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Intercontinental Hotels Group

Intercontinental Hotels Group (IHG), formerly Bass PLC, was founded in 1777 by William Bass, when he established a brewery in the English town of Burton-on-Trent. The year 1876 was a landmark year for Bass, when it was recognized as the largest brewery in England. Even more notably, it was also this year that Bass’s red triangle trademark became the first trademark to be registered in England.

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During the 1960s, Bass made two strategic and significant mergers.

In 1961, Bass merged with Mitchells & Butler, becoming Bass, Mitchells & Butler. In 1967, Bass, Mitchells & Butler merged with Charrington United Breweries to become Bass Charrington Ltd [30]. The year 1970 marked Bass’s entrance into the world of hospitality, as it purchased about 50 hotels from the oil giant Esso [31]. These hotel holdings became known as Crest Hotels. Renamed Bass PLC in the early 1980s, the company’s leisure subsidiaries, including its hotel division, “contributed substantially to Bass’s growth and profits” [32].

In 1988, Bass made the first significant international move into the hotel industry by acquiring the international assets of Holiday Corporation outside the United States, Canada, and Mexico for $ 475 million [33]. The year 1989 saw the advent of legislation on the brewing industry through Beer Orders. Through Beer Orders legislation, the government sought to limit the vertical integration within the brewing industry by limiting the number of pubs a brewer could own [34]. Bass’s response was to continue to focus on and develop its international hotel business.

Therefore, on August 25, 1989, Bass made a monumental decision to purchase Holiday Corporation’s flagship Holiday Inn chain for $ 2. 23 billion. Included in this purchase were 1,410 franchised Holiday Inns and 177 company-owned and – managed Holiday Inns [35]. Founded by Kemmons Wilson in 1952, Holiday Inn quickly grew into the largest lodging corporation in the world. A 1951 road trip to Washington, D. C. , with his wife and five children had convinced Wilson of a great need for a brand – name hotel/motel that families could trust anywhere they traveled.

Importantly, Wilson was aware of the coming construction of a $ 76 billion federal interstate highway system and planned to take full advantage by building Holiday Inns alongside it. His foresight paid off as the interstate highway system popularized travel from coast to coast. “It has been said that what John D. Rockefeller did for gasoline and Henry Ford did for automobiles, Kemmons did for lodging: standardizing a product and making it available to the masses at a reasonable price anywhere they went” [36].

When Bass purchased Holiday Inn, the chain was in the midst of a decline due to aged properties and poor services. Additionally, the hotel industry was seeing great growth in budget hotel chains such as Hampton Inn. To counter these issues, Bass began a $ 1 billion renovation project for the Holiday Inn brand, launched its own budget hotel chain called Holiday Inn Express in 1991 to add a complementary brand in the limited – service segment, and launched its high – end Crowne Plaza Hotels in 1994 to move the group into the upscale market [37].

It entered the profitable U. S. upscale extended–stay segment with the introduction and development of Staybridge Suites by Holiday Inn in 1997 [38]. With the money raised through the sell-off of various retail businesses, Bass outbid Marriott International, Patriot American Hospitality, and Ladbroke Group to acquire the Intercontinental hotel chain from Japan’s Saison Group for $ 2. 9 billion in 1998. Included in the acquisition were Intercontinental’s 211 hotels in 77 countries [39].

Thomas Oliver, then chairperson and CEO of Bass’s hotel division (Holiday Hospitality), summed up the acquisition well when he said that Intercontinental provides an “excellent geographic complement to Holiday Hospitality’s current structure and gives us a broader portfolio of brands spanning the midscale and upscale markets around the globe. The purchase . . . is consistent with our strategy of growing Bass’s business in markets which offer long – term growth opportunities” [40].

On June 14, 2000, Bass severed its 223 – year – old tie to the brewing industry when it entered into an agreement to sell its beer brewing division to Interbrew for $3 billion [41]. Along with Bass’s sale came the cessation of its name and, on June 28, 2001, Bass officially became known as Six Continents PLC [42]. On October 1, 2002, Six Continents announced that it would be demerging the group’s hotels and soft drinks business, Britvic (to be called Intercontinental Hotels Group PLC) from the retail business (to be called Mitchells & Butlers PLC) [43].

This separation process was completed on April 15, 2003, and Intercontinental Hotels Group PLC (IHG) became a distinct, discrete company. In December 2003, the midscale extended – stay brand Candlewood Suites was added to IHG’s portfolio. The new brand complemented the existing Staybridge brand and increased IHG’s U. S. system size by an additional 109 hotels and 12,500 rooms. In April 2004, IHG introduced Hotel Indigo, a hotel brand developed primarily for conversions, to fit a variety of markets in preferred locations.

The new brand was designed as a lodging alternative for the traveler seeking a refreshing hotel experience, not just a hotel room. IHG announced the disposal of 100 percent of its holding in soft drink company Britvic in December 2005. The total proceeds received from the disposal of IHG’s entire interest in Britvic were ? 371 million. The disposal of soft drink assets allowed IHG to focus on being purely a hotel company [44]. Intercontinental is the world’s first truly global brand that has put the knowledge and understanding of each destination at the core of its business.

The brand is deeply rooted in a mosaic of cultures and landscapes that define our world. Thanks to its unique heritage, Intercontinental is able to go out of its way to enrich guest stays with authentic experiences that make their world feel bigger. To fulfil this promise, the brand launched a programme to encourage the sharing of local knowledge so guests get more out of their stay. The Intercontinental brand is currently enjoying unprecedented growth, with 63 projects in the pipeline.

There is still significant opportunity to expand, especially in high-demand city centres and under-penetrated resort locations. Each Intercontinental Hotel development is unique and indigenous to its location, and attains landmark status in the locale that it touches. The Intercontinental Boston won “Development Project of the Year” at the Americas Lodging Investment Conference in 2007, owing to elegant design and insightful use of the historic waterline.

The Intercontinental Nanjing, currently under construction, will soon stand as one of the tallest hotels in the world. Intercontinental Hotels & Resorts’ unique market positioning provides many performance advantages. Resting between upper-upscale and luxury, the Intercontinental brand has greater rate elasticity within both market segments without the typical expenses. So guests experience a luxurious atmosphere while the hotel operates with upper-upscale service – the perfect balance for guests and owners alike.

IHG’s success is built upon its commitment to matching owners with the right brands in the correct markets. Intercontinental was among the earliest international hotel chains to enter the Kazakhstani market. IHG operates hotels in three different ways – as a franchisor, a manager and on an owned and leased basis. The business model focuses on managing and franchising hotels. Franchising is the largest part of the business: over 3,800 hotels operate under franchise agreements. IHG manages 624 hotels and owns 16 hotels worldwide (less than 1% of the portfolio).

The strategy of Intercontinental Hotels Group is to build the hotel industry’s strongest operating system focused on the biggest markets and segments where scale really counts. IHG’s operating system is made up of all the things it does to drive demand for its brands. This includes advertising and marketing campaigns, 10 global call centres, 13 local language websites, an 8,000-strong sales force, Priority Club Rewards – the world’s largest hotel loyalty scheme which has 48 million members – and all the advantages that IHG’s global hotel distribution and scale brings to brand awareness.

One of the points highlighted in the list of strategic priorities of IHG along with such aspects as improving the performance of the brands and generating excellent returns from the hotels is strengthening the organisation through investing in people. The activities IHG supports are aligned with its corporate values and Winning Ways. IHG’s Winning Ways are how the staff members behave every day – a set of behaviours based on values that are helping the hotel chain to become one of the very best companies in the world.

They reflect the values that were developed through research with the employees across the world into how they behave at work every day – and how they want the people they work with to behave. The Winning Ways provide a strong sense of shared purpose, and are critical to driving the business performance forward, as well as making each hotel of the chain a great, enjoyable place to work. IHG’s Winning Ways include the following points: Doing the right thing.

Everyone engaged in providing services for guests and fulfilling managerial functions must keep promises and must not let people down. They also ought to take responsibility and take decisions even when they’re difficult. Showing care. It implies treating people as individuals, looking and listening for the little things that make a difference and using the own experience to find new ways to deliver great service. Aiming higher means putting hearts into learning new things, challenging and encouraging each other and always looking for ways to improve. Celebrating difference.

Every member of IHG should welcome different perspectives and listen to everyone’s ideas, be respectful of all cultures, look to learn from others and play an active role in the communities in which IHG operate Working together. Everyone in the team must work hard to develop excellent working relationships with colleagues, think about what they do and how it might affect others and trust and support each other. Part of the IHG’s commitment to responsible tourism is creating opportunities for local people, preserving local customs and traditions and introducing guests to local cultures.

With operations in more than 100 countries across six continents, ensuring that each hotel operates responsibly in local communities is a key priority for the company’s management. Given the economic downturn, focus this year has been on maximising the benefits the hotels bring to local economies via direct and indirect employment, taxes paid, local purchasing and donations to community projects [45]. In addition to their corporate efforts, IHG hotels are also involved in their own right with their communities through in-kind donations, grants and volunteering programmes.

Hotels’ grassroots level activity is now surveyed as part of Green Engage. The company trains potential employees in their communities and work with local and regional Chambers of Commerce and trade and industry associations to support workforce development. In China, for example, it has launched an innovative public/private partnership, the IHG Academy, with renowned educational institutes in the region. With the first launched in Shanghai in June 2006.

These Academies now operate in 11 locations, are supported by 25 partners in the region and in December 2009 had 5,000 students enrolled on one of these programmes. IHG also works with other companies and government bodies to identify and address workforce issues in the countries where it has a substantial presence. Owing to such issues as working conditions, skills shortages, infrastructure development – particularly in developing countries – on which the hotels need to focus in order to provide local economic opportunities.

This is why two key policies for Human Rights and Supporting Communities have been put in place. IHG has detailed Group-wide policies on key Corporate Responsibility (CR) issues, including: code of ethics and business conduct, environment, human rights and community. Environment. IHG understands its responsibility to respect the environment and manage its impacts for the benefit of the communities in which it operates. IHG commits to measure, manage and innovate. Human rights. IHG supports and protects human rights within its sphere of influence.

As a responsible company with operations in nearly 100 countries, it believes that strong ethics and good business go together and is committed to complying with the laws and regulations of the countries and jurisdictions in which it operates. To demonstrate its commitment in this area the company: •Supports the protection of human rights, particularly those of the employees, the parties with whom it does business and the communities within which it operates; •Respects its employees’ rights to voluntary freedom of association, under the law; •Provides a safe and healthy working environment; Does not support forced and compulsory labour or the exploitation of children; •Supports the elimination of employment discrimination and promotes diversity in the workplace; •Provides remuneration, wellbeing consideration and tools for growing careers for the employees; •Promotes fair competition and does not support corruption; •Conducts its business with honesty and integrity in compliance with applicable laws; •Will develop and implement company procedures and processes. Supporting the communities policy.

IHG has a corporate commitment to be actively involved in local community issues. The chain has a clear mission that guides all its charitable endeavours: to support global efforts that represent the business goals of IHG and to give back and thank the communities in which it operates. IHG provides great opportunities and experience which helps staff progress. The hospitality industry does not just employ receptionists and room attendants. To keep any large hotel operating round the clock takes a diverse team of highly skilled specialists with backgrounds ranging from accountancy to IT.

Therefore maintaining its position as the world’s largest hotel group means IHG can offer more opportunities to develop a career in many different directions. “IHG is the biggest hotel group in the industry, providing staff with lots of career opportunities. Already I think that the skills that I have gained through working with IHG have given me a better platform from which to launch a successful career” says Mike Li, IHG Academy graduate. A Holiday Inn hotel’s employee asserts, “IHG offers opportunities to people who aspire to gain experience and develop their profile in an ndustry that is truly international” [45]. To make sure that all of its members share a common purpose of “creating great hotels that guests love” and are engaged in achieving it, IHG has made a commitment that will create an environment and culture where they can give their best and make a difference. It is called “room to be yourself”. People may all work for different brands, speak different languages and like different things, but all of them are passionate about something.

Whether an employee’s passion is karaoke or canoeing, IHG promises to provide an environment so that he/she can bring the same amount of energy and the unique personality to work. IHG admits that it is their people who drive the success of the business, so the company invests in their skill to allow them to improve and progress to a more challenging and responsible position. To help the staff to do this IHG offers a range of training programmes designed to develop their potential from the moment they become a part of the IHG team.

A range of functional training and leadership development initiatives covers Revenue Management, Sales & Marketing, Housekeeping, Maintenance and Supervisory Leadership. IHG also takes advantage of the online training programmes developed in partnership with the Hospitality Research Institute. In 1966 Professor Chase (Ithaca, New York) who has been associated with the School of Hotel Administration since 1962 undertook development of the first “management game” for hotel administration. The result of this effort was the Cornell Hotel Administration Simulation Exercise (CHASE).

Professor Chase’s course responsibilities involved property management, information systems, accounting, finance, and business strategy. In addition to teaching undergraduates, he has been active in the School’s Professional Development Programme (PDP). This programme serves the needs of industry practitioners from around the world in multiple endeavors. IHG is the first hotel group to develop and conduct an online version of the renowned Cornell Hotel Administration Simulation Exercise (CHASE).

According to Cornell Professor Daphne Jameson, “The ever increasing globalization of the hospitality industry and movement of people across international borders heightens the need for intercultural education and training. However, few intercultural training materials have a hospitality focus, and customized instruction is costly. The tool presented helps reduce cultural barriers by providing a low-cost, hospitality-specific intercultural simulation that hospitality practitioners and educators can use with a wide variety of audiences. CHASE has helped companies and non-profit organizations analyze communication problems and develop solutions, for instance, assisted individual hotel companies and tourism organizations in Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and the Ukraine in comparing communication strategies and designing effective websites [45]. Senior Leadership Programme offers a structured route to developing the competencies required for top-level management.

The programme offers psychometric assessment and course content delivered by leading university academics that is focused on connecting with individual corporate, personal and career goals. IHG is also the only hotel group that offers assessment centres across the world to help high performing individuals in corporate, executive and supervisory roles move on and up to the next level. The most important promise that IHG gives to each and everyone who works for it is room to grow.