Hospitality Industry in Australia: Accor and the Intercontinental Hotels Group

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Table of Contents

Introduction
The Particular Features of Accor’s Strategic Direction
Factors Driving and Limiting Innovation in Relation Accor
IHG Strategic Development
IHG and Innovation within the Market
Recommendations
Conclusion
Appendices
Bibliography
Footnotes

Introduction

In Australia, the hospitality industry is one of the most developed industries which is characterised by the significant economic progress and revenues and by the close connection with the international market, depending on its trends. Travel, tourism, and hospitality industries are associated, and there are a lot of factors which affect the companies’ development within this economic and market sector¹.

The most influential companies which operate within the industry in Australia are Accor and the Intercontinental Hotels Group (IHG) which are also competitors at the international arena. To analyse the particular features of the companies’ strategic development and compare and contrast their strong and weak qualities, it is necessary to pay attention to the major factors which affect the companies’ strategic direction and their openness to innovations in order to predict the companies’ possible successes in the future.

The Particular Features of Accor’s Strategic Direction

Accor is one of the most largest and developed hotel groups in Australia. The hotel group includes more than 150 hotels of different brands which levels respond to the needs of all the demographic categories. The most popular hotel brands belonging to Accor are Sofitel, MGallery, and All Seasons².

To preserve the leader positions within the market, Accor should operate the effective strategy³. It is possible to focus on the role of workforce for the company’s development. Managers of Accor state that to compete within the industry, it is important to provide the high-quality services based on the top-class employees.

From this point, one of the main strengths of the company is the highly-skilled workforce (Appendix 2). However, to achieve the greater results in this field, it is important to improve the workforce planning in order to provide the necessary services.

The next point is the value-creating asset management to improve the company’s performance within the market. Today, the company intends to expand its impact, and it develops strategies to operate within the larger market segment. Thus, according to PESTELDI Analysis, the accents are made on such macro-environment factors as economy, social and cultural aspects, and technology.

The presence within the market is strengthened with references to adapting to the industry policies and responding to the unemployment rates with creating new workplaces, building new hotels (Appendix 1). Accor has also implemented the effective strategy to attract more franchisees and investors basing on modernisation of brands⁴.

Factors Driving and Limiting Innovation in Relation Accor

Much attention is paid to modernising the companies’ brands meeting the globalisation trends and improving the technologies available for customers. Moreover, the driving forces of Accor are the focus on innovation in technologies with references to using modern web-based central booking system, providing the high-level connectivity. The developed hotel network is important to control the whole system and guarantee the connection between the sectors (Appendix 3).

IHG Strategic Development

Hotel industry is the globalised industry that is why the most successful companies-representatives of the sector in Australia are those ones which operate successfully within the global or international market, and IHG is one of such companies⁵.

The company focuses on the economic and social challenges providing the workplaces for Aboriginal people in Australia and participating in the programs to reduce the levels of unemployment. To provide the high-quality services, the company emphasises the creation of necessary conditions for employees who receive needed training and additional education⁶.

The focus on environmental issues and the question of sustainability are the strong features of the company operating globally and following the global tendencies to meet the environment’s needs (Appendix 1)⁷.

In spite of the focus on the multi-brand system and strategy, the concentration on the luxury hotels is one of the company’s weaknesses, and it prevents it from attracting more customers from different social categories⁸. The company is successful in focusing on the sustainability and responding to the social and economic needs while concentrating on the issue of responsibility.

IHG and Innovation within the Market

The factors which drive innovation and improvement of the company are accents on low cost of operations provided and on the effective employee management. Moreover, the company uses the modernised and extensive database basing on the quality IT management to respond to the global trends⁹.

Nevertheless, there are factors which can be discussed as limiting the implementation of the innovation technologies by the company. The problem is in the fact the company uses rather general business and strategic models which can be not effective for implementing in all the IHC hotels over the world¹⁰.

The Australian hospitality industry develops intensively, and it is highly competitive that is why it is necessary to pay more attention to the usage of the innovative technological devices to meet the customers’ needs (Appendix 2, 3). From this point, the strategy followed by Accor is more effective.

Recommendations

The success of the strategy used by Accor should be based not only responding to the global tendencies and customers’ expectations but also on the greater flexibility in relation to financial questions and investement;
The Intercontinental Hotels Group should concentrate more on the implementing on the innovation technologies to attract more customers and satisfy their needs;
It is important to develop the Intercontinental Hotels Group and improve the strategy, paying more attention to brands for all the social categories without focusing on luxury hotels¹¹.

Conclusion

Paying attention to the analysis of the strengths and weaknesses of the strategic management and focus on innovation in relation to the Australian most successful companies Accor and the Intercontinental Hotels Group which operate in the hospitality industry, it is possible to state that Accor will develop more effectively within the market because of the successfully set priorities.

Thus, the company focuses on the brand performance using the results of the technological development and contributes to the progress of the most attractive brands. Furthermore, the company regularly generates high revenues with references to the investors’ loyalty. The company focuses on the effective organisation and high-quality services.

However, these points are also typical for the Intercontinental Hotels Group, and the leader position of Accor in the future should be based on emphasising the role of the market scale and profitable growth within the industry. Thus, Accor is more adaptive to operate in the modern environment and succeed in relation to the future changes of the market.

Appendices

Appendix 1

PESTELDI Analysis
Factors	Accor	Intercontinental Hotels Group
Political	– Focus on following the industry policies carefully	– The dependence on the industry regulations
Economic	– the creation of more workplaces, responding to the unemployment rates	– Focus on tax rates to develop the strategy to work with investors
Social/Cultural	– the multi-brand system provides services for all the social categories	– luxury focus, the lack of the brand’s development for all the social categories; – the concentration of the Aboriginal issues.
Technology	– focus on innovation	– focus on tradition combined with using technologies
Environment	– sustainable usage of energy resources	– focus on sustainability and environmental protection
Legal	– professional liability and focus on the principles of the corporate ethics
Demographic	– workforce (men and women, age 21-38)
International	– there is the threat of emerging markets and competitors’ progress at the global arena

Appendix 2

SWOT Analysis
Accor		Intercontinental Hotels Group
Strengths the highly-skilled workforce; the improved workforce planning; the value-creating asset management.	Weaknesses – lack of flexibility	Strengths management focuses on developing the most strategic and successful hotels; employee performance.	Weaknesses lack of innovation; luxury focus.
Opportunities – modernisation of the multi-brand company	Threats – the decrease in the company’s popularity among customers	Opportunities – the intensive product and service growth	Threats – ineffective competition within the market

Appendix 3

Porter’s Five Forces
	Accor	Intercontinental Hotels Group
Bargaining Power of Customers	Strong. There are a lot of alternatives within the market
Bargaining Power of Suppliers	Rather low. The dependence is observed in relation to property owners	Low. There is weak dependence on suppliers
Threat of New Entrants	Low. There are high fixed costs
Threat of Substitute Products	Rather high. The threat is different in relation to the services and products provided because of the multi-service character of the companies
Competitive Rivalry within the Industry	High. The market is mature	High. The necessity to find the balance between price and quality

Bibliography

Accor Brands, 2013. Web.

Challenges in hospitality industry, 2010. Web.

Cole, G, Strategic management, Cengage Learning EMEA, Australia, 2003.

Hubbard, G. & Beamish, P., Strategic Management: Thinking, Analysis and Action, Pearson Education, Frenchs Forest, NSW, 2010.

IHC: Corporate Responsibility Report, 2013. Web.

Intercontinental Hotels Group, 2011. Web.

Intercontinental Hotels Group: Case Study, 2010. Web.

Sadler, P., Strategic management, Kogan Page Publishers, UK, 2003.

Trott, P., Innovation Management and New Product Development, Prentice Hall, England, 2008.

Thompson, G., Strategic management, Cengage Learning EMEA, Australia, 2010.

Footnotes

¹ G. Hubbard & P. Beamish, Strategic Management: Thinking, Analysis and Action, Pearson Education, Frenchs Forest, NSW, 2010.

²Accor Brands, 2013.

³Challenges in hospitality industry, 2010.

⁴Accor Brands, 2013.

⁵IHC: Corporate Responsibility Report, 2013.

⁶ G. Cole, Strategic management, Cengage Learning EMEA, Australia, 2003.

⁷ P. Sadler, Strategic management, Kogan Page Publishers, UK, 2003.

⁸Intercontinental Hotels Group, 2011.

⁹ G. Thompson, Strategic management, Cengage Learning EMEA, Australia, 2010.

¹⁰Intercontinental Hotels Group: Case Study, 2010.

¹¹ P. Trott, Innovation Management and New Product Development, Prentice Hall, England, 2008.

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