Holiday Inn 2013 Annual Report Download - page 38

Managing risks in a changing environment
We continue to experience a dynamic external risk environment with changes in political, economic, social, technological, legal and
environmental risks. However, we do see the global macroeconomic conditions improving. We see the Group’s business model, diversity
of brand portfolio and wide geographical spread contributing to our resilience to events that could affect specific hotels, local areas or all
but the most significant countries.
The table below sets out the principal risks and uncertainties (the Major Risks) in the context of delivering against our strategy for
high-quality growth (as described on pages 18 to 33). These are perceived as the most dynamic risks and are therefore proactively
managed and monitored by senior management. These complement the wider comprehensive risk factors set out on pages 164 to 167.
Preferred brands
Having a portfolio of preferred brands
with a clear, distinct brand proposition
(delivering a consistent guest experience,
regardless of our predominantly managed
and franchised business model) and a
global presence aimed at meeting the
changing needs of our guests, is crucial
to creating brand preference, loyalty and
advocacy. Failure to achieve this could
impact on IHG’s competitive position and
its reputation with owners, investors
andguests.
• IHG has a complementary and differentiated portfolio of nine brands (see page 17), each of
which is designed to meet a wide demographic of guests and differing guest occasions and
needs through distinct brand propositions (see page 29).
• IHG continues to review and refresh both its brands and brand standards, giving particular
consideration to the optimisation of global requirements while retaining local distinctiveness.
• IHG has built awareness and loyalty, particularly across our priority markets, through a blend
of global and local marketing promotions, sponsorships and brand initiatives.
• In 2013, IHG relaunched its loyalty programme to IHG Rewards Club to clearly communicate to
consumers that all of our brands are part of the same IHG brand family and to therefore
encourage guest loyalty and cross-sell opportunities.
• IHG manages brand consistency through the entire hotel life cycle commencing with
development through to due diligence and deal approval processes, which help us select
appropriate sites and owners. This is supported by clear contractual terms, new hotel opening
processes, brand standard requirements and quality compliance processes. We also provide
central support tools, training and guidance to assist those working at our hotels and owners
to enable them to deliver brand consistency and thereby support the success of the hotel.
However, to maintain high-quality growth in the IHG System, IHG may be required to exit
non-compliant hotels.
People, talent and culture
IHG must recruit and retain the right
people, give them the tools, guidance and
support to be successful and to influence
behaviour and culture in order to deliver
a preferred brand promise. High growth
and emerging markets are a particular
challenge, and ensuring we have the right
leadership is crucial. Failure to manage our
people, talent and culture could impact on
our service delivery, financial performance
and longer-term growth.
• IHG has in place a comprehensive global people strategy to ensure we are able to find and
retain the right people to deliver our preferred brands at our hotels and corporate offices and
we continually review the tools, systems and guidance we offer them.
• We are constantly evolving our recruitment strategies. We have in place different strategies for
different markets to ensure we have the most appropriate and effective methods and channels
for talent attraction and recruitment. The IHG Academy also assists us with recruiting for our
talent pipeline.
• IHG proactively manages succession planning and has formal programmes in place to help its
people grow their careers. Incentive plans for senior leaders are aligned to IHG’s strategy to
ensure longer-term growth.
Channel management and technology
platforms
Travellers now have access to far more
information through comparison websites,
search engines and online travel agents.
Booking channels and technological
systems are a key part of the guest
journey and an important value driver
for our owners. This is also an area
where there is rapid change in terms
of technology, guest expectations and
relationships with online travel agents
and other intermediaries.
Threats to information security, from
payment card information to other
information held in IT systems or, in paper
format and other media, remain of concern.
Failure to effectively manage and keep
under review our channels, information
technology infrastructure and
technological systems to optimise
performance and resilience could impact
on the Group’s revenue and delivery
channels, guest experience, return for our
owners and investors and the Group’s
future performance.
• IHG recognises that technological advances and changing guest expectations mean that we
must continually invest in and improve our systems and reservations channels. We have in
place a multi-channel management strategy that focuses across the entire guest journey and
encourages guests to book directly through IHG’s channels and reservation systems.
• Recognising the growing trend amongst some travellers to book through online travel
agencies and intermediaries in search of better value, IHG proactively manages and seeks to
improve terms and conditions of our relationships with these partners and continues to support
roomkey.com, a meta-search website launched in 2012 in partnership with other hotel
companies. These activities compliment our wide programmes and activities to encourage
guests to book direct.
• IHG’s Global Technology function works collaboratively with specialist third-party technology
partners to continuously monitor, manage and optimise our systems and channels, including
their resilience through backup systems and business continuity practices, to enhance all
aspects of the guest journey.
• Operating in nearly 100 countries and territories, IHG takes information security very seriously
and has applied risk-based methods to build capability and resilience into our systems and
processes. The Group manages data security to contain the risk and reduce the Group’s
exposure, tightly controlling sensitive data through limited and monitored access.
• IHG continues to aim to be fully compliant with Payment Card Industry – Data Security
Standards (PCI-DSS) using tools and services from a leading specialist third-party provider
with respect to payment card processing.
Risk description Control and mitigation activities
36 IHG Annual Report and Form 20-F 2013
Risk management continued