Holiday Inn 2015 Annual Report Download - page 28

How each principal risk links to our strategic priorities
Winning Model Targeted Portfolio
Disciplined Execution Responsible Business
How the external environment for each principal risk has
changed over the past year (risk trends)
Increased risk No change in risk
Risk description Trend Impact How do we manage these risks?
Preferred brands and loyalty
A portfolio of clearly defined and
consistently delivered brands which meet
increasingly personalised guest needs
and occasions is crucial for creating brand
preference, loyalty and advocacy, and
failure to deliver this could impact our
competitive positioning, our ability to drive
growth and our reputation with guests,
owners and investors.
• Each of the brands in our portfolio is designed to meet specific guest needs
and occasions through distinct and complementary brand propositions informed
by guest research and insights (see pages 4 and 5).
• We continually review ways to increase awareness of, and loyalty to, our brands
through our loyalty programme, IHG Rewards Club, as well as global and local
marketing promotions, sponsorships and specific brand initiatives (see page 20).
• We manage brand consistency through the entire hotel life cycle, supported by clear
contractual terms, new hotel opening processes, brand standard requirements and
compliance processes. Tools, training and guidance assist owners and those working
at our hotels to deliver brand consistency.
• We continue to evaluate our brand portfolio and extend the portfolio where necessary,
through developing new brands (HUALUXE, EVEN) or acquisitions (Kimpton).
Additionally, significant analysis is given to brand presence in priority markets
and the business’ ability to grow in these markets.
Leadership and talent
Failure to recruit and retain the right
leadership talent and to give them
the tools, guidance and support to be
successful could impact IHG’s delivery
and ability to drive our strategic ambition.
• We have in place a comprehensive global people strategy (see pages 17 and 18)
to ensure we are able to recruit, retain and develop talent at our hotels, corporate
offices and central reservations offices. Supplementing the global strategy, we
have developed localised people strategies for some of our priority markets.
• Our leadership framework, support tools, and training and development programmes
help our people grow their careers, thereby managing internal talent. We proactively
manage succession planning at all levels and consider the diversity (more broadly
than gender) of our people and leadership.
• IHG Academy assists us to fill our talent pipeline whilst supporting local communities
(see page 24).
Channel management and
technology platforms
Failure to maintain and enhance our
booking and distribution channels and
technology infrastructure could impact
on our ability to deliver revenue, meet
evolving guest expectations and generate
returns for our owners and investors.
• We recognise that technological advances, the growth of intermediaries and the
sharing economy, and changing guest expectations (see pages 10 and 11) mean
that we must continually invest in, and improve, our technological systems to deliver
across the ‘Guest Journey’ and to build lifetime relationships with our guests. Our
focus is on encouraging guests to use direct booking channels. However, recognising
that some travellers use intermediaries, we seek to secure better terms with those
intermediaries for our hotels.
• Our Global Technology function works collaboratively with specialist third-party
technology providers continuously to monitor, manage and optimise our systems
and channels to enhance all aspects of the ‘Guest Journey’, and this includes testing
the resilience of our systems through business continuity practices.
Owner proposition
Failure to maintain strong relationships
with owners, and to demonstrate
attractive returns on investment, could
impact the retention and growth of IHG’s
System size and development pipeline.
• We build relationships with owners through a variety of methods, including formal
and informal communications and the IHG Owners Association.
• IHG works closely with the IHG Owners Association to ensure we have insight into
owners’ perspectives, particularly with respect to new programmes, initiatives
and the use of the System Fund (described on page 47).
• Long-term franchise and management contracts, new hotel opening teams and
processes, Hotel Solutions (our internal online portal which provides tools and
guidance to hotels across a number of operational areas) and the wider corporate
infrastructure are put in place to leverage scale, support our hotels and maintain
relationships with owners throughout the life cycle of the hotel.
• We closely monitor the performance of our revenue delivery systems and are focused
on delivering a strong return on investment for our hotel owners.
Risk management continued
IHG’s principal risks, uncertainties and review process
The external risk environment remains dynamic, with changes in political, economic, social, technological, legal and environmental risks.
However, the Group’s asset-light business model, diverse brand portfolio and wide geographical spread contribute to IHG’s resilience to events
that could affect specific segmental or geographical areas. Our Risk Working Group, chaired by the General Counsel and Company Secretary
and comprised of the heads of Global Risk Management, Global Strategy, and Global Internal Audit, provides input on, and oversight of, the
principal risk review process, which identifies and assesses risks for ongoing monitoring and review by senior management.
The Directors have carried out an assessment of the principal risks facing the Company, including those that would threaten its business model,
future performance, solvency or liquidity. These risks are reviewed formally by the Directors on a biannual basis and are considered in more detail
through the activities of the Board and Committees (see pages 61 and 62). The table below describes our principal risks and uncertainties,
which align with our strategic priorities (see page 14). These principal risks are supplemented by a broader description of risk factors set
out on pages 156 to 159.
26 IHG Annual Report and Form 20-F 2015