SWOT analysis of Holiday Inn

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SWOT analysis of Holiday Inn

This is a detailed SWOT analysis of Holiday Inn. It aims to examine the strengths and the weaknesses of Holiday Inn. It also aims to examine the opportunities the company should explore, and the threats it should keep an eye on. Holiday Inn is a British-owned American brand of hotels. It was founded in the USA in 1952.

Strengths of Holiday Inn

Holiday Inn is a modern hotel that provides business and leisure travellers with the comfort they seek. It has 1,186 hotels with 215,714 rooms globally as of March 2019. Approximately 100 million people stay in Holiday Inn hotels annually. It is amazing that 9 out of 10 travellers have stayed at a Holiday Inn hotel globally (IHG, 2019).

Holiday Inn belongs to one of the biggest hotel chains in the world, IHG group. Although it is the budget hotel service provider, Holiday inn benefits from the whole experience and same efficient management as all the other brands of the group. Likewise, Holiday Inn Resort, Holiday Inn Club Vacations and Holiday Inn Express work really well to uplift the image of the brand.

The effect of Brexit has been beneficial to Holiday Inn and other brands of IHG due to the falling value of the pound sterling and, investors turning towards investments which bring dollar earnings. That is because half of the company’s earnings happen in the US. Share price rose from £27.23 in June 2016 to £40.93 in October 2017 (Dunkley, 2019).

Weaknesses of Holiday Inn

In April 2017 Holiday Inn UK was hit by hackers affecting 1,200 of its franchisees. Information stolen from guests’ cards are card number, expiration date and verification code which the hackers steal as soon as a payment is made at front office desk. This clearly demonstrates a big weakness and Holiday Inn’s vulnerability in the face of IT security challenges (BBC, 2017).

The Holiday Inns of north England, namely Birmingham was faced with temporary closure due to a lack of hygiene standards found by health and safety inspectors. It can be argued that it is not the only chain of hotels caught in the region, and this is perhaps the reason it got away without much damage to its image.

 Opportunities for Holiday Inn

Holiday Inn can grow further in its existing markets and exploring new markets is worth the effort as well. In fact, the success of Holiday Inn UK and its profitability has prompted IHG group to finance expansion towards Germany from the profits of the UK hotels. Likewise, new partnership with Manchester Airport City to open a 280-bed Holiday Inn in 2019 is a good opportunity. There are also plans and negotiations for a similar development at the Luton Airport.

Atlas Hotels, and Somerston Capital fund are investing heavily in Holiday Inn franchises. Atlas already owns and operates 47 Holiday Inn Express in UK and plans to extend that with an additional 1,000 bedrooms soon. Further plans include increasing the portfolio and go over 60 hotels with some 7,500 rooms within the next few years. The agreement with IHG has been extended for a further 15 years starting 2018.

Threats to Holiday Inn

Threat is the last element to address in the SWOT analysis of Holiday Inn. The biggest threat facing Holiday Inn is the competition from Premier inn, Travelodge, ibis, Comfort inn, Fairfield inn and the price wars they all have to face. Travelodge and ibis practice a lower rate due to a rigorous low-cost strategy. The number of units and rooms are higher for Premier Inn who also boasts that more than 75% of UK population live within a 5-mile radius of a Premier Inn. The rate of expansion of the other budget hotels is also faster than Holiday inn.

Concluding statement

Holiday Inn benefits from its association with the umbrella brand of IHG, the biggest hotel chain in the world. Its strength lies in the fact that unlike Premier Inn and the other competitors, it forms part of a broader range of brands which caters for higher segments and markets as well all operation under slight variations of the name Holiday Inn. It does not refer to itself as budget hotel, but limited service hotel as compared to what the other competitors offer. Therefore, any guest wishing for more does not need to go to the competitors but can upgrade within the same brand.

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Last update: 28 July 2019

References:

BBC (2017) Holiday Inn hotels hit by card payment system hack, available at: https://www.bbc.co.uk/news/technology-39642172 (15 February, 2019)

Dunkley, D. (2019) Brexit bounce for Holiday Inn group, available at: https://www.thetimes.co.uk/article/brexit-bounce-for-holiday-inn-group-mnkcdjxhz (accessed 01 January 2019)

IHG (2019) Holiday Inn, available at: https://development.ihg.com/s/amea-holiday-inn (accessed 23 July 2019)

Photo credit: Tripadvisor.co.uk

Author: Veeren Gowrea

Veeren Gowrea is a lecturer in Tourism & Hospitality management. He holds an MBA in Strategic Management and MSc in Human Resource Management from the University of Wales, UK. He also holds a Postgraduate Certificate in Higher Education (PgceHE) from Birkbeck, the University of London. He works as a visiting lecturer at a number of institutes in London.