The Target Market Change for Holiday Inn Hotels and Hotels in England and Bosnia - Literature review Example

Literature review: “The difference between the target market change for Holiday Inn Hotels after the financial crisis amongst hotels in England & Bosnia” Chapter: Literature review Introduction: Literature review section of the research work is directed to explore and investigate some crucial secondary sources including books, journal articles, research papers, and different authentic online articles so that a theoretical and conceptual framework for the entire research can be prepared1. In direction to this, the literature review section of this research work demonstrates some crucial theoretical and conceptual findings regarding marketing strategies and orientations adopted by a hospitality organizations and their disposition in the post recession era in terms of target market. Different types of relevant literatures are reviewed for the purpose of attaining some conceptual findings regarding research work. Critical review of target market Holiday Inn Hotels after the financial crisis From the perspective of impact of financial crisis in late 2008, Platt, Carper, and McCool (2010) have presented their views. As per the findings of the author, it can analyzed critically that recent financial crisis have been proved quite critical for business organizations operating across the world. The failure of some of the major business organizations has induced different domestic as well as multinational business organizations to change the norms of their business practices and strategies for the purpose of minimizing risks in their business operations2. Kotler, Bowen, and Makens (2011) have presented the theory of strategic change in the market. As per the theory, external environmental factors can be responsible factors for changes in the market place. As per the theory, although the major impact of recession have been seen in the operations of finance sectors organizations, yet still there are some other sectors such as hospitality, manufacturing, and automobile, that have been affected quite significantly after the occurrence of this financial slump across the globe 3 In contrast to such findings, Corgel, and Woodworth (2012) have explained the impact of recession over hospitality sector. Authors have argued quite critically that hotel industry is one of the industries which directly relates with other business industries. The recession has affected the patterns and trends followed by different hotel organizations4. In the support of this Shi, White, Zou, and Cavusgil (2010) has elaborated that such crucial differences can be observed in the context of product and service offerings, internal administration, operations, and marketing strategies. Due to shortage of financial resources during the time of recession, hotel organizations have started to be more concerned about refining their all the marketing strategies and tactics5. The imperial discussion of the findings of Shi, White, Zou, and Cavusgil (2010) is provided by Chahal (2012). The scholar explained the strategy of strategic direction, which stated that due to external environmental changes, the strategic direction of the organization is drifted. As per the findings of the author for the purpose of countering the adverse business conditions emerged due to recession, Holiday inn has changed its marketing strategies. On the basis of the findings of the author, it can be evaluated that the hotel organization has changed the target customers and audiences of its marketing campaigns. In this regard, after the recession the hotel had to reframe its different operational and marketing strategies for the purpose of reducing its overall operational cost. In this direction, the hotel has changed its target market. Now the company has started to focus of online marketing of its services. In this way the target audience of the company’s marketing campaign has been drifted to online customers6 Pingshan, (2010) has supported such findings of Chahal (2012). As per the author, online marketing measures adopted by Holiday inn have changed the dimensions of its marketing strategy. This is also showing the change in the strategic directives of the orgasniation. It can be evaluated from the article that nowadays instead of focusing on high profile and individual customers, the hotel organization has now started to focus on mass market available online. This target market considered by the company has been proved quite crucial after the recession for the purpose of enhancing market share, which have been decreased during recession7. For elaborating Barrows and Powers (2008) Holiday Inn has started to market its different services with the help of different internet based sources like e-mails, and social media. In this regard, young generation that generally show intensive amount of affinity towards different crucial social media sources have also become quite prominent target markets for the company8. In the views of Corgel, and Woodworth (2012), the recent financial crisis has shaded some negative impact over purchasing power of people in the developed nations like the US, England, Bosnia and other European countries. According to the theory of product change, the preference of the people regarding product keeps changing as per the changing trends in the market. In this way, the article provides insight that the target market for high class and expansive hotels such as Sheraton, Marriott, and Holiday Inn has been started to concentrated. From the perspective of sustainability of the organization, it has become quite crucial for the hotel organizations to change their target markets in prominent locations such as England, and Bosnia. The management of such organizations has become quite attentive towards the offerings of low budget hotel chains instead of highly expensive and premium hotel9. Bowie, and Buttle (2012) elaborated this further by saying that launching of Holiday inn express as a subsidiary of Holiday inn is one of the most crucial example of the strategic drift of the company from the perspective of target market. As per the author, due to decreased purchasing power of people in developed countries, now people have started to prefer low cost and economic hotel services. In this regard, they have started to prefer hotel Holiday inn Express to Holiday inn10. Critically explaining this perspective of the author, Sherman, Miller, and Sherman (2009) have articulated this sudden drift in the target market population of organization as the normal change in the market speculation after the events like global financial crisis. It can be evaluated from the review of article that recession is one of the phases of economic cycle which leads to suppress the growth of economic practices and rotation of financial resources within the market. The shortage of money supply in the market place is one of the major features of the recession or financial crisis. In direction to this, sudden downfall in the purchasing power of consumers of that particular area becomes quite obvious phenomena in the time of recession. In such conditions, the focus business organizations should be directed to cater mass market so that the adequate level of revenue can be earned11. Considering this disposition of market conditions during and after the recent global financial crisis, Shafer, (2011) has expressed that like other large and prominent business organizations, changes in the preference of target market can be seen in context of Holiday inn. For instance, earlier, where the organization used to focus on high and premium class customers, now the company has started to undertake different strategic measures for the purpose of attracting mass population. The launching of new brand under the name of Hotel Holiday inn Express is one of the most considerable efforts of the company in the direction of changing target market12. This strategic orientation of the company is directly supported by Harris (2012). As per the author, attracting mass market with low advertising campaign is the part of market penetration strategy adopted by the business organization for the purpose of enhancing its overall market share and customer base. In this way, this strategic measure will be quite crucial for the business organizations to have some well expanded target market in order to attain a competitive position within the market place13. Enz, (2010) has also stated that the business organizations can cater mass market in order to enhance its market share and its reach into market. In relation to this, for the business organization catering mass markets can be proved an effective option for the purpose of address issues emerged due to recession14. In contrast to this, O’Neill, and Mattila (2010) has also specified a different perspective that the changed scenario of competitive position of the hotel industry of the UK after the period of recession. After the recession, the low price competition has been enhanced quite intensively in the hotel industry of the UK. There are a number of different players in the hotel industry, which offer a number of low cost services to customers. In this context, it has become quite essential for the business organizations to mould their products and service offerings. On the basis of such discussion, the author has concluded that for the purpose of being successful and sustainable after recession period, it is quite essential for the hotel organization to put its focus on caterings mass market by offering low cost products and services to its customers15. This perspective of the author has also been opposed by Dines (2008). The article of the author has evaluated that after the recession, the UK hotel industry have undergone to the phase of structure changes. The recession has divided the entire UK hotel industry into two specific categories. The first category consists of top end five-star hotels, while the second category of hotel comprised of low cost hotels. In direction to this, within the UK, after the recession period, there is a boom of mid range three star hotels. The lack of discretionary spending is one of the major reasons behind the increasing focus of hotel organizations on the mid ranged subsidiaries16 These findings have been supported by O’Fallon and Rutherford (2010) in the context of hotel Holiday inn. As per the findings of the author, in order to be consistent with the existing marketing trends the hotel has decided to cater mass market by launching it low cost hotel chain with the brand name of Hotel Holiday inn Express. The main focus of this hotel chain is on delivering some low cost services to the customers so that mass populations can be catered17. In opposition to this, Cohn, Katzenbach, and Vlak (2008) has elaborated that for the purpose of being successful in the new market, the company is required to make thorough evaluation of its target market. In this regard, through the brand expansion strategy, the hotel has started to focus on middle class population, which cannot afford highly expensive hotel for accommodation. This change in target population is triggered by global financial crisis that lead to decrease the per capita income within developed countries such as the UK and the US18. In addition to this, Ford, Sturman, and Heaton (2011) have also illustrated that before the period of recession, hotel organizations like Marriott, Sheraton and Holiday Inn were used to concentrate on individual and direct marketing for the purpose of developing a niche market. The prime significance of this strategy was related with the development of a specific and distinguished image of its services within the market. With the help of such important marketing strategies, hotels were used to cater the population which has high discretional income. However, after the recession period, such discretional income of people has been decreased, which have led the hotel organizations to adopt mass marketing measures in place of individual marketing. The prime rationale behind the adoption of this target market is that this strategy allows hotels to maintain adequate level of revenues, which helps them to preserve the sustainability of the organization in tough and adverse business conditions during and after the period of recession19. In views of Manning (2007) also, the focus of hotel organizations over mass population can be justified due to requirement of frequent and adequate supply of funds, which is quite crucial in recovery time period of after the recession20. As per the opinion of Tavitiyaman, Qu, and Zhang (2011) this reason can be applied effectively in the case of large scale hotel organizations such as Holiday Inn, and Marriott as such organizations has made some intensive amount of investments in the real estate. Owing to this reason, during the period of recession, the amount of risks adhered by such organizations is quite high. For this purpose, such hotel organizations have to change their marketing strategies as well as target markets for the purpose of addressing such critical risk21 Moreover leading the critical discussion further, Spencer (2010) has also specified some of the strategic measures for the purpose of addressing adverse conditions such as recession. The article has reflected that the business organization should adopt the measure of market diversification strategies which induces the originations to enhance the target market and products offerings so that an effective portfolio can be created. In addition to this, the organization should also intensify the range of products and services offerings for the purpose of enhancing the level of the overall customer base. The high customer base allows the company to attain a significant amount of market share22. These findings of Spencer (2010) have been used quite intensely by Roger (2010) for the purpose of revealing the reasons behind the changes in the target market by Hotel Holiday Inn. The author has reflected that in order to address different crucial problems due to global financial crisis faced by hotel has expanded its target market by launching new product line namely Holiday inn Express for different customer segment. By doing so the company has tried to have an effective portfolio of target markets which allowed the hotel to diversify the risk associated with the project23. Barsky (2013) has opposed the views of Spencer by saying that after the recession, there is change in the patterns and trends in the tours and travel industry. As per the findings of the authors it can be evaluated that the business travelers have got affected quite adversely because of the global recession. There is a significant slump in the number of business travelers during the period. The primary reason behind this trend is related with the enhancing attention of business organizations regarding cost reduction. This trend has directly affected the number of bookings in the luxury hotels like Holiday inn24. In contrast to this, Noe, Uysal, and Magnini, (2010) has critical examined that in the year 2009, there is no any significant changes in the number of leisure travelers during the year. Different promotional schemes and offers of travelling companies have led to attract more leisure customers. Especially in the context of high end travelers, who like to have long travels in leisure, there is no significant change in the travelling pattern25. On the basis of analysis of the findings of Seggie, and Griffith (2008) it can be argued that that hotel organisations have become quite concerned about decreasing number of business travellers. Owing to this reason, hotel organisations like Holiday inn have started to put more attention for catering the target market of business travellers26. In contrary to this, Dev, Brown, and Zhou, (2007) have specified that before the period of recession, the prime focus of the organisation was on attracting leisure customers27. As per the article written by Eleftheriou-Smith (2012), Holiday inn has become quite attentive towards changing its brand image across the world. In direction to this, in the year 2009, the company has undertaken a global marketing and re-branding campaign of worth £600m. In such program, the company has tried to refurbishing itself across its 3200 estates across the world so that overall customer base of the organisation can be enhanced28. In addition to this, Plummer, Rappaport, Hall, and Barocci, (2007) have also contrasted the findings of Eleftheriou-Smith (2012), by saying that along with catering the new target customers, holiday inn has also started to target its frequent visitors so that level of brand loyalty among customers. In direction to this, for the purpose of target its frequent visitors, the company has started to provide different offers and promotions paid dividends to them. Moreover, the company has highlighted a new segment of target market, namely road warrior guests. This segment consists of the customers who are required to travel quite frequently as travelling is an essential part of their job profile. For such customers the hotel has started to provide facilities of advanced bookings and group books at discounted rate29. Such facilities delivered by the hotels are the part of hotel’s long term competitive strategy for the purpose of countering adverse situations after the period of recession. In the context of markets like England and Bosnia, the disposition of hotel customers have been deviated due to different crucial events. In line to this, LEtang, (2012) has presented the changes in the marketing strategy of hotel during London Olympics 2012. As per the findings of the author London Olympics was one of the major events after the recession period which has affected the hotel industry of the country. During the event there is a high amount of influx of spectators in the country, which provided the boom for the industries like hospitality, and transportation within England and nearby areas30. Howard-Allen (2013) has supported that during the London Olympics the Holiday inn has changed its marketing focuses. The hotel Holiday Inn was the Tier Three sponsor of the Olympics games in the London. Being as sponsor, the company took advantages and started to cater customers who have got some intensive amount of interest in sports. In this direction, the company has undertaken two prominent and high profile events for targeting markets consisting of sports lovers. These events were ‘Running Club with Mo’ and ‘Ride with Cav’. These events were taken into account within Greater London for the purpose of providing opportunities to the sports lovers to get trained with athletes31. Along with this, for the purpose of exploring the disposition of Holiday Inn during the Olympic period, Johnson (2010) has explored some of the crucial announcement made by the company. As per the author, for the purpose of catering mass population and tourists during the Olympic season the hotel announced special discount offer namely offer 20.12, which offers the room available at the tariff of £20.12 during the Olympic month. The offer was aimed to attract the population that belongs to middle income group categories. Moreover, the company has also attempted cater the population which is quite keen towards sports. For this purpose, Holiday Inn has a number of different athletes as ambassadors for instance Denise Lewis32 In contrast to this, Rooney (2009) has also explained that InterContinental Hotels Group, which is a parent group of Hotel Holiday inn, has announced to invest about $ 1 billion in the re-launching of more than 3200 Holiday Inn and Holiday Inn Express hotels across the globe for the purpose of refining its image from highly premier hotel brand to budget hotel available and affordable for mass population. Along with this, the parent hotel of holiday Inn has also decided to opening of another 1,050 hotels for the purpose of enhancing its reach and customers base in the marketplace. As per the evaluation of the author, such all the efforts undertaken by the company are directed to target mass markets so that economies of scales can be enjoyed33. Reid and Bojanic (2009) have also elaborated that the concept of economies of scale directs an organisations to undertake the production at mass level so that overall production cost can be minimised34. In this context, Moreo, DeMicco, and Xiong (2009) have also stated that service organisations like hospitality sectors, the concept regarding economies of scale induces the rendering the services to mass population so that operational cost of the hotel can be minimised. In this way, as per this concept for the purpose of attaining long term success and high profits, it becomes quite essential for the organization operating in hospitality sector to enhance its target customer base so that they can be able to produce more services for its customers35 DAveni (2010) have also argued critically that in recent period of time, the Holiday inn has started to focus on middle income group and leisure customers as in population of middle income group and leisure customers in the context of countries like England have been grown quite intensively after the period of recession. This sudden drift in the target market of the organisation can be related to changes in the economic conditions of the region after the period of financial crisis36. Conclusion: In the presented literature review section, different crucial literatures have been critically argued as such literatures contain some effective and contemporary information regarding Hotel Holiday inn. The literature provides some crucial information that is quite helpful in accomplishing objective of the research work. Different literary sources used within this section have explained some theoretical and conceptual information regarding the situation and trends in the hotel industry after the recent financial crisis. Changed conditions and trends have also induced hotel Holiday Inn to change its focus. Different literatures have also evaluated to after the financial crisis the business environment for hotel industry has become quite tough. There is a significant change in the personal income of individual and consequently their spending habits. Their disposition towards low cost budget hotels has been enhanced quite positively. In this context for the purpose of capturing this trend of the market, Hotel Holiday Inn has also changed its focus from individual customers to mass customer by positioning itself as low cost budget hotel. In this way, different literatures reviewed within the section presented as above have reflected that there are some significant changes in the target market considered by hotel holiday inn for the purpose of addressing the issues emerged during the recession. Moreover, there are a number of different crucial other advantages that have induced the business organization to shift its concentration from individual customers to mass market in the post recession period. On the basis of this critical evaluation of the different literatures some crucial points can be collected that can be helpful in answering research question which is related to the reasons behind changing focus of Holiday Inn in terms of target market after the recent global financial crisis. Although the literature review has presented some crucial insights regarding the research context, yet still there are some limitations associated with this review. For instance, review of theoretical literatures can only supply conceptual information. There is a lack of practical and personal experience based data that can be able to reflect realistic data and current position of the data. In this regard, in the future research work, different interviews and reviews of mangers of different hotels which are published in various magazines and news papers will also be taken into consideration. The prime Rationale behind the inclusion of such sources in the future work is that information provided by news papers and magazines are quite realistic and confined with practical experiences of people related to the industry. This will be proved quite effective in investigating the research work in the most effective manner. Reference Barrows C W, and Powers, T, Introduction to the Hospitality Industry (7th Ed., John Wiley and Sons, 2008). Barsky, J, ‘Luxury hotels and recession: A view from around the world’, 2013, viewed on 6th February 2013 Bowie, D and Buttle, F., Hospitality Marketing, (2nd Ed., CRC Press, 2012). Chahal, M, ‘Hotels fail to get a grip on reality’, 2012, viewed on 6th February 2013 Cohn, J, Katzenbach, J and Vlak, G, ‘Finding and Grooming Breakthrough Innovators’, Harvard business review, 2008, Pp 1-9. Corgel J, and Woodworth, M, ‘Hotel industry perseveres through downturn’, 2012, viewed on 6th February 2013 DAven, A, Beating the Commodity Trap: How to Maximize Your Competitive Position and Increase Your Pricing Power, (Harvard Business Press, 2010). Dev, CS, Brown, J R and Zhou, K Z, ‘Global Brand Expansion: How to Select a Market Entry Strategy’, Cornell Hotel and Restaurant Administration Quarterly, Vol. 41, 2007, Pp 13-27. Dines, N, ‘The Effect of the Recession on the Hotel Sector’, 2008, viewed on 6th February 2013 Shafer, R, Grab More Market Share: How to Wrangle Business Away from Lazy Competitor (John Wiley & Sons, 2011). Eleftheriou-Smith, J ‘InterContinental Hotels Groups Matt Luscombe on his post-Olympics strategy, 2012, viewed on 6th February 2013 Enz, C A, The Cornell School of Hotel Administration Handbook of Applied Hospitality Strategy, (SAGE, 2007). Ford, R C, Sturman, M C and Heaton, C P, Managing Quality Service in Hospitality: How Organizations Achieve Excellence in the Guest Experience, (Cengage Learning, 2011). Harris, P, Accounting and Finance for the International Hospitality Industry, (Routledge, 2012). Howard-Allen, F, ‘Holiday Inn Olympic Sponsorship’, 2013, viewed on 6th February 2013 Johnson, B, ‘Holiday Inn leverages 2012 Olympics connection’, 2010, viewed on 6th February 2013 Kotler, P, Bowen, J T and Maken, J C, Marketing for Hospitality and Tourism (Pearson Education Ltd, 2011). LEtang, J, Public Relations: Critical Debates and Contemporary Practice (Routledge, 2012). Manning, G L, Selling Today: Creating Customer Value. (9th ed, Pearson Education ltd, 2007). Moreo, A, DeMicco, F J and Xiong, L, ‘Towards a Model to Measure the Quality of Environmental Sustainability: The Hospitality Environmental Scorecard’, Journal of Quality Assurance in Hospitality & Tourism, Vol. 10. 2009, Pp 44–58. Noe, N P, Uysal, M, and Magnini, V P, Tourist Customer Service Satisfaction: An Encounter Approach, (Taylor & Francis, 2010). O’Neill, J W and Mattila, A S, ‘Hotel Brand Strategy’, Cornell Hospitality Quarterly, Vol. 51, 2010, Pp 27-34. OFallon, M J and Rutherford, D G, Hotel Management and Operations,(5th Ed. John Wiley and Sons, 2010). Pingshan, H, ‘The Impact of rebranding on guest satisfaction and financial performance: A case study of Holiday Inn Singapore Orchard City Centre’, 2010, viewed on 6th February 2013 Platt, R G, Carper, W B and McCool, M, ‘Outsourcing a High Speed Internet Access Project: An Information Technology Class Case Study in Three Parts’ Journal of Information Systems Education, Vol. 21, 2013, pp 15-25. Plummer, J, Rappaport, S D, Hall, T., and Barocci, R., The Online Advertising Playbook: Proven Strategies and Tested Tactics from the Advertising Research Foundation, (John Wiley & Sons, 2007). Reid, R D, and Bojanic, D C, Hospitality Marketing Management, (5th ed. John Wiley and Sons, 2009). Roger, K, Strategic marketing problems, (Pearson Education, 2010). Rooney, J ‘Why InterContinental Chose to Relaunch Holiday Inn’, 2007, viewed on 6th February 2013 < http://adage.com/article/cmo-strategy/marketing-intercontinental-chose-relaunch-holiday-inn/138687/> Seggie, S H and Griffith, D A, ‘The resource matching foundations of competitive advantage’, International Marketing research Vol. 25, 2008, pp 262-275. Sherman, H J, Miller, J, and Sherman, P, The Roller Coaster Economy: Financial Crisis, Great Recession, and the Public Option. (M.E. Sharpe, 2009). Shi, L H, White, J C, Zou, S and Cavusgil, S T, ‘Global account management strategies: Drivers and outcomes’, Journal of International Business Studies, Vol. 41. 2008, Pp 620–638. Spencer, M, ‘If InterContinental were a sound: what would it be’? Journal of Business Strategies, Vol. 31, 2010, pp.39-46. Tavitiyaman, P., Qu, H., and Zhang, H Q, ‘The impact of industry force factors on resource competitive strategies and hotel performance Pimtong’, International Journal of Hospitality Management, Vol. 30. Pp.1-10. Taylor, R H, Research Methodology: A Guide for Researchers In Management And Social Sciences, (PHI Learning Pvt. Ltd, 2006). Read More