Considering one of the industries in which the company is operating, first, analyse the current business strategy it has adopted in that industry and, second, provide two strategic recommendations that can ensure business success in that industry in the future. Finally, consider consistency between your strategic recommendations at corporate and business levels.

There are three parts to this question, and you should give them equal importance.

In the first part you need to analyse the company's business strategy in the UK Hotel industry using Porter's generic strategies framework, which you studied in Week 13 Section 4. The first step is to identify the current business strategy pursued by the company. You can look back at the cost leadership definition and its sources of advantage (Week 13 Sections 6and7), at broad differentiation strategy and its characteristics (Week14, Sections1,2and3), and at focus strategies (Week 14 Section 3and its subsections). Having done that, you need to discuss the pros and cons of the strategy chosen by the company. Revising the risks of cost leadership (Week13 Section10.1) and broad differentiation (Week14 Section2.4) would be helpful.

The second part of the question asks you to make two strategic recommendations that can ensure business success in the future. To answer this part of the question you can look back at what you have done in Week 14Section 5. It is important to explain both what your recommendation is and to discuss why it is appropriate. Your answer needs to combine the evidence from the materials on the case company with theoretical concepts from the module (Weeks13and14). You may demonstrate your recommendations with the aid of the diagram shown in Activity14.11. A good answer to this part will combine a good analysis of the current business strategy with the strategic recommendations.

Finally, in identifying your strategic recommendations at a business level, you should also consider the corporate level recommendations you made in Part 2 of this TMA. The strategic recommendations at the business level should be consistent with the ones at the corporate level.

Material

1 Premier Inn, Hub and ZIP

Premier Inn has an integrated business model that delivers an unrivalled mix of quality and value to millions of customers and offers a significant competitive advantage in the budget, domestic, short-stay market. This, alongside our strong fundamentals, conservative capital structure and disciplined capital allocation, provides a strong platform for long-term growth and will ensure we exit the COVID-19 crisis as a leaner, stronger and more resilient business.

Source: Whitbread (2021, pp. 12).

1.1 Premier Inn

With over 800 hotels across the UK and beyond, we really are everywhere. Sleep in a comfy kingsize Hypnos bed, enjoy Freeview TV, an en-suite bathroom with power shower and so much more. From booking to bed, we're here to help you rest easy.

At Premier Inn you're guaranteed exceptional, all-encompassing comfort and outstanding quality in every one of our 77,000 rooms.

Source: Whitbread (2022n)

1.2 Premier Plus rooms

Not all stays are standard, so neither are our rooms.Treat yourself to even more comfort, convenience and connectivity by choosing one of our Premier Plus rooms. Our enhanced rooms are perfect for business trips, special occasions - or whenever you fancy a little more from your stay. Enjoy an improved workspace with a large desk and adjustable chair, air conditioning, a comfy armchair, ultimate Wi-Fi offering a stronger connection and a handy USB port by the bed. All Premier Plus rooms come with a mini-fridge a Nespresso machine with coffee pods and an iron and ironing board.

Source: Whitbread (2021o).

1.3 Hub & ZIP by Premier Inn

We have innovated to develop two new hotel brands to cater for different market segments. Contemporary style combined with great connectivity makes hub by Premier Inn the UK's most space-efficient digitally-advanced hotel. Meanwhile, atZIP by Premier Inn, our idea is simple. Do the essentials brilliantly, then take away everything else. You get a small room, a simple stay and, best of all, a price to match.

Source: Whitbread (2021, pp. 3).

1.3.1 Hub by Premier Inn

Discover hub - smaller rooms, big locations

Smart, stylish rooms across London and Edinburgh at great prices. Slick touchscreen room controls, completely free Superfast Wi-Fi to stream your favourite shows, snazzy 40" Smart TVs, high-powered Monsoon showers and luxurious Hypnos beds. Change your room's lighting and temperature to suit you without even getting out of bed, using state of the art touchscreen controls. Recharge and unwind on our luxurious Hypnos double beds. Enjoy high-powered, monsoon showers in our en suite bathrooms, and free tea or coffee 24/7.

Source: Whitbread (2022p).

1.3.2 Discover ZIP by Premier Inn

Our idea is simple. Do the essentials brilliantly, then take away everything else. You get a small room, a simple stay and best of all, a price to match - from 19 a night. Now open in Cardiff, with more coming soon.

BASICALLY BRILLIANT ROOMS

The flexible rooms can be made up as a single bed, twin single beds or pushed together to make a double. As well as a TV, there's a small bathroom with a power shower, body wash and a towel, plus handy overhead storage and hangers.

EAT. WORK. CHILL.

Whatever you need ZIP for, we'll help you get it done. There are drinks and light snacks at the bar, workstations and booths plus free WiFi throughout. There's also a chill-out area with table football and TV for all the big games. And every morning we serve up breakfast, for just 3.95.

ZIP IN. ZIP OUT.

At ZIP, we make your stay as quick and simple as possible with a no-frills approach. Here's a bit more info on what to expect:

2 A good night's sleep guaranteed

Source: Whitbread (2022q)

At Premier Inn we've thought of everything you need to have a great night's sleep. From our super-comfyHypnos mattress, to a choice of firm or soft pillows, we're always on the lookout for ways to make bedtime better.

In fact, we're so confident you'll have a great night's sleep that, if you don't, we'll give you your money back. Just speak to one of our friendly reception team. This is our Good Night Guarantee.

Source: Whitbread (2022r).

2.1 Sleep Tips

If there's anything we're experts in, it's sleep.We've teamed up withSleep Wellbeing ExpertNatalie Pennicotte-Collierto bring you top sleep tips and wellbeing advice to help you rest easy.

2.2 Book yourself in for a sleep MOT

As part of our mission to help the UK sleep well, we've decided to to offer some incredible sleep MOT sessions hosted by the wonderful Natalie Pennicotte-Collier!

The exclusive 30-minute sessions will give you the chance to have your everyday bedtime routines, sleep environments and late-night habits reviewed during a bespoke one-on-one Zoom call with our sleep expert. These sessions are completely free and available for one day only on World Sleep Day 18thMarch.

Source: Whitbread (2022s).

2.3 Premier Inn takes counting sleep digital

A new study commissioned by Premier Inn, has revealed that the average person delays bedtime by 36 minutes a night due to streaming videos online, creating 17 full hours of possible extra rest a month that is being missed out on.

Bad digital habits appear to do everything but aid a good night's sleep, with 17% of Brits admitting that some programmes they watch stimulate their mind before bed, and 13% citing scary or thrilling shows as making it harder to sleep.

When it comes to traditional sleep-inducing techniques, 13% of Brits admit to counting sheep to help them sleep, even in the digital age, though only 4% say this works for them.

Premier Inn takes counting sheep digital with launch of 'ewe-nique' video streaming platform 'Ewe Tube' to help Brits rest easy before their summer holiday, by teaming up with the Yorkshire Shepherdess, Amanda Owen - and her flock - to launch the brand's first-ever video streaming platform,www.Ewe.Tube dedicated to encouraging sleep by digitally counting sheep. Supported by our resident sleep expert as a tool to help Brits get to sleep,Ewe Tubebrings counting sheep into the digital age. Jam-packed full of woolly video content, the platform includes popular movie greats as you've never seen them before. From2001: A Space Odysheep,Zooland'baatoThe Queen's Lambit, there is a whole host of baarilliant content that is not only entertaining - but will actually help Brits to get the rest they need.

Source: Whitbread (2022t).

2.4 Buy Premier Inn mattresses, beds, pillows and bedding

Now, you can enjoy a Premier Inn sleep at home by buying your own super-comfy Hypnos mattress. With a thousand pocket springs supporting a pillow-top mattress you won't just be waking up on the right side, but the right bed.

Everyone loves feeling snug in a super-comfy bedding at night, so why not treat yourself to some hotel-quality pillowsor aduvet to enjoy in the comfort of your home? Choose the best bedding for you - the same bedding that you've come to know and love in our Premier Inn hotels- get it delivered to your door, and look forward to a luxurious sleep every night.

1 Internationalisation dynamics

Despite the significant impact of COVID-19 on our markets our review of the market is written for the long term and we remain excited about the potential. It is especially important in times like this to operate a vertically integrated model like we do; by owning all of the value chain, from developing and building the hotels right through to managing the brand, the operations and the direct distribution, we are best positioned to access the structural growth opportunities and continue to create value for our shareholders over the longer term.

The UK Market

In the UK, we are focused on continuing to grow and innovatewith growth delivered through our existing pipeline. With ourstrong brand and winning customer proposition, weare confident that we will be able tocontinue winning market share.

Furthermore, the budget market in which we operate experiences higher growth than other hotel sectors and tendsto outperform those other sectors in downturns. During this current COVID-19 crisis budget branded hotels have outperformed themarket in every year since 2008, including amaterial outperformance during and after the financial crisis, and weare seeing evidence of that once again.

In Germany, we are focused on replicating our UK success, with the ambition to be the number one budget hotel operator. We have significant headroom to grow, both organically and through careful and considered mergers and acquisitions (M&A) activity

Germany presents an exciting opportunity given it has remarkably similar characteristics to the UK. Both markets arecharacterised by long-term migration from independents to budget branded hotels, and we have seen clear signs ofdistress and a weak independent segment decline. The COVID-19 crisis will likely accelerate the pressures on independents through demand weakness and increased costpressures, and we expect this to worsen as Government support schemes are reduced. We also expect a decrease in new branded hotel supply, leaving an opportunity for Premier Inn to grow market share further.

The actions we have taken over the course of the year to protect our team, our guests and our business as a whole mean we are well placed to exit the COVID-19 crisis in aposition of strength. The structural characteristics of the UKmarket remain, and we have ensured that Premier Inn isable to capitalise on the opportunities as a result of structural market changes, particularly the distress felt bysmaller operations in the market as a result of the COVID-19pandemic. There will inevitably be a constrained competitor set where there will be less opportunity for othersto invest.

The UK is densely populated, which drives domestic short-stay travel, and post COVID-19, we expect the overall market to continue growing over the long term. Over the lastdecade, wehave seen all consumer indices show an increasing expectation for value for money. We areseeing agenerational impact, asyounger people have agreater demand for leisure and travel in general. As a result, the UKtravel market is agreat core market for us to be in andPremier Inn is the clearmarket leader on every importantmeasure.

The UK market remains highly fragmented from both ademand and supply standpoint, with around 48% of the supply provided by the independent sector. Whilst Premier Inn achieves high occupancy levels, we still represent arelatively low share of supply.

The vast majority of our rooms are sold to domestic travellers,compared to around 60% for the total market. Domestic short-stay travellers have a higher frequency of visit and, as a result, a greater likelihood of wanting to stay with us again if we meet their needs. This domestic skew also means we are better protected from any structural changes and effects on international travel that will arise as a result ofCOVID-19.

We also have a good mix of business and leisure travellers. This balance ensures, in a non-pandemic world, that we achieve consistently high levels of occupancy at around 76%.Furthermore, our business customers include asignificant proportion of manual trades workers (thosethat need to be physically present to perform their jobs), while ouroffice-based workers are from a wide variety ofsectors. This means we are less exposed to potential structural shifts inworking patterns, such as permanent flexible working. Premier Inn also under-indexes on group business bookings and we have very limited conference facilities so we believe weare less exposed to those areas ofbusiness travel that may see astructural shift to virtualmeetings.

Since 2010 we have increased our market share of rooms from 6% to11%, achieved through an ambitious network expansion programme. The rest of the budget branded sector has increased its market share by a similar amount toPremier Inn. However, the budget branded sector growth has been fragmented, with a long tail of smaller competitors.

We see an attractive ongoing opportunity to continue investing in new capacity and win further market share gains. This means that we can continue to grow our total sales ahead of the market and our plans are not wholly contingent on short-term conditions.

With our strong network and value for money, only 1% of our customers book using online travel agents, reducing the cost of customer acquisition vs the rest of the market. We can also leverage our scale to find ways to improve our efficiency to partially offset the inflationary cost increases, whilst smaller operators will, of course, struggle to do that. Post COVID-19, the pressure on the independents will only grow, creating an ongoing structural opportunity, which we are best placed to capture. We expect our additional new, efficient and superior hotel capacity to continue to provide domestic short-stay guests with a superior mix of quality, service and price, therefore allowing Premier Inn to win share in the UK.

The German Market

We have materially grown our pipeline in Germany over the year, with 30 operational hotels and an open and committed pipeline of 72 hotels. This network now gives us a national footprint, with a presence in many major German cities.

The German market is around 42% larger than the UK, atalmost one million hotel rooms. Pre COVID-19, RevPAR in the budget branded sector in Germany had also been growing at a faster rate to the UK, at around 2.3% CAGR between 2015 and 2019 vs 1.3% in the UK.

Furthermore, the German market is even more fragmented than the UK, with independent hotels making up around 72%of the supply, and more domestic travel-oriented than theUKat around 77% of the total. This high proportion of domestic travel is a long-term output of Germany's geography and history.

Germany is significantly more regionally dispersed than the UKdue to its history and federalised political and industrial structure. This geographic dispersion drives greater demand for short-stay travel, particularly business-led. Therefore, there is a greater frequency of travel by the type of customer that Premier Inn excels at serving.

Structural barriers to entry exist as a result of the nature oftheproperty market. With limited large property financing structures, such as Real Estate Investment Trusts (REITs), andgreater opportunities in the four-and five-star sector for asset-light models, there has been limited new capacity added in the budget sector, which is considered to be the hardest sector in which to earn a return. This has meant that the international asset-light operators have struggled to find franchisees to operate appropriate newhotel sites. In fact, the only hotel businesses that have delivered meaningful growth adopt a similar owner-operator model to Premier Inn. In order to add sufficient capacityin thebudget sector, an operator needs to be willingto develop freehold, sign long leases or buy out existingoperators.

Post COVID-19, these structural elements make the opportunity even more attractive to us over the longer term.Even in the depths of the pandemic, we have seen opportunities come ourway. We announced an acquisition inDecember, where wewere able to select 13 hotels in key German cities at an attractive price. Our ability to very carefully deploy capital, when others will be constrained, provides an opportunity for us to continue investing in or acquiring assets with attractive long-term returns. We are seeing real signs of distress in the German market and expect the independents tocontinue to fall out ofthe market, creatingan opportunity for Premier Inn to fill the gap.

Part 31 Our business model

Our unique ownership business model provides us with a competitive advantage in a challenging market, and has enabled us to become the number one hotel operator in the UK, and to expand our presence in Germany.

1.1 Our unique vertically integrated model sets us apart

Ourvertically integrated model, which combines the ownership of property, hotel operations, brand,and inventory distribution has enabled Premier Inn to grow at a significantly faster pace than competitors, delivera consistently superior customer experience and generate a strong return on capital for shareholders over thelast 15 years.

Source: Whitbread (2022c).

4.2 Direct distribution

Premier Inn's direct digital distribution model, with only 1% of bookings delivered through third party online travel agents (OTAs), is industry-leading and ensures that Premier Inn's gross RevPAR (RevPAR: Revenue Per Available Room) is similar to net RevPAR achieved after cost of sales, unlike independents or most other brands, which pay high commission rates to third parties. Direct distribution also provides complete ownership of the customer relationship driving significantly lower acquisition and retention costs.

Source: Whitbread (2021).

4.3 Rest easy from booking to bed

From booking to bed, Premier Inn are here to help the nation rest easy. And we're not just talking about getting a great night's sleep in our beds. We're talking about taking the worrying out of booking because you know exactly what you're going to get. Then there's the knowing that you can have both choice AND flexibility and the same, consistent top-quality experience as ever, where people are happy to greet you. And then there's you sleeping soundly knowing that time and time again our hotels are cleaned to the highest of standards, and that we genuinely care about you.

And what better way to show you how we're doing it than with a new [2021] TV ad! That voiceover is our beloved Sir Lenny Henry of course!

Source: Whitbread (2022g)

5.1 Taking the pulse of modern guests

The concept of having intimate knowledge of, and 24/7 attention on, the guest experience (GX) is realized in a different way today. The imperative of the GX remains as critical as ever. Collecting information about guests is fundamental to delivering exceptional GX, and today's guests are more willing than ever to provide it via a variety of means. The issue hoteliers face now is not just to collect that data but to also make sense of the data and know how to apply those insights based on situational nuances. This is compounded by the fact that guest expectations are continuing to rise. This is leading hotel guests to expect that the information they have shared will be put to good use, consistently. Today's guests expect hotels to deliver on more than what is promised, and what is implied is that guests are now expecting hotels to go beyond.

Over the last few decades, hotels were able to differentiate with sustainable practices, notable facilities, amenities or signature products, public spaces, and food and beverage. Now, many guests often expect the availability of such things. We represent these elements as thenew basics.

It is widely acknowledged, inside the industry and beyond, that engaging guests meaningfully and creating lasting, positive impressions is the path to obtaining and retaining guest loyalty and advocacy. But with guest expectations higher than ever and previous "differentiators" now serving as the cost of entry, how can hotels continue to elevate their game?

Guest satisfaction scores across the hotel experience (satisfaction scores refer to how satisfied guests report themselves to be, based on a scale of 100) (Deloitte, 2018).

5.2 Getting to know you

Knowing their guests is what can allow hotels to deliver on the other experiential elements, from the functional to the sublime. For example, to deliver on delight me, the hotel might have learned some information about a guest's behaviors and preferences while traveling on business, such as an after-work glass of a specific Cabernet Sauvignon. To delight that traveler on one of her business trips, the hotel has a note and a half-bottle of that wine in her room waiting upon arrival?but not on every trip and not the same gift every time. That same guest, traveling on leisure to a resort with her family, has a different mind-set, with different expectations, needs, and concerns. Perhaps a delivery of the family's favorite snacks and drinks to pack for their scheduled adventures might be more meaningful. Our research substantiates the belief that knowing more about your guests positively impacts their satisfaction.

Loyalty programs have historically been a great source of guest information, behaviors, and preferences. Guests with higher loyalty status indicated they were 75 percent satisfied. Knowing your guests outside of their specific stay-patterns, like tracking when they visit your restaurants and bars, spa, and events?or even those of your competitors?will tell a more complete story.

6 Next-generation guest experience

If the challenge of GX starts with guest knowledge?but then depends upon the actions that arise from that knowledge? what is the path forward? Many hotels will find it involves the intersection of two key themes: an embrace of cognitive capabilities and the development of a partnership ecosystem.

6.1 The cognitive advantage

We live in a cognitive world, in terms of how data and technology operate. Today, workers can amplify their intelligence with cognitive capabilities. With those capabilities, they can create smarter insights to help improve core operations, build new assets, and enhance decision making. In hotels, the cognitive capabilities can enhance the guest experience by enabling the hotel to better serve them.

Opportunities include facilitating repeatable tasks using automation in order to free up hotel teams to engage guests by delivering meaningful recommendations based on guest-specific insights. We group these concepts into three capabilities: robotics and cognitive automation, insights, and engagement.

6.2 Robotics and cognitive automation

Think about the laborious task of blocking rooms. Using automation, we can allow a trained machine to take on this task with confidence and free up the front desk agent to proactively reach out to arriving guests to ensure their every need is met.

6.3 Service recovery

When something has gone less than perfectly in a guest's experience, the hotel has an opportunity to shine. Take, for example, the ability to report an issue via a variety of means (text message, voice, in-person, etc.) and to get a fast, helpful response regardless. Not only does this technology structure the data capture regarding the incident, but it also establishes a channel to enhance follow-up.

6.4 The partnership ecosystem

Fueled by cognitive insights, the new world of data-driven guest experience can also enable the development of a partnership ecosystem powered by digital engagement.

Guests with computers in their pockets can self-create experiences that involve the hotel but do not begin and end with what the hotel offers. Our survey found that 85 percent of guests used digital devices during at least some part of a hotel visit and 41 percent used their devices to stream entertainment while they were there. This change?from a hotel offering pay-per-view movies to a hotel providing free high-speed Internet that enables guests to manage their own entertainment content?is only one example of the larger trend toward the hotel as "enabler" of a "partnership ecosystem" that extends beyond its walls.

Today, guests want the benefit of local knowledge and resources but still want to maintain some semblance of control. The hotel's role is to identify how best to help and make the process easier.

In a partnership ecosystem, hotels can use new business relationships and mobile technology to help give their guests access to for example, a boutique fitness experience in the neighborhood. This partnership ecosystem has benefits for all types of hotels, as it helps them provide the experience guests want while reducing hotels' total cost to serve. For "asset light" hotels in particular?those with limited food options or a limited fitness center?a partnership ecosystem helps them to compete more effectively. They are creating a portfolio of assets that they do not own and do not have to maintain, helping drive a diverse set of experiences without the big capital outlay.

How important are the following amenities to you when choosing a hotel for a leisure trip? Comfortable beds 92% Cleanliness 91% 89% Good/central location Price 89% 89% Free internet access 88% Nearby restaurants and bars 85% Free parking 83% Flexible booking conditions 79% Large rooms 79% Sustainability of hotel Drinks and food offered at the hotel 75% Hotel chain/brand 75% 66% Wellness area Nearby public transport stops 52% 52% Business center equipped with workstations Gym 49% Nearby long-distance train stations 44%