Holiday Inn 2013 Annual Report Download - page 168

In addition, the value of the Group’s brands is influenced by a number of other factors, some of which may be outside the Group’s
control, including commoditisation (whereby price and/or quality becomes relatively more important than brand identifications due,
inpart, to the increased prevalence of travel comparison websites and online travel agents), consumer preference and perception,
orother factors affecting consumers’ willingness to purchase goods and services provided by the Group. The Group companies own
a substantial number of service brands upon which it is dependent and the Group believes that its significant trademarks are
protected in all material respects in the markets in which its brands currently operate.
Given the importance of brand recognition to the Group’s business, the protection of its intellectual property poses a risk due to the
variability and change of controls, laws and effectiveness of enforcement globally. Any widespread infringement, misappropriation or
weakening of the control environment could materially harm the value of the Group’s brands and its ability to develop the business.
The Group is reliant upon its proprietary reservations system and is exposed to the risk of failures in the system and increased
competition in reservations infrastructure
The value of the Group’s brands is partly derived from the ability to drive reservations through its proprietary HolidexPlus
reservations system, a central repository of the Group’s hotel room inventories linked electronically to multiple sales channels
including the Company’s own websites, call centres and hotels, third-party intermediaries and travel agents.
Lack of resilience and operational availability and/or the failure of athird-party technology provider could lead to prolonged service
disruption and may result in significant business interruption, impact the guest booking experience and subsequently impact
onrevenues.
Lack of investment in these systems may also resultin reduced capability, stability and ability to compete. Additionally, failure to maintain
an appropriate technology strategy and select the right technology partners could erode the Group’s long-term competitiveness.
The Group is exposed to the risks related to information security and data privacy
The Group is increasingly dependent upon the availability, integrity and confidentiality of information including, but not limited
to, guestand employee credit card, financial and personal data; and business performance, financial reporting and commercial
development. The information is sometimes held in different formats such as digital, paper, voice recordings and video and could
be stored in many places, including facilities managed by third-party service providers.
The threats towards the Group’s information are dynamic, and include cyber attacks, fraudulent use, loss or misuse by employees
and breaches of our vendors’ security arrangements amongst others. The legal and regulatory environment around data privacy
and requirements set out by the payment card industry surrounding information security across the many jurisdictions in which the
Group operates are constantly evolving. If the Group fails to appropriately protect information and ensure relevant controls are in
place to enable the appropriate use and release of information through the appropriate channels in a timely and accurate manner,
IHG System performance, guest experience and the reputation of the Group may be adversely affected. This can lead to revenue
losses, fines, penalties and other additional costs, including legal fees.
The Group is exposed to a variety of risks associated with safety, security and crisis management
There is a constant need to protect the safety and security of our guests, employees and assets against natural and man-made
threats. These include but are not limited to exceptional events such as extreme weather, civil or political unrest, violence and
terrorism, serious and organised crime, fraud, employee dishonesty, cyber crime, fire and day-to-day accidents, incidents and petty
crime which impact the guest or employee experience, could cause loss of life, sickness or injury and result in compensation claims,
fines from regulatory bodies, litigation and impact reputation. Serious incidents or a combination of events could escalate into a
crisis which, if managed poorly, could further expose the Group and its brands to significant reputational damage.
The Group requires the right people, skills and capability to manage growth and change
In order to remain competitive, the Group must employ the right people. This includes hiring and retaining highly skilled employees
with particular expertise or leadership capability. The implementation of the Group’s strategic business plans could be undermined
by failure to build resilient corporate culture, failure to recruit or retain key personnel, unexpected loss of key senior employees,
failures in the Group’s succession planning and incentive plans, or a failure to invest in the development of key skills.
Some of the markets in which the Group operates are experiencing economic growth, and the Group must compete against other
companies inside and outside the hospitality industry for suitably qualified or experienced employees. Some emerging markets may
not have the required local expertise to operate a hotel and may not be able to attract the right talent. Failure to attract and retain
employees may threaten the success of the Group’s operations in these markets. Additionally, unless skills are supported by a
sufficient infrastructure to enable knowledge and skills to be passed on, the Group risks losing accumulated knowledge if key
employees leave the Group.
The Group is required to comply with existing and changing regulations across numerous countries, territories and jurisdictions
Governmental regulations affect countless aspects of the Group’s business ranging from corporate governance, health and safety,
the environment, bribery and corruption, employment law and diversity, disability access, data privacy and information protection,
financial, accounting and tax. Regulatory changes may require significant changes in the way the business operates and may inhibit
the Group’s strategy, including the markets the Group operates in, brand protection, and use or transmittal of customer data. If the
Group fails to comply with existing or changing regulations, the Group may be subject to fines, prosecution, loss of licence to operate
or reputational damage.
166 IHG Annual Report and Form 20-F 2013
Group information continued