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Overview of Intercontinental Hotels Group

Extracts from this document...

Introduction

Introduction Almost everything in economics is controversial. Economics is usually defined as the social science concerned with analyzing and describing the production, distribution, and consumption of wealth of the society. Every citizen in the society takes part in the economics in different forms from individuals to business organizations. The government, individuals, and business organizations all play major part in the economical growth of the nation. The government, hoping to increase the National Gross Domestic Product (GDP), will try to increase the aggregate demand for the nation by encouraging more people spending instead of saving. This will be influenced by the amount of money individuals have in hand. Furthermore, the investments from businesses also act as a critical factor in determining the growth of the nation's economy. Hospitality industry is one of the largest industries that provide the most contribution to some of the nation's GDP. Since the demand of leisure travel is greatly depended on interest rate, exchange rate, level of income, tax rate, and also the decisions of the government's intervention of the economy. A large hospitality corporation such as the InterContinental Hotels & Resorts will pay close attention on the latest economical fluctuations in the society to forecast their sales and revenue. The following context consists of an overview of IHG, and some of the economical factors they consider. Overview of Intercontinental Hotels Group History of Intercontinental Hotel Group The origins of InterContinental Hotel Group (IHG) can be traced back to the mid nineteen nineties. It was founded by Pan American World Airlines and served not only as a quality hotel brand, meeting the international travelers' needs but also taking care of the large number of airline crew and staff as they flew the airlines' routes. It enjoyed a reputation for exceptional facilities and meticulous personal attention. InterContentinental Hotels, an upper upscale hotel had an important global position. The Bass Group was developed from a mere brewery in Burton-on-Trent to a leading domestic brewery. ...read more.

Middle

On the other hand, when the political situation is peaceful, it will boost the economy of the country. Thus, there will be more travelers visiting destinations in the countries. Asia Pacific is the region where politics are non-stable. Situations, such as Taiwan calling for independence for mainland China, nuclear threat was detected imposed by North Korea and its hostile attitude towards the United States, could be the major problems that affect hotels and travel industry. Moreover, China is now integrating its markets into free market economies by joining WTO. It is also playing a bigger role on the world scene of manufacturing, technology, and business trade, which can help boosting travel and hospitality industry to grow at the same time. * Economy Asia Pacific is considered as the fastest growing market region in the world. Inflation rates in East Asia are within acceptable range, while it is increasing in Southeast Asia. It is one of the regions attracting international business investment. Hence, the high growth of economic draws more attention to business travelers to visit and invest. InterContinental Hotel is focusing on business travelers who are premium or high end markets. This category of market segmentation concerned more on time and convenience rather than price. In either economy booming or down turn, this group of market still travel due to business purposes. Moreover, the level of income has very low impact on this market. The expenses on business trip are covered by corporate rather than personal expense. These infer that the business travelers are less price-sensitive than the leisure travelers. Therefore, the state of the economy would not have much effect on the up-scale market group, which is the major market segment of InterContinental Hotel. * Social Asian Pacific region are occupied by one-third of the world's population. Out of the total population in this region, the majority of the population is living in People's Republic of China; there are approximately 1.29 trillion people in the country. ...read more.

Conclusion

Contradictory from Keynesians belief, New Classical theory believe in non-intervention by the government and emphasizing on free trade and free market. Moreover, the theory focuses on supply side managements, which includes improving training, skills of work force, and development of technologies to increase country's productivity. The result of implementing New Classical theory will affect the long-run benefit of the country. Therefore, we believe that InterContinental Hotels & Resorts will gain more benefit through achieving higher productivity and be able to reduce their costs as the marginal profit increase. We firmly believe in the benefits InterContinental Hotels & Resorts will receive from the Keynesians inspired government. The reason is based on the immediate results and benefits the company can receive. Overall, no one policy is perfect, therefore; in hoping to achieve the greatest benefit for InterContinental Hotels & Resorts the Keynesians and New Classical theories should be adapted for both the short and the long-run. Conclusion Businesses should always be aware of their own position in the economy. By knowing where they are positioned, they need to know about the nature of their business, competitors, and also the whole environment. This will allow the business to know how they have performed in the past. Furthermore, the business will also be able to predict the future economy and develop appropriate strategies to maximize the revenue of the company. Demand is an important factor in the economy. Without demand, the circular flow of income will be affected as the economy would collapse. Furthermore, the economical situation could affect the demand of the society greatly. For example, in keeping the economy growing at a steady pace in increasing the aggregate demand by lowing tax and interest rate, and also increase money supply and government expenditure. In InterContinental Hotels & Resorts' case, government's intervention in creating greater aggregate demand in the economy will boost the perishable produces usage and therefore, increase the most revenue possible within the limited time frame. ?? ?? ?? ?? Economics Project on InterContinental Asia Pacific 1 ...read more.

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