Impact of Pricing Strategy on Market Share - Research Paper Example

An exploration into how the Intercontinental hotel in Geneva can use effective pricing strategy to increase Market Share Valerya Averbuch Glion Institute of Higher Education September 19, 2014 Executive summary The purpose of this research was to conduct an in-depth evaluation of the pricing strategy followed by InterContinental Hotel Geneva. By doing so, the researcher endeavoured to recommend an appropriate pricing strategy to the hotel’s manager which would enable the hotel group to enhance their market share. In order to be able to conduct this study, a qualitative research based on the supply and demand of services in the Geneva hotel industry had to be carried out. This enabled the researcher to learn about the average price charged by hotels in Geneva and the annual number of stays in hotels situated in Geneva. The researcher also implemented the Porter’s five forces model for the hotel in order to establish a foundation that paved way for an extensive qualitative research. Following that the room rates of Intercontinental Hotel Geneva was compared with similar standard hotels based in this region. It is with regards to this fact that the researcher has attempted to conduct a thorough analysis of the pricing strategy adopted by Intercontinental hotel Geneva and suggest an appropriate pricing strategy in accordance with the supply and demand of services in the hotel industry in Geneva. The study revealed that Intercontinental hotel Geneva has been following a premium pricing strategy over the last few years in order to keep its brand image intact which in turn has decreased the hotel’s market share when compared to its competitors. That is why the hotel group is recommended to follow a competitive pricing strategy with the underlying aim of keeping its existing customer base intact as well as grab the attention of more international tourists coming to visit Geneva. Table of Contents 1.Introduction 6 2.Main research question 8 3.Research objectives 8 4.Data presentation 10 4.1. Hotel industry in Geneva 10 4.2. Hotel market performance in Geneva 11 5.Analysis 13 5.1.Porter’s five forces model implementation 13 5.2. Supply and demand in Geneva hotel industry 16 5.3. Pricing strategy of Intercontinental Hotel Geneva 21 6.Conclusion and Recommendation 24 References 27 Bibliography 29 Appendix 30 Company background 30 List of figures Figure 1: Upscale hotel performance in Geneva............................................................................10 Figure 2: Overnights in Geneva (2000-2010)................................................................................13 Figure 3: Overnight stays in the year 2010 in Geneva...................................................................13 Figure 4: Geneva Supply and Demand Canton (Yearly)...............................................................19 Figure 5: Standard room rate comparison......................................................................................20 List of tables Table 1: Overnight stays in the year 2010 in Geneva....................................................................14 Table 2: Hotel industry - Supply and demand cantons (2012)......................................................15 Table 3: Hotel industry - Supply and demand cantons (2013) .....................................................15 Table 4: Yearly supply and demand canton Geneva.....................................................................18 Table 5: Room rates comparison...................................................................................................20 Table 6: Average room rates and annual revenue comparison......................................................21 1. Introduction The underlying purpose of this project is to conduct a thorough analysis of the pricing strategy that has been followed by Intercontinental Hotel Geneva (IHG) and thereafter recommended an appropriate strategy that enables the hotel’s manager to increase its market share by a significant margin. In order to conduct this research in an appropriate manner the researcher will collect key facts and figures associated with the hotel industry in Geneva. The demand and supply of hospitality services will be evaluated using secondary data. This information will be collected from the reports published under the column Swiss tourism data and Switzerland statistical data. An in-depth analysis of these reports will be conducted in order to learn about the number of foreign as well as domestic visitors who visit Geneva. The researcher also endeavours to learn about the average rate of rooms charged by hotels in Geneva. Thereafter the researcher will be collecting room rates offered by the competitors of Intercontinental Hotel who belong to the similar category. In that way the researcher will be able to figure out the disparity in pricing strategies that exist between these hotels. Thereafter depending upon the average number of visitors and the availability of rooms, the researcher will be able to comment on the appropriate price that should be charged by InterContinental Hotel in order to increase its market share. Intercontinental Hotel Geneva is a part of the famous International Hotel group (IHG) headquartered in the US. The hotel has been regarded as prestigious by many tourists and the same image has been maintained by the hotel over the past few decades. The brand image of this hotel is automatically enhanced precisely because of the fact that it has been known to organize various diplomatic and political events. Moreover the hotel has proven to be immensely popular for tourists from all over the world. The underlying aim behind the establishment this hotel in Geneva was to attract upper middle to high income holding travellers. In addition to that Geneva has attracted a considerable number of tourists from all over the world and this city ranks second to Zurich as far as the number of travellers and popularity index is concerned. This provides Intercontinental Hotel Group with huge base of customers whereby the hotel group can increase their market share by a drastic level. This in turn justifies the establishment of a hotel in this part of the world (InterContinental Hotels Group, 2014b). The research is mostly qualitative in nature where secondary data collection becomes extremely important. The research will be collecting the supply and demand statistics from the reports published by the Swiss tourism federation. This will allow the researcher to make an assessment of the pricing strategy adopted by Intercontinental Hotel Geneva in accordance with the supply and demand of services that exist in the Geneva hotel industry. The supply and demand serves as a theoretical perspective in this case as the application of this perspective will prove to be instrumental when it comes to setting appropriate pricing strategy for the hotel in order to boost its market share. The researcher will also apply the Porter’s 5 forces model created Michael Porter. By doing so, the researcher will be able to analyse the competition faced by Intercontinental Hotel Geneva. In addition to that the researcher will also be able to analyse the bargaining power of suppliers as well as the buyers. Alongside that, assessment of the threats posed by new entrants can also be made through the implementation of this model. The outcomes of this analysis will help the researcher to recommend the appropriate price that should be set for the rooms by the Intercontinental Hotel in Geneva. 2. Main research question Which pricing strategy will prove to be more effective for Intercontinental hotel in Geneva as far as increasing the organization’s market share is concerned? 3. Research objectives To study the supply and demand in the hotel industry in Geneva through the review of secondary data. In order to achieve this objective the following research question needs to be answered: How has the supply and demand of hotel services in Geneva varied over the past few years? How has this change in supply and demand affected the hotel market performance in Geneva? In order to answer the above mentioned questions, the following information will be presented: What is the tourism demand in Geneva? How many tourists have visited Geneva? To compare the room rates of other hotels in Geneva with the room rates charged by Intercontinental Hotel Geneva. In order to achieve this objective the following research question needs to be answered: What is the room rate charged by Intercontinental Hotel Geneva? What is the room rate charged by hotels of similar standards in Geneva? In order to answer the above mentioned questions the following information needs to be incorporated: Room rates of Intercontinental Hotel Geneva and other hotels of similar standards (Swissotel Metropole, Hotel De La Paix, Grand Hotel Kempinski, Hotel Inn Thoiry – Geneva Airport, Crowne Plaza and Holiday Inn express) collected from the hotels’ official website or other hotel booking websites such as Hotels.com and expedia.com. To elaborate on the most appropriate pricing strategy for David Intercontinental hotel based on secondary research. To achieve this objective the following research questions will be answered: What pricing strategy has been implemented by Intercontinental Hotel Geneva as of the present day? What should be the appropriate pricing strategy for Intercontinental Hotel Geneva that will help the organization’s managers to increase its market share? In order to answer the above mentioned questions the following information needs to be incorporated: What is the average annual stay of travellers in Geneva? What is the average room rate charged per night by hotels in Geneva? 4. Data presentation 4.1. Hotel industry in Geneva International and domestic tourism is a crucial determinant of the stability of Geneva’s economy. A considerable proportion of the economy’s revenue comes from the tourist accommodation, means and transportation. The three factors mentioned above accounts for more than half of total value added from tourism. In the year 2011, the hotel industry in Switzerland recorded 35.5 million overnight stays. This was a 2% decrease from the number of overnight stays recorded the year before. 15.8 million Overnight stays were recorded in case of Swiss residents whereas 19.7 million stays were recorded in case of international tourists (Swiss Tourism Federation, 2012). Geneva has also recorded more number of international tourists when compared to domestic tourists. This presents an excellent premise for InterContinental Hotel Geneva to make its presence felt over the world by providing superior quality service at affordable price. Intercontinental Hotel Geneva has long been known as an epitome of standard for tourists all over the world. This is precisely because of the fact that the hotel group has been responsible for organizing number of historic events of the past decades. Despite such a magnanimous repatriation all over the world, the company is not being able to increase the number of visitors in its hotel in Geneva. This fact holds true regardless of the company’s superior ratings offered in majority of the hotel booking websites. The hotel has been consistently complimented by the visitors for its superior quality services. In-spite of that the hotel’s customer base has decreased over the past few years. This led the organizational managers to believe that the pricing strategy has to be modified. The price for the hotel bookings has to be kept competitive and in accordance with the room rates of the competitor hotels based in Geneva. In order to be able to do that the pricing strategy of the hotel has to be reviewed in accordance with the supply and demand that exists in the hotel market in Geneva. 4.2. Hotel market performance in Geneva The researcher has conducted a thorough study of the occupancy as well as the average rate performance of a cluster of 1700 upscale hotel rooms in Geneva. The underlying reason behind the choice of upscale hotel rooms is to establish a foundation over which an appropriate pricing strategy for InterContinental Hotel Geneva can be formulated. The analysis has taken into consideration the historical performance during the years between 2007 and 2010. The analysis also takes into consideration the new supply that is expected to arrive over the subsequent few years. The following figures give a summary of the annual occupancy of hotels in Geneva. Figure 4: Upscale hotel performance in Geneva (Source: HVS, 2011) As far as the annual occupancy of the hotel market in Geneva is concerned, it has remained relatively close to 65% over the time period between 2007 and 2013. This indicates that there is a robust foundation for business demand in this highly upscale part of the country. Nonetheless when compared to other major cities in Europe, the occupancy rate in Geneva is relatively stable. Regardless of this stability in the occupancy rate, the market wide average room rates have fluctuated over the last six years. As can be seen from the figure, the average room rate was less than 350 Swiss Franc in the year 2007. Thereafter it crossed the 350 Swiss Franc mark in the following year. The average room rates again decreased and went below the 350 Swiss Franc mark and stayed below that level for the following six years. Even after that there was a certain degree of fluctuation in the room rates. Despite this fact the researcher was able to have an idea of the room rate that can be set in order to have a stable occupancy rate. The fluctuation in the room rates have been largely due to the quality and quality of events which were held at the Palexpo, NATO, and other special events that encountered visits from high net worth individuals and Middle Eastern Royalties during the months of Summer. The superior marketwise performance in the year 2008 can be largely attributed to the international motor show that was hosted in the unofficial capital of Switzerland. Another reason for this strong performance was due to the UEFA European Football Championship held during the summer. The annual occupancy rate in the very same year was 67% with an average room rate going as high as 365 Swiss Franc. The reduced event budgets as well as the decreased travel budgets of various companies all over the world due to the global financial crisis in the year 2008 impacted the hotel market performance in Geneva severely. As a consequence, the occupancy rate and the average room rates fell drastically to 60% and 340 Swiss Franc respectively in the year 2009. Nonetheless, the market bounced back in the year 2010 with an occupancy rate of 65% (HVS, 2011). This was attained as a result of decreased prices of room reservation in the place. 5. Analysis 5.1. Porter’s five forces model implementation Intensity of existing rivalry: HIGH As far as the intensity of existing rivalry is concerned, it is extremely high for InterContinental Hotel Geneva. This is precisely because of the fact that the hotel market in Geneva and overall Switzerland is growing at a rapid rate. The size of the industry in this particular region of the world is extremely large which has a huge concentration of world class hotels that are capable enough to pose heavy competition to the likes of InterContinental Hotel Group (Swiss Tourism Federation, 2013; 2014). As far as the hotel industry in Geneva is concerned, InterContinental hotel faces steep competition from Holiday Inn express, Grand Hotel Kempinski and Swissotel Metropole. This is precisely because of the fact that each of the competitor hotels has their own unique aspects which has enabled the hotels to differentiate themselves in terms of the quality of services that is provided to the travellers. Although similar kind of services are provided in this hotels but the competition lie in the way these services are provided. For example all these hotels provide free Wi-Fi connections to the rooms but the differentiation factor in this case is the speed of connection that is provided to the occupants. Rivalry has also been noticed in terms of the price that is charged by these hotels for booking a particular room. A considerable number of hotels in Geneva have been found adopting competitive pricing strategy in order to grab the attention of more and more customers. The facts that have been mentioned above justify the high intensity of rivalry faced by Intercontinental Hotel Geneva (Tsubaki, 2012). Threats of new entrants: MODERATE The threat of new entrants is moderate in case of Intercontinental Hotel Geneva. In the past decade entry into the hotel industry was considerably difficulty. However, due to the advent of advanced technology it is become comparatively easy for new hotels to emerge in the market in compete with the existing organizations. The introduction of modern technology such as online, social media marketing and several other features of information technology have made it relatively easier for newer hotels to target their own segmented customer base. In that way the new entrants have been largely successful in depleting the profit margin of many established hotels based around the world. Such has been the case with Intercontinental hotel Geneva as well. New hotels have the propensity to follow discounted pricing strategy with the underlying aim of expanding their potential customer base and this has posed some sort of threat for Intercontinental hotel in Geneva. Despite all these fact, the threat is still moderate precisely because in order to achieve the position equivalent to the position held by Intercontinental Hotel Geneva a new entrant will require considerable amount of capital, strong brand image and distribution network. These are attributes that are hard to come by during the initial stages of business for a new entrant (Tsubaki, 2012). Threat of substitute: LOW The threat of substitute is considerably low for Intercontinental Hotel Geneva. This is precisely because the substitutes for hotel accommodation are dorm rooms, paying guest accommodation and household accommodation. Although the substitutes of Intercontinental Hotel’s services are considerably inexpensive when compared to the rates charged by the hotel itself, the quality of service offered by the hotel is unmatched to the quality offered in case of substitutes mentioned above. In addition to that, the segmented customers of Intercontinental Hotel Geneva belong to the upper middle income, high income households, corporate executives and political leaders. People like these would never prefer to stay elsewhere apart from hotel accommodation and only a handful of few have their own house in Geneva. The facts that have been mentioned in this section provide a justification for the low threats posed to Intercontinental Hotel Geneva by the substitutes (Tsubaki, 2012). Bargaining power of buyers: HIGH As far as the bargaining power of buyers is concerned, it is considerably high for Intercontinental Hotel Geneva. This is precisely because of the fact that the hotel industry in Geneva is highly concentrated. There is considerable number of hotels in this industry whose price to quality of service ratio has grabbed the attention of a large number of travellers from all over the world. They have the option of changing their hotels as and when they want if they are not satisfied with the services provided if they are not happy with the prices charged. The introduction of online hotel booking system has increased the bargaining power of customers in the hotel industry by a significant margin. The online booking platforms enable customers to compare the prices as well as the customer reviews of various hotels at once. This in turn helps them to make an informed decision. They have the option of choosing the hotel with low room rates or the hotels which are offering rooms and associative services at discounts. Certain hotel packages also come in conjunction with various tour packages at a very low cost. Such options fascinate customers which in turn influence their buying behaviour in favour of those hotels. Its options like these which has enhanced the bargaining power of customers (Tsubaki, 2012). Bargaining power of suppliers: HIGH The bargaining power of suppliers in case of Intercontinental Hotel is considerably high. This is precisely because the supplier companies of hotels like Intercontinental Group are relatively low in number. They are adequately equipped to supply products to five star hotels like Intercontinental Group, Hilton Group and many more. The supplier companies are large multinational corporations who have the power to outrun small businesses and therefore, they have the ability to alter the prices charged by suppliers all over the hotel industry. Hotels cannot afford to lose quality suppliers because their brand image is associated with the quality of products that are supplied to them. This dependence has increased the bargaining power of Intercontinental Group suppliers by a considerable margin (Tsubaki, 2012). 5.2. Supply and demand in Geneva hotel industry Geneva is the second most populous city in Switzerland. Being known as the most multicultural city in the country, the city has drawn considerable attention both from domestic as well as international tourists from all over the world. Aside from the fact that the city is known to be a global hub particularly because of the presence of several international organizations, the city’s landscapes has been one of the major reasons behind the increase in inflow of tourists over the last decade or so. As such the demand for the city’s hotels has been both business as well as leisure oriented. The strong demand for hotels can be largely attributed to the major events (mentioned above) that are held in this part of the world. Events held in Palexpo convention centre as well as in large conference hotels in Geneva have recorded the presence of various high net worth individuals belonging from all over the world. This presents opportunities for InterContinental hotel to formulate its pricing strategies appropriately with an underlying aim for increasing their market share. Demand of hotels for leisure purpose is mainly generated by skiers who travel through Geneva as well as by the popularity of this city with Middle Eastern tourist. The extended stay during the time of Ramadan provides ample opportunity to InterContinental Hotel to uplift its room rates by a considerable margin during this period (HVS, 2011). With a steady growth rate in overnight stays of greater than 2% over the last decade, Geneva has proven itself to be a stable hotel market. The year 2007 showed the highest increase in overnight stays with an inspiring annual growth rate of 11%. This was a 3% increase from an 8% growth rate attained in the year 2006. However in the year 2008, the city was severely impacted due to the global economic crisis which in turn decreased the rate of overnight stays by 7% (HVS, 2011). Figure 5: Overnights in Geneva (2000-2010) (Source: HVS, 2011) However, the year 2010 has indicated a sign of recovery of the hotel market in Geneva. the amount of overnight stays in the year 2010 increased by a 100,000 from the previous year to reach a value of 2,800,000. This was a 5% increase from the occupancy rate achieved in the year 2009 (HVS, 2011). Figure 6: Overnight stays in the year 2010 in Geneva (Source: HVS, 2011) Table 1: Overnight stays in the year 2010 in Geneva Overnight stays in the year 2010 in Geneva Percentage Switzerland 20% France 11% Germany 6% Middle East 7% Russia 4% UK 11% USA 11% Others 30% As is evident from the figure given above, more than 80% of the Geneva’s visitation comes from international travellers. The figure also demonstrates the balanced mix of source markets for Geneva with a healthy share coming from the Russian as well as the Middle Eastern travellers. Guests from these two countries are known to spend a lot on their accommodation as they desire superior quality services above all. Therefore, InterContinental should adopt a pricing strategy that attracts clientele from these countries. The supply in the Geneva hotel market has been relatively stable over the past few years. Five star and four star hotels in combination have accounted for close to 70% of classified rooms’ stock during the year 2010 (HVS, 2011). Table 2: Hotel industry - Supply and demand cantons (2012) Capacity Overnight stay in millions Net occupancy rate in % Canton Rooms Beds Swiss Foreigner Total Rooms Beds Graubünden 18957 39190 2.9 2.2 5.1 49 40.3 Bern 17019 33161 2.2 2.5 4.7 50 41.8 Zurich 13958 24012 1.2 3.3 4.6 64.8 52.4 Valais 14109 29134 1 1.5 2.5 48.7 41.4 Geneva 9029 14823 0.5 2.3 2.8 63.6 52 (Source: Swiss Tourism Federation, 2013) Table 3: Hotel industry - Supply and demand cantons (2013) Capacity Overnight stay in millions Net occupancy rate in % Canton Rooms Beds Swiss Foreigner Total Rooms Beds Graubünden 18819 39083 2.9 2.2 5.1 49.8 41 Bern 16845 32747 2.2 2.6 4.8 52.1 44 Zurich 14029 24387 1.2 3.4 4.6 65 53.2 Valais 13959 28958 2 1.8 3.8 48.6 41 Geneva 9188 15152 0.5 2.3 2.8 63.8 52.3 (Source: Swiss Tourism Federation, 2014) Table 4: Yearly supply and demand canton Geneva Supply and demand canton: Geneva 2008 2009 2010 2011 2012 2013 Room Capacity 9093 9064 9073 9034 9029 9188 Swiss overnight stays 578,689 544,105 591,729 593,220 543,361 564,145 Foreign overnight stays 2,305,421 2,116,486 2,208,793 2,245,009 2,268,719 2,251,479 Total overnight stays 2,884,110 2,660,591 2,800,522 2,838,229 2,812,080 2,815,624 Occupancy rate 66.40% 61.30% 63.90% 65.10% 63.60% 63.80% (Source: Swiss Federal Statistical Office, 2008; 2009; 2010; 2011; 2012; Swiss Tourism Federation, 2014) Figure 4: Geneva Supply and Demand Canton (Yearly) The figure given above shows a comparison between the occupancy rates of hotels based in Geneva and other cities in Switzerland. It is evident from the figure that Geneva stands second in position behind Zurich with a steady net occupancy rate of 63.6% and 63.8% in the year 2012. This is quite close to average room occupancy rate of 65% of all the 1700 upscale hotels based in Geneva. The overnight stays of foreigners have been recorded to be 2.3 million whereas that of domestic travellers has been recorded to be 500,000 (Swiss Tourism Federation, 2013). The figures provide in the table also provides a justification of the fact that demand and supply of hotels has been relatively stable over the past few years. Therefore, now might be the right time for Intercontinental Hotel Geneva to revise its pricing strategies in order to make sure that it stays ahead in the competition. 5.3. Pricing strategy of Intercontinental Hotel Geneva Table 5: Room rates comparison Standard room rate IHG Four Seasons Kempinski Hotel Beau-Rivage Le Richemond average Monday, November 3 434 700 588 650 689 612.2 Tuesday, November 4 434 860 674 650 1146 752.8 Wednesday, November 5 434 860 674 650 1146 752.8 Thursday, November 6 382 700 588 650 641 592.2 Friday, November 7 280 725 472 510 583 514 Saturday, November 8 280 725 443 510 583 508.2 Sunday, November 9 318 725 472 530 583 525.6 (Source: Four Seasons, 2014; Hotels.com, 2014) *the room rates are denominated in CHF Figure 5: Standard room rate comparison Table 6: Average room rates and annual revenue comparison Hotel Total Rooms Avg. Room rate Annual revenue Four seasons 115 CHF 756.43 CHF 56,543.14 Hotel Beau Rivage 109 CHF 592.86 CHF 42,004.13 IHG 333 CHF 366.00 CHF 79,220.70 Grand Hotel kempinski 412 CHF 588.71 CHF 157,656.54 Le Richemond 109 CHF 767.29 CHF 54,362.50 (Source: IHG, 2014a; 2014b, 2014c, 2014d; The Leading Hotels of the World, 2014; Hotels.com, 2014; Dorchester Collection, 2014; Grand Hotel Kempinski, 2014) The table given above shows a comparison between the prices of standard rooms of 5 upscale hotels in Geneva which have more than four star rating in majority of the hotel booking websites. The table also shows the total number of rooms available in each of those hotels. It is quite evident from the table that InterContinental Hotel Geneva follows a competitive pricing strategy that is targeted towards individuals with high net worth. The pricing strategy is quite in contrast to the premium pricing strategy followed by all the other hotels in that list. Le Richemond follows a premium pricing strategy by charging the highest for its rooms when compared to the room rates of all the other hotels. The annual revenue has been calculated by considering an average net occupancy rate of 65% throughout. The calculation has revealed that Intercontinental Hotel Geneva comes second in the list as far as market share is concerned with annual revenue of CHF 79,220.70 standing just below Grand Hotel Kempinski with annual revenue of CHF 157,656.54. However, this difference can be because of the fact that Grand Hotel Kempinski has more number of rooms than Four seasons, Hotel Beau Rivage, IHG and Le Richemond. The underlying rationale behind Intercontinental Hotel Geneva adopting a competitive pricing strategy was to target the mass market. Given the fact that the hotel is primarily responsible for holding some of the major events hosted in this part of the world, the brand value of the hotel group enhances drastically. However, by following a competitive pricing strategy instead of a premium pricing strategy the hotel has failed to keep its brand image intact. Provided the higher number of high profile guests that the hotel group entertains every year, adopting a competitive or a discounted pricing strategy is never an option. This is precisely because of the fact that lowering the room rates would deteriorate the brand value of the company. This in turn will also compel high profile guests to refrain from availing accommodation in this hotel. Adopting a competitive or discounted pricing strategy will also change the target market of the company which in turn will compel Intercontinental hotel to change its promotional strategy thereby incurring additional cost. The company might not get further opportunities to host high profile events which in turn will also decrease the company’s revenue stream. Therefore, InterContinental Hotel Geneva needs to adopt a pricing strategy that suits its brand value as well as caters to the need of its clientele. In that way the hotel group will be able to enhance its market share by a considerable margin. 6. Conclusion and Recommendation Geneva has a highly concentrated hospitality industry that in turn has intensified the competition between hoteliers. They engage in a cutthroat competition with each other that in turn increases the bargaining power of customers. Therefore maintaining an optimal relationship between price and quality is a crucial requirement among hoteliers. This fact holds even truer for Intercontinental Hotel Geneva which has an already established brand value. This is precisely because customers can strategically alter their purchase plans in order to pay as less as possible. In such a context it can be said that adopting an effective pricing strategy is extremely important. This is precisely because failing to implement this pricing strategy would deplete the customer base of the hotel thereby deteriorating its financial performance. The research has revealed that the hotel market in Geneva has grown at a steady pace following the sovereign debt crisis. However the Intercontinental Hotel based in this part of the world has failed to achieve a similar growth rate precisely because of the fact that the hotel follows a competitive pricing strategy mostly and occasionally a discounted pricing strategy. This has deteriorated the brand image of the hotel and that is why the hotel has failed to garner the attention of its high profile customer. The underlying reason behind the adoption of this strategy as mentioned above is the fact that the company wanted to target the mass market alongside its high profile clientele. The hotel’s primary target segment includes corporate executives and political leaders and this is particularly the reason why InterContinental Hotel Group should adopt a premium pricing strategy keeping its room rates somewhere close to average room rates all the hotels compared above. Having conducted a thorough research of the hotel market in Geneva, it is believed that following a premium pricing strategy would be an appropriate strategy for InterContinental Hotel Geneva. Given the fact that the hotel market performance is improving consistently over the past few years, it is expected rate the net occupancy rate of hotels will also improve in the following years. Adopting a competitive pricing strategy will enable Intercontinental hotel Geneva to maintain its existing high profile clientele and at the same time expand its customer base towards targeting the middle to high income individual. It is expected that if the company reduces its room rates to make it close to the price charged by Grand Hotel Kempinski and Hotel Beau Rivage, it will increase its net occupancy rate to nearly 75%. For example, if the room rates vary between CHF 580 and CHF 595 then with an occupancy rate of 75%, the company’s annual revenue is expected to reach CHF 146,853 which is an increase of about CHF 67,663 from the hotel group’s current market share. References Dorchester Collection. (2014). Le Richemond. Retrieved from http://www.dorchestercollection.com/en/geneva/le-richemond Four Seasons. (2014). Find a hotel or resort. Retrieved from http://www.fourseasons.com/ Grand Hotel Kempinski. (2014). Rooms & Suites. Retrieved from http://www.kempinski.com/en/geneva/grand-hotel-geneva/rooms-and-suites/ Hotels.com. (2014). Hotel search. Retrieved from http://in.hotels.com/ HVS. (2011). Hotel market snapshot: Geneva. Retrieved from http://www.hospitalitynet.org/file/152004658.pdf IHG. (2014a). 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Appendix Company background The Intercontinental Hotel Group is a distinguished hotel chain that has 693,072 rooms in more than 4,700 hotels providing services throughout the world. The company operates under nine hotel brands with a sole aim of providing world class accommodation experience to travellers. The hotels group endeavours to deliver a high quality growth by accruing unswerving and sustained growth in terms of cash inflows and subsequent profits over the longer period. The company has been attempting to do the same over the last decade or so by focusing on targeted portfolio and establishing preferred brands that is driven by a an in-depth understanding of the needs and requirements of the guests who avail the hotel’s accommodation facilities. Intercontinental hotel group’s strategic priorities involve making their brand a foremost choice for their clientele. In that way they will be able to improve the revenue of their hotels by encouraging repeat visits from their guests. The company also puts enormous effort behind enhancing the efficiency of their hotels and the operational processes. In order to be able to do the managers have to put the company’s market scale as well as their knowledge to good use. By doing so, the company will be able to convert more hotels to its brands (InterContinental Hotels Group, 2014a). Europe has been a very prospective premise for the Intercontinental Hotels Group. The company operates through 634 hotels all over the continent and provides services through the already active 102,433 hotel rooms (InterContinental Hotels Group, 2014b). Read More