needs to further demonstrate through its value proposition and marketing the superior value of The ICW brand compared to its competitors. It is an exclusive, luxury hotel. | Strengths and Weaknesses Strengths| Why? | Weaknesses| Why? | – The only Internationally branded 5 star hotel in Wellington. – The InterContinental Concierge program, a point of difference. | This provides The ICW with a competitive marketing and product advantage. -Its marketing capabilities are increased due to being part of the largest global hotel company. Product advantage due to being the only one of its kind in Wellington. The ICW’s Concierge program provides guests with authentic local experiences, this is a differentiating strength for The ICW when compared to its competition. The likely impact of this program is that it will ensure The ICW’s visitors enjoy the overall experience of the hotel more than other hotels they have stayed in. | – High price relative to competition. -Competitors offer a more ‘awarded’ service| – The ICW’s room pricing starts at NZD$210. 00, (New Zealand, 2012).

This is high relative to the competition, therefore this will not be affordable to most consumers. – The ICW’s competitors all have Hospitality New Zealand Excellence awards. If The ICW received one of these awards this would benefit the company greatly. | Recommendations Future target market I believe the ICW should continue to target the ‘male baby boomers’ market. The population of this market segment is increasing. The ICW’s target market is also wealthy and affluent so are more likely to spend higher amount of discretionary income on luxury.

This is an attractive target market segment for ICW because of the higher income levels of this age group, also it has always been the target market for this hotel so existing knowledge of this market segment and the experience The ICW has with delivering their product to this market can be used advantageously. Corporate strategy- Market Penetration The ICW has a stake in wanting to increase market share of its target market segment. I recommend The ICW implement a market penetration strategy coupled with improvements to their existing product offering.

This will seek to grow the business by increasing sales of its existing product to their current target market, including current users and users of competing brands, (Charbonneau et al, 2012). I think this idea will be successful because this Target market has worked well and proven to be profitable for The InterContinental brand in the past and based on the situational analysis conducted in this report, the market for wealthy, affluent, male travellers between 45 and 64 who are seeking luxury experiences is a predominant market.

In order to achieve Market Penetration, The ICW will need to convince consumers that the value created, delivered and received from their product is better in some way than the competitors in the luxury hotel market. Value Proposition The ICW will need to satisfy the needs and wants of their target market the baby boomers to further penetrate the hotel market. They will need to build on their reputation as Wellington’s only internationally branded 5- star hotel and deliver value through improvements on their product and being the market leader in luxury hotels in Wellington.

An opportunity presented in the TOWS Analysis is for The ICW to become the market leader in sustainable business practices in the luxury hotel segment. This will create a competitive advantage because consumers are now concerned with sustainability more than ever and positioning The ICW in this way will attract a growing number of consumers who are concerned for the environment. This will create value for ICW because consumers are willing to pay more for environmentally friendly products so profit margins will increase.

Value for The ICW’s customers will increase; they will gain ethical and moral value knowing they are helping support the environment and sustainable business practices. Another opportunity identified in the TOWS analysis is the need for The ICW to increase competitiveness in the Hospitality New Zealand Awards for Excellence program. This is an area where the competition is doing it better, shown by the fact that all of the competition has won an award over the past ten years. In order for The ICW to be more competitive and achieve its goal of being the market leader, it needs to increase its chances of winning an award.

This would create value for the business because of the positive media attention this would create and the winning of an award being remembered for years to come. Customers and consumers would benefit from this because they would know of the award and feel further informed about the hotel. Therefore value will be added to The ICW’s product offering if they win an award of Excellence from Hospitality New Zealand, and become the market leaders in Wellington for luxury, environmentally sustainable hotels. These will add value to both the business by and to its customers by benefitting them.

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