Introduction
The hospitality industry has always been a thriving sector and it is highly conducive to creating millions of jobs. Premier Inn is a leading hotel chain in the world and has its headquarters in the heart of the UK. Over the years, Premier Inn is continuing to serve consumers all over the world with premium services. Instead of charging high amounts of money from the consumers in exchange for luxury services, Premier Inn has chosen to serve its consumers in a cost-efficient way. In terms of staying abreast in the global market competition, Premier Inn is intending to expand its services outside the territory of UK. A major upsurge in tourism has altered the arena of Hospitality in Spain. This report aims to focus on the potential marketing areas, such as the target market, positioning strategy, marketing mix and market attractiveness to assist Premier Inn in their market entry.
Company Overview
Premier Inn has an exclusive eminence as UK’s hospitality expert from 1987. Besides the glorious position in UK domain, Premier Inn has a sublime aim to deliver quality services to the consumers and simultaneously to create value for the potential stakeholders (PREMIER INN, 2021). Being a subsidiary of the eminent Whitbread Plc. group, Premier Inn has a mission of providing personalised services and maintaining professionalism. Premier operates in UK hospitality market with the objectives of serving the consumers sustainably and responsibly and wants to expand their hotel community on a global level.
Market attractiveness
The hospitality market is always characterized by the continual ebb and flow of demand. Besides that, there are so many unforeseen factors in the business environment that are to be encompassed by Premier Inn for its successful entry into the Spanish market. The PESTEL framework has been chosen in this study for emphasizing the macro-environmental factors.
Macro environmental analysis
Political factors
The Spanish market has always played a pivotal role in European trade. Being a member of the European Union, Spain has its dominance in the European trade domain. As per data, it has been found that the political circumstances are not so stable in Spain and the country is ranked higher in terms of corruption (Navarro-Galera et al. 2017). In such a situation, the business quest of Premier Inn would not be so smooth in Spain and it shall have to encounter several high and lows. According to Brakman et al. (2018), Brexit has created an invisible rift between UK and the other EU countries. Therefore, the consolidated relationship between Spain and European Union shall avert the UK brand, Premier Inn from entering the Spanish hospitality market. Besides that, there is a territorial feud between UK and Spain over Gibraltar (Dadson, 2017). This factor shall create political constraints for Premier Inn to enter the Spanish market and to create a huge consumer base over there. Hence, it can be stated in the path of Premier Inn entry to Spanish there are numerous political threats and a higher level of negotiation is required to overcome the challenges.
Economic factors
The economic factors leave an indelible impact on the market entry of the organizations. As per data, it has been seen that Spain had been subjected to severe economic constraints from 2007 to 2014 (Carrasco Carpio, 2017). Even in 2019, the unemployment rate was nearly 13.96%. The data analysis has also provided insight that the rate of poverty is quite high and Spain is still striving to revive stability in the economic sector (STATISTA, 2021). The entry of Premier Inn in such a scenario would uplift the economy of Spain as it would act as the major revenue simulator.
The advent of this UK based hospitality brand would also create huge employment opportunities for Spanish people. The employment market of Spain would be enriched in this process. Therefore, it would prove beneficial for both Premier Inn authority and Spain. The data has revealed that the income tax rate of Spain in 2021 is approximately 45% (EXPERTSFOREXPATS, 2021). The comparative analysis has depicted that the Spanish income tax rate is a bit higher than the UK. Resultantly, the operating cost of Premier Inn would be higher and to capture the Spanish hospitality market, this company needs to come up with a higher budget.
Social factors
Though a European country, the cultural affinity of Spain is quite different. As per the data, Spain has scored 44 in the indulgent index (OPENSTAX, 2019). UK society is deemed to be an indulgent society, characterized by pleasure-seeking people, high hedonistic in nature. In comparison to UK, Spanish society is quite restrained as the people have a low-income level (OPENSTAX, 2019). Therefore, the pricing strategy of Premier Inn would have to be different from the existing one. In terms of capturing the Spanish market, Premier Inn would have to offer a cost-efficient and high comfort deal. The social framework and the cultural differences shall be a threat for Premier Inn if it fails to cope with the new socio-cultural standards in the Spanish market.
Technological factors
Technology has always been considered as the weapon to achieve success in the competitive domain. As per the data, Spain is a tech-savvy country and is quite enriched in the domain of technology (Hernández-Trasobares and Murillo-Luna, 2020). The rapid employment of technological innovation in their organizational operation has provided a competitive edge to the Spanish firms. The Spaniards also rely on the usage of social media platforms for shopping and other important purposes (BUSINESS CULTURE, 2019). Therefore, the social media marketing strategy would help Premier Inn to capture the potential and loyal customers from the segmented market. The social media promotion would be most feasible for Premier Inn to connect the Spaniards and to create consumer touchpoints.
Environmental factors
The environmental factors are highly crucial for the proliferation of the hospitality business. Spain is one of the most attractive tourist destinations of the world and with its natural charms and diversity lures tourists from the different corners of the world (Sellers-Rubio, and Casado-Díaz, 2018). The Spanish cities, such as Madrid, Barcelona and Valencia are eminent tourist spots that offer varied natural resources and world-class expertise to the tourists. These locations allow the hospitality industry to offer beautiful destinations in the portfolio. Therefore, these locations of Spain would help Premier Inn in the steady business growth and the tourists would be the potential consumers in the juncture.
Being a member of the European Union, Spain strictly follows the EU legislation and the environmental laws in this domain are quite stringent (Pridham, 2019). Air pollution and water pollution is exceedingly high in Spain and the Spanish government introduced stringent pollution control law (SGINETWORK, 2017). Such impositions would fall heavy on Premier Inn as it would have to reduce the emission of greenhouse gases. Consequently, the operating cost would increase. Hence, it can be stated that environmental impositions in Spain would be a threat to Premier Inn.
Competitors Analysis
Being a part of the hospitality sector, Premier Inn needs to focus on the three key drivers, service, market segment and location. López-Bonilla and López-Bonilla, (2020) mentioned that in the Spanish market, there are numerous leading players, who are at the forefront of the hospitality industry and leading it over the years. In terms of making an entry in the Spanish hospitality domain, the competitors’ analysis is mandatory for UK based Premier Inn. It is opined by Goud et al. (2020), competitor analysis reveals the strengths and flaws of the rival companies and allows them to consolidate the existing strategies. The analysis of the flaws and strength of the Spanish competitors would prove advantageous for Premier Inn. As per data, NH hotel group and Melia Hotel Internationals are the two leading players in the Spanish hospitality sector.
NH hotel group
Though NH hotel group is an international hospitality brand, it has its headquarters in Spain. NH hotel group mainly relies on flexibility as it tailors the strategies as per the needs of the consumers (NH HOTELS, 2021). Besides that, it operates in the luxury segment of the hospitality sector and is continuing to deliver superior quality of services. It has been found that NH hotel group has its luxury hotels in the cities like Barcelona, Bilbao, Burgos, Cordoba etc. The sea beaches and the extraordinarily beautiful cityscapes have been chosen by the NH hotel authority to establish their business.
Melia hotel international
Melia hotel international is one of the most agile hospitality brands of Spain, whose fame rests on a diversified business model. Melia hotel international seeks to provide global experiences in accommodation and luxury (MELIA HOTELS INTERNATIONAL, 2021). In Spain, it has its branches in eminent cities like Majorca, Marbella, Madrid, Seville and Tenerife.
Market entry strategy
Figure1: Market Entry Strategy
(Source: As influenced by Kim, 2018)
The competitor analysis has enlightened about the potential strategies that Premier Inn needs to embrace to capture the Spanish market. Kim, (2018) mentioned that an effective market entry strategy is highly required for the new players and the agile players before making entry to the new target market. In terms of entering the Spanish hospitality market, it would be recommended for Premier Inn to take assistance from the Spanish hospitality organizations.
The partnership with the Spanish brands would enable Premier Inn to achieve a better grip on the Spanish market and to surpass the cultural barriers gradually. Although Spain is situated in the European territory, there are certain socio-cultural perspectives that are different from UK. According to Higueras-Castillo et al. (2019), Spain relies on the collectivist spirit. On the other hand, UK is found to have scored high in the individualism index. Therefore, the incorporation of the partnership market entry strategy would enable Premier Inn to fathom the cultural tenets of the collectivist society.
It would be advised to Premier Inn uphold the collectivist spirit in their branding and promotional activities to attract the local consumers of Spain. The local tourist guides would be the potential stakeholders of Premier Inn and they would fetch target consumers from different areas. This UK based hospitality brand shall team up with the local tourism organisations or with the tourist guides to make an effective business entry in the Spanish market.
Key demand drivers
Over the years, the Spanish tourism industry is booming and is widening the scope of the other associated industries, such as aviation and hospitality. The cultural resources, technological innovations and optimized infrastructure are alluring the tourists and enabling Spain to become one of the favourite tourist destinations of the world. As per sources, there are several key demand drivers that are inducing the excellence of Spain in tourism (Santamaria and Filis, 2019). In this regard, it can be stated that the thriving state of tourism is an opportunity for Premier Inn to leverage its strengths in the Spanish market.
The presence of impotent rivals is a dominant demand driver of the hospitality industry. Egypt and Tunisia were the rivals of Spain in the tourism and hospitality domain. Currently, the growing rate of terrorist activities in Egypt and Tunisia has culminated in the loss of tourists (Wendt, 2019). Besides that, the sunny climate and diversified landscapes persuade the tourists to choose this country as their vacation destination. The Spanish hospitality industry has in store variegated forms of tourism, business tourism, natural and rural tourism and cultural tourism. Therefore, vacationers, international tourists, local people and art lovers would be the target customers of Premier Inn. It can also be stated that Premier Inn would be able to earn profits in every season by taking assistance from the various tourism practices in Spain.
Key target markets of Premier Inn
In terms of expanding the business, the organizations need to conduct an effective segmentation of the large market to manage the smaller segments easily. As per the view of Dolnicar et al. (2018), market segmentation can be conducted, based on four categories, such as demographic, geographic, behavioural and psychographic. The geodemographic, psychographic and behavioural segmentation would be recommended for Premier Inn as it would fit the objectives of Premier Inn.
Geodemographic
The target market of Premier Inn in Spain would not be the same as in the UK. In Spain, the poverty rate is relatively high, while the individual income of the people is lower (Ayala et al. 2017). Therefore, cost-efficient accommodation along with quality food would have to be provided to people of lower-income. Besides that, the luxury segment of the hotels would also have to be established in the beautiful cityscapes like Madrid and Majorca for the individuals of a higher level of income. The rising number of ageing people is a matter of concern to Spain. Premier would make use of this factor by converting the ageing people into loyal customers and providing them special discounts. The affordable pricing strategy would help Premier Inn to survive in the Spanish market.
Behavioural
The behavioural factors of the Spaniards are quite different from UK people as they do not have a special affinity towards the brands. As per data, 75% of Spanish people tend to bargain in the marketplace (Chambers, 2018). The bargainers would be the target customers of Premier Inn in Spain. The bargaining power of the consumers would be manipulated later on with the product innovation and lucrative discount strategies. On the basis of behavioural factors, the consumers from 18-45 would be the best fit for Premier Inn as they would be swayed by the new marketing strategies. The survey has depicted that older people don’t have the tendency to get easily influenced by the new products or services.
Psychographic
The culture of a nation has its immense impact on the psychology of individuals. The Spanish cultural factors have shaped and moulded the psyche of the individuals in a different manner. The key target market of Premier Inn would be both vacationers as well as pleasure-seeking people. Being a part of a collectivist society, the Spaniards are family people. Therefore, the family holiday packages and special discounts for the families would help to fetch these people. The families would be the loyal and potential target customers of Premier Inn. Spaniards are mostly adventurous and have a fondness for nature. The beachside hotels and holiday resorts amidst the greeneries would be the perks for Adventurous Spaniards. The key target markets of Premier Inn are not extravagant and they expect value for the money. Therefore, in Spain Premier Inn would have to come up with convenient and sustainable services to derive customer satisfaction.
Brand positioning strategy
Brand positioning is an important part of business expansion. According to Heinberg et al. (2019), brand positioning allows a company to enhance the visibility of its presence in the target market and at the same time helps to derive value from the consumers in both material as well as non-material terms. The branding strategy of Premier Inn is quite different from that of its other potential Spanish competitors. Premier Inn brand development process in Spain would be a blend of agility and innovativeness and the purchasability of the consumers would be given utmost priority. The concept of premium services within reasonable prices is the value proposition of Premier Inn and it intends to increase the number of loyal customers from every walk of society. The reputed hospitality brands of Spain, such as NH hotel group and Melia hotel international are following the world-class services at a high rate. The people of countries like Spain, who are already poverty-stricken, find it difficult to invest high amounts for accommodation purposes. Besides that, Premier Inn has always remained flexible in tailoring its strategies as per the consumer demand.
Competitor brand analysis
NH hotel group
NH hotel group has a unique brand identity in the domain of Spain. This hospitality brand is continuing its business operation in the places of Spain, like Madrid, Malaga, Bilbao and Barcelona (HOSPITALITYNET, 2020). Even the NH hotel group has its prominence outside Spain. This company has always invested a humongous amount of money in the refurbished decors and interiors to maintain a higher standard of luxury and aesthetic value. The pricing of the NH group hotel accommodation is relatively higher than the other hotels due to its international identity. Besides the existing destinations, NH hotel group continues to add new locations to its portfolio and mostly prefer the modern cities and sea beaches for their hotel establishment. NH hotel group has focused on the people of higher income level for their better brand positioning.
Melia hotel international
Melia hotel international was founded in 1956 and is continuing to serve the consumers with excellence. Melia hotel international is not only a leader in the Spanish market but has its preponderance in the global hospitality market (MELIA, 2021). This company is dedicated to incorporating the following values, such as consistency, responsibility, sustainability and innovation. Fostering family values, Melia hotel international has garnered immense popularity among the Spanish people. Being a luxury hotel brand, Melia hotel international follows a high pricing strategy. The monetary affluent and extravagant consumers are the targeted segment of this company. Melia Hotel international hails consumers from different corners of the world with a powerful slogan “where everything is possible” (MELIA, 2021). In Spain, Melia Hotel international has its branches in Barcelona, Almunecar, Gran Canaria etc.
Position strategy of Premier Inn
Figure 2: Price Positioning Strategy
Source: As influenced by Iyer et al. 2019)
The competitor brand analysis has revealed that most of the hospitality brands in Spain stress the quality while overlooking the price issues. In the domain of Spain the position of Premier Inn, based on price would be the perfect fit for the target market segments. In terms of outperforming the potential rivals like Melia hotel international and NH hotel group, a price positioning strategy would be the competitive advantage of Premier Inn in Spain.
Standardisation and Adaptation Decisions
Advantages of Standardisation and Adaptation
“Standardisation Approach” highlights the similarities between markets and tries to take advantage of similar consumer aspirations irrespective of geographical divisions. As per the views of Menapace and Fathinejad (2020), standardisation policies help companies to reduce production costs and apply cost saving strategies during economic crises. Companies would benefit in creating a strong international brand image and adapt according to consumer preferences. For instance, UK based Hospitality Company Premier Inn can benefit by applying this strategy in acquiring a brand image in the tourism sector in Spain. This company would gain advantage in standardising their operations as per the current COVID 19 protocols in Spain and how tourists would accept new hospitality companies during the pandemic situation.
“Adaptation Approach” refers to identifying cultural aspects and political factors prevalent within a country or region in expanding a particular business. According to De-Juan-Vigaray et al. (2021) adaptation approach helps companies evaluate the cultural differences, overcome language barriers and work according to the political guidelines of a country. Organisations would be able to adapt product, pricing and promotion strategies in satisfying consumer needs in a particular sector. In this manner Premier Inn would benefit by applying this strategy in understanding the regional preferences of Spanish tourists. The hospitality company would be able to promote their services as per the economic and social differences prevalent in Spain.
Application of “cost saving strategy” under standardisation policies would benefit a company to increase efficiency and lower the cost of advertisement. Li and Wu (2020) explained that standardisation policies help companies by providing a global insight through a centralised communication. In this context the chosen hospitality company Premier Inn can get advantage over the competitive tourism market in Spain by applying a centralised communication system. Weir (2017) noted that adaptation policies help organisations to develop strategies by understanding current environmental situations. Implementing adaptation policies Premier Inn can get an overview of the COVID 19 Protocols incorporated by Spanish Government and plan their promotional strategies without violating any legal prospects.
Disadvantages of Standardisation and Adaptation
Implementation of Standardisation approach can develop limitations that may provide barriers for business organisations. As observed by Sigala (2018) standardisation policies can affect the innovative structure of an organisation where a product or service may lose its uniqueness. Companies that focus on the existing consumer preferences in a market may lose their effectiveness in providing consumers with new products and services. In this context, hospitality company Premier Inn can face limitations in improving their services after applying standardisation techniques in expanding their sector in Spain. According to Femenia-Serra et al. (2019) standardisation approaches may not be appropriate for industries dealing with customer service as it hinders creativity and disrupts business responses. For instance, the chosen hospitality company Premier Inn can face difficulties in changing their organisational structure after applying standardised policies. This may create a negative impact on the company where tourists in Spain would prefer hospitality sectors with unique services over Premier Inn.
Limitations can arise in case of Adaptation Approaches where comparisons between traditional and modern marketing techniques are not provided to companies which act as an obstruction in choosing the best approach. As observed by Reddy et al. (2020) adaptation processes are time consuming in nature and involve higher costs. Companies willing to expand their businesses in international form may not get enough time to apply adaptation policies in planning and managing their businesses. Premier Inn, UK may fail in adapting to the rapid changes in the tourism industry during COVID 19 which may obstruct them from expanding their business in Spain. García-Milon et al. (2020) further explained that adaptation approaches may not always provide a deeper insight in understanding consumer preference in a market. By applying the adaptation process Premier Inn, the company may not be able to compare between the existing tourism trends in Spain and thereby may fail to adapt to the regional choices of Spanish tourists.
Application of Standardisation and Adaptation in Hospitality Sector
Standardisation and Adaptation approaches can help in developing an effective “marketing mix” for tourism and hospitality companies. As per the views of Filimonau et al. (2019) hospitality sectors may approach standardisation approaches in developing “location strategy” for identifying tourist spots within a particular region. For instance, the chosen hospitality company Premier Inn can apply this strategy in establishing their hotels and hospitality grounds in the popular tourist destinations in Spain. This would help the company in attracting clients from overseas areas and settle in choosing their hotels. According to Alonso et al. (2020) hospitality companies can benefit in adapting to the new changes in the tourism sector by evaluating socio economic factors. For coping up with the current COVID 19 pandemic situation, Premier Inn can adopt adaptation approaches in identifying the situation of the Spanish tourism sector. This company can plan their “promotion strategy” through digital and online marketing methods for creating a successful brand image. Standardisation and Adaptation approaches would help Premier Inn in developing their “product” and “pricing strategy” by analysing the income level of Spanish tourists and how competitors have been rendering their services.
Conclusion
It can therefore be concluded that for organising a business expansion, an organisation would be required to create an effective marketing strategy. In this report, the chosen hospitality company Premier Inn, UK would be required to adopt marketing attractiveness for analysing the demand for tourism in Spain. Macro environmental analysis would help Premier Inn to develop an understanding of the political, social, economic and environmental factors of Spanish Tourism industry. Upon critical analysis of each factor, the company would be able to develop its strategic approaches to expand their business in the current COVID 19 pandemic.
Competitors Analysis would help Premier Inn, UK would help in evaluating the existing customer service programmes offered in the tourism sector. In respect to this, the company would be able to compare them with their own marketing strategies and develop them according to Spanish preferences. For expanding their business operations, Premier Inn would be required to apply market entry strategies like Partnership Marketing for targeting specific market sectors within the tourism industry in Spain. The company would be required to develop partnership strategies according to population, income levels and tourism destinations. Apart from these, Premier Inn, UK would be required to adopt Standardisation and Adaptation approaches in creating an effective Marketing Mix for promotional activities and creating brand awareness.
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