Concepts Of Revenue Management(RM) - Impacts On Hospitality Industry

In this document, we will discuss the core concepts and key characteristics of Revenue Management and their impact on the hospitality industry. Also, we cover the following topics: the origin of revenue management and its relevance to contemporary hospitality management, the impact and application of RM in the hospitality industry to achieve business goals and objectives, the information requirements of the RM process, and the role of market segmentation in effective business analysis and forecast creation.

UNIT 26: Revenue Management
MARCH 9, 2022
Grizli777
By:
 Laetitia Marie: NC77202
 Melissa Levasseur: NC7720
 Rolisha Ramdin: NC77209
 Noah Turner: NC77218

Contents
Explore the origin, the core concepts and key characteristics of RM and their impact on the
hospitality industry................................................................................................................................1
P1 Discuss the origin of RM and its relevance to contemporary hospitality management................1
P2 Examine the core concepts and characteristics of RM including fundamental economic
principles and performance indicators that impact the hospitality industry.....................................4
M1: Review the impact of RM on hospitality businesses in terms of performance and
organisational response....................................................................................................................9
Impacts of revenue management on the hotel in terms of performance and organisational
response..........................................................................................................................................10
D1: Critically evaluate the impact of RM and provide justified recommendation for the use and
application of RM in the hospitality industry to achieve business goals and objectives..................12
LO2 Assess the relationship between RM systems and processes and how these link to strategic,
tactical and operational hospitality business goals..............................................................................15
P3 Examine how structural, procedural and other elements of RM support the achievement of
business goals within a hospitality organisation..............................................................................15
M2: Critically evaluate how RM supports the achievement of hospitality business goals within a
hospitality organization...................................................................................................................20
L03: Examine the information requirements of the RM process and the role of market segmentation
in effective business analysis and forecast creation............................................................................24
P4: Examine the information requirements of the RM process for core hospitality industry..........24
P5 Evaluate the process of market segmentation, the creation of profit through customer
definition and forecast creation using a range of hospitality examples..........................................28
LO4 Apply pricing and non-pricing tools in dynamic hospitality contexts to formulate and justify
revenue optimisation decisions...........................................................................................................32
P6 Develop a functional RM plan and strategy to optimise pricing and revenue decisions using
pricing and non-pricing tools for the chosen hotel..........................................................................32
Revenue Management Cycle (RMC)................................................................................................32
Pricing vs. Non-pricing strategies.....................................................................................................35
REFERENCES:.......................................................................................................................................38
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Explore the origin, the core concepts and key characteristics of
RM and their impact on thehospitality industry
P1 Discuss the origin of RM and its relevance to contemporary hospitality
management.
Introduction
The origins of revenue management is related to the aviation sector in the 1980s. Airlines began
implementing an idea known as dynamic pricing in order to optimize financial results. American
Airlines, for example, has had a lot of success using price discrimination strategies and forecasting
consumers' needs.
Now, what exactly is revenue management, as well as what exactly does it implies? In general, it can
be defined as the use of data to help predict customer behaviour just so product accessibility and cost
can be adjusted to create the most amount of revenue attainable. The primary goal of the hospitality
sector is to boost revenue while delivering the same quantity of items or resources, such like hotel
rooms. It's all about balancing supply and demand, and effective revenue management requires an
understanding of how consumers think as well as what their value views are. This may include
declining to sell a room today in order to sell it for a greater price later, but it could also include
recognizing when demand fall enough just to sell at a discount.
Revenue Management in the hospitality industry
Revenue management is the "science and art of enhancing firm revenues while selling essentially the
same amount of product," as according to Dr. Peter Bell of the Ivey School of Business. It's defined as
"the practice of selling the right product for the right price at the right time to the right customer,"
according to an article in Hospitality Upgrade magazine. Revenue management is sometimes known
as yield management in the hospitality business, as seen in the goal to raise the yield over a plane seat,
renting a car, or hotel room.
The major goal of revenue management, which has grown in popularity since the 1980s, is to
maximize revenue and profitability. Perishable items, high fixed costs, low variable costs, and fixed
volume are all factors that contribute to increased profit margin and return as a result of revenue
management in the hotel industry. Hotels and other accommodation establishments, rental car firms,
travel package and tour operators, restaurants, and cruise lines are among them.
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Businesses achieve from revenue management because it allows them to take advantage of price
differentiation through market segmentation. Customers in various segments have diverse needs and
desires. Middle-class leisure travellers, for example, are price conscious, prefer to travel on weekends,
and prioritize cost. Business travellers, on the other hand, place an emphasis on efficiency, preferring
to travel throughout the week and focusing on service quality. Other groups fall somewhere in the
middle. Retirees or seniors, for example, might well be price conscious but willing to travel during the
week.
For example, airline companies adopt revenue management tactics such as providing business class
tickets at significantly greater costs than coaches and overbooking flights, as well as preventing
changes on massively discounted economy prices while enabling alterations on higher-priced tickets.
Hotels utilize revenue management by giving bundle package rates to large groups while charging
single business visitors nearer to the highest prices. Car rental firms cater to several market segments
with cars varying from economy to luxury, and they offer tanks full of gas and damage insurance to
generate more cash.
Managing revenue usually involves a culture change. To obtain the most benefits, revenue
management methods and associated technology must be implemented throughout the board. This
necessitates a higher level of inquiry, measurement, and analysis. All staff working in marketing and
sales, customer care, finance and accounting, and product innovation must become accustomed to
these operations. When hotels include revenue management into their operations, they help to
stimulate innovation, which leads to increased income for both basic "products" like guestrooms and
supplementary services like room service and bar purchases.
Forecasting
Forecasting is a vital subject to comprehend when understanding revenue management. In basic
terms, forecasting is the process of making future predictions based on historical data, current data,
and trend analysis. As a result, a business will be able to predict future situations and events.
Forecasting is beneficial to individuals in hotel management as it makes it far easier to think long
term and make more educated strategic decisions. Furthermore, because a hotel can estimate demand
levels ahead of time, it can help the organisation boost the amount of income made from perishable
inventory.
Below is a list of some of the most important things to remember if using forecasting as parts of a
revenue management strategy.
 Maintain Accurate Records
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The concept of selling the right product, to the right consumer, at the right moment, through the
appropriate channels, for the right cost, at the lowest cost to the business, is at the core of revenue
management. This requires the use of the information accessible to them, which needs the upkeep of
correct records. One should keep records of occupancy rates, income, room prices, and other key
performance indicators (KPIs).
 Use of historical data
Typically forecasts, especially in hotel revenue management, depend significantly on past data and the
belief that past trends will replicate themselves. While looking at the data, one might discover, for
example, that demand drops from April to July, or that the busiest months are frequently in the
summer. This data can be utilized to develop reliable forecasts about how demand will change at
some point.
 Make use of data that are in the books
Information which is already in the books is one of the most valuable things companies have towards
forecasting as well as hotel revenue management in general. This usually refers to guestrooms that
have been already reserved, and also any previously scheduled activities, parties, or meals. The hotel
can, however, look at its google AdWords and social media posts in addition to this. The hotel
industry must remember that the material inside the books is among the most reliable information
they have.
 Take Special Occasions and Holidays into Consideration
It is important that one’s forecasting efforts account for events and celebrations, and that any
necessary changes are made with all these factors in mind. For example, if a hotel uses historical
analysis to predict some certain level of demand but fail to consider the fact that perhaps a big sports
event is taking place in the region, the forecast may be incorrect. Similarly, holidays such as
Christmas, Easter, Ramadan, and Thanksgiving may cause current hotel trends to divert towards
a positive or negative way.
 Maintain a Focus on Industry Trends
It is also critical to pay attention on broader market trends. For instance, has there been a reduction in
overall travel towards the zone where the hotel is located? Are there any global events affecting
bookings, like the COVID 19 pandemic? There could also be new methods of doing business that are
assisting competitors in attracting visitors, or new distribution networks that are worth investigating.
When forecasting, all of these issues must be taken into account.
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There are a few more tips that can help users improve their forecasting and understand fully what
revenue management is really all about. These include staying aware of competitors and segmenting
one's forecasts so that the company can be more precise with their predictions.
 The concepts behind hospitality revenue management.
Revenue management in the hospitality industry is the selling of the right rooms, to
the right customers at the right time for the right price and through the right channel.
It requires data on past revenue, past consumer purchase behaviour, past pricing
strategies, market demand, and more in order to predict future revenue based on future
pricing strategies.
 Where did the concept of revenue management come from?
This concept was originally designed for the airline industry, these companies could
find ways to forecast their customers’ needs and demands. Then it was applicable and
beneficial to any type of industry that involves customers who are willing to pay
different prices for the same product.
 Importance of revenue management in the hospitality industry
They are making the most out of room inventory in order to further maximizes the
revenue. It also led to greater innovation in terms of branding or even their products. It
improves efficiency, drive down costs and improve demand forecasting. We can see the
importance and the great impact this have in any hospitality businesses but it also,
determine the right balance of staff, roaster, and even for example an hotel have an edge
over their competitors.
Hotels have fixed costs whether their rooms are sold or not, using the revenue
management they make sure that they meet their costs and price their services to allow
them to make profit.
 How are hotels suitable to apply revenue management?
Hotels have a fixed capacity of guests; they provide perishable product for example
the rooms and also, they have a high fixed costs and low variable costs which depend
on the type of rooms and special requests. Their product can be priced differently,
demand evolves, and the product can be sold in advance, early bookings. The market
can be segmented, couples, family, businessman and young adults.
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 The impact of digital technology on the evolution of revenue management.
An element that has a direct impact on digital distribution is price parity, sites like
TripAdvisor, Trivago, Kayak etc which allows customers to make price comparison.
Another aspect that has been influence by the digital technology is online reputation,
maintaining a good online reputation of a service or even a destination is an objective
that companies put forward as it has a decisive influence on demand.
Some other ways how digital technology has an impact on revenue management are:
1. The weight of big data.
They can obtain a huge volume of customers’ data through digital analysis tools for
example google analytics and it allows more precise segmentation and better
customisation. For example, they can predict the products the customers may want,
and they can further use those key data to influence the customer’s behaviour.
2. Searching and bookings.
It has now made the process of searching and booking simpler and easier and also
increases products visibility and product demand.
3. Strategic distribution
It involves in aiming the right customer with the right service at the right time and it
also helps in understanding and analysing online reality in order to optimise results.
4. The new revenue manager
They need to have a specific training in revenue management but also a knowledge of
the hospitality market. Companies need to ensure that they have constant training and
development, they need to have a strong analytical, communication, team focus and
dealing skills.
5. Artificial intelligence and machine learning
They help revenue managers to make decision quicker, develop new rate plans and
create more segmented offers. They also help them to identify patterns and highlight
issues before they have a negative impact. Nowadays many hotel groups, for example,
the Marriott group used this Artificial Intelligence in its mobile application called
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Bonvoy, it collects the user’s data, intent data, and attribution data the application is
making complex recommendations around in-destination offerings
P2 Examine the core concepts and characteristics of RM including fundamental
economic principles and performance indicators that impact the hospitality
industry.
Interpretation of the key internal and external RM performance benchmarks including
occupancy, length of stay.
Internal Determinants of revenue management:
This consists of the internal features of the hotel and have various impact on the revenue
management.
It includes:
 Star Rating
The star rating has influence on the customers and this will have influences and impact on
revenue management. That is, there is more than 100 score it means that the hotel has been
successful in booking of rooms and this will also influence potential customers to come to the
business. It has direct influence on RevPAR.
 Hotel location and size
The location of the hotel is very important as it increases the approximate worth of RevPAR
if it is a highly frequented location with high accessibility and so on. Also, the size of the
hotel has an indirect relation between the number of guest rooms and RevPAR and also the
number of employees increase value due to occupancy and this impact on RevPAR.
External Determinants:
This consists of the factors that cannot be control by the hotel industry and which impact on
the revenue management, thus the hotel should make use of the right KPIs in order to achieve
its objectives.
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 Seasonality
It impacts on the performance of the hotel where there will be changes in the room rates
during peak and off-peak seasons which directly impact on the revenue of the hotel. There
tend to be changes in the products and services offered in the various packages during the
different season.
 Technology
The hotel industry nowadays relies a lot on technology to effectuate operations where
revenue management necessitates the gathering of information in a continuous process. Thus,
this required RM necessities for managerial use in order to be successful.
 Uncertainty
The hotel industry can be greatly affected by unpredictable situation which is not under the
control of the hotel. Take the example of the outbreak of Coronavirus Pandemic, this have
negatively affect many hotels across the world and lead to major decrease in revenue where
the hotel had no choice but to adapt and find solution to overcome this challenge.
 Environment dynamism
The hotel industry is a rapid changing environment with quick evolvement of the industry,
where their tends to be continuous and fierce competitions in the industry. Hence, this will
influence the performance of the hotel either in the positive way or negative depending on the
decisions taken by the revenue manager.
 Environmental complexities
The process of product differentiation has direct influence on the hotel where their needs to
be products and services that meets the needs and wants of the consumers. It is crucial due to
the complexity of the industry in order to remain competitive and thus achieve the objectives
of the hotel.
Key Performance Indicator (KPI) is generally defined as the specific measures used to
measure the performance of an individual, a teams or department. It will reflect the critical
success or failure that is useful to understand the current performance of the hotel and be
better prepared for future performance of the hotel. KPI is usually in numbers, percentage,
scale and etc which helps in the identification, measurement, reporting and managing key
development of the hotel and reduces the complexity of the different processes.
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Financial performance of the hotel industry:
This factor has impact on the various strategies and practices of the hotel to increase revenue
where there is the use of metrics which will be examined in the coming paragraphs.
The various determinants include:
 Pricing polices
The price set for the products and services of the hotel will influence revenue in determining
its success in the long-run or whether the KPIs metrics should be changed in order to achieve
objectives of making profits.
 Revenue forecasting techniques
Based on the revenue techniques used in the previous days, weeks, month or year, the hotel
will be able determine and forecast its likely success on the market.
 Social media strategies
This has become very important nowadays in the hospitality industry which to be main
influential tool to encourage bookings of hotel rooms. This is where all information of the
hotel are available and whether will make booking or prefer to go to competitors and this will
impact on the revenue of the hotel.
KPI is it a metric?
As said above it can in number or in ratios where there can be both:
 Number metrics: pageviews, revenue, gross profit, net profit, operating profits or
visits and so on. Ratio metrics: bounce rate, conversion rate, profit margin, return on investment etc. Number KPIs: Day to purchase, revenue, visit to purchase etc.
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In order, for KPI to be successful it needs to have a goal to be effective. It helps in tracking
goals against the hotel objectives and implement changes that are required. The various
attributes include:
Difference between KPI and a Goal:
KPI is not a goal but it is effective in accomplishing goal. Goal refers to the outcome that the
hotel wants to achieve and thus KPIs is a metric that help the hotel situate itself of whether it
is on the right track towards achieving the goals.
1. Available and measurable
Metrics can be used as KPIs which is available at the very first place. As coming something
that is impossible to measure KPI will not be useful then, like the frustration level of the
customers cannot be measure where the left their card at their third purchase.
2. Highly impact its corresponding goals
If it does have great impact on the goals and objectives of the hotel, then it is the suitable
KPI.
3. Relevant to corresponding goals
Having high impact on the goals of the hotel, it means that the KPI is related and relevant to
the hotel.
4. Instantly useful
If the KPI is highly impacted on the hotel, it means that it is instantly useful for the hotel
based on the insight obtained from KPI.
5. Available in timely manner
It should be available in a timely manner so that the hotel can take decisions on time without
delay. The KPI should be assess based on several month or even years to make good
decisions for the hotel.
Important KPIs for the hotel industry:
 Average Daily Rate (ADR)
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This is one the most common metrics that is used in the hotel industry to measure the average
rate per occupied room. That is the Average amount of Revenue that is obtained daily for all
the occupied room of the hotel without unoccupiedroom to prevent irrelevant figures.
It will enable the hotel to measure the key element in the financial performance of the hotel
and help in forecasting marketing and pricing of the product and services. It allows the hotel
to plan and set flexible prices based on the seasons.
Calculation of ADR:
Room Revenue/ Number of rooms sold.
 Revenue Per Available Room (RevPAR)
This consist of the measurement of the average of revenue for a certain period of time, by
the income received through all the booking received. RevPAR tend to create a price metric
of how much revenue is generated per room where there is a good occupancy rate as well as
high ADR.
Calculation:
a) Average Daily Rate X Occupancy rate
b) Total Revenue from Night / Total Number of Room Available
 Average Length of Stay (ALOS)
ALOS is commonly used to determine the occupant’s length of stay divided by the total
number of occupied rooms by the number of bookings. It is calculated based on the number
of night that the customers stay at the hotel.
The data can be used to decide of the pricing strategies to adopt, if there is lower ALOS then
the room rate for short stay should increase and thus offer better deals for longer stay. The
length of stay of the customers have a impact on the revenue of the hotel.
Calculation:
a) Total Occupied Room per Night / number of bookings
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 Occupancy Rate
This is very useful in the calculation and tracking of the hotel daily, weekly, monthly and
yearly booking of the hotel, where there is the identification of the total number of rooms,
booked rooms and occupied rooms of the hotel.
It is important in the analysing the performance of the hotel which gives a constant flow of
data and trends of occupancy where there the hotel can make promotions to encourage
booking like during off-peak season,
Calculation:
a) Total Number of Occupied Rooms / Total Number of Available X 100
Furthermore, nowadays there is the use of technology and internet which makes it easily
accessible for the customers to share their experiences and feedback about the hotel. And this
enable the hotel to evaluate and measure of how well the hotel is operating based on the star
ratings of the customers on the digital platforms. This will thus help the hotel to make
improvement in its products and services.
The various metric that are used:
 RevPAR Room Type Index (ReRTI)
Since changes keeps operating in the hospitality industry, a new metric has been developed to
assist the revenue managers to decide of whether the deal of higher esteem rooms
contributes relatively to the stock of each room sort to the RevPAR.
It helps to know which types of rooms is the most suitable and get to know of whether a
room upgrade can help or obstruct the hotel. If the room score is more than 1, that means that
this type of room contributes proportionally more than it should based on the number of
rooms of that type. That is, if it is less than 1 it means that the room type contributes less than
expected.
Calculation:
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a) % Total RevPAR x Number of Specific Room Type / % Inventory x Number of
Specific Room Type
 Market Penetration Index (MPI)
It is an important metric when measuring KPIs where it shows the hotel performance
compared to that of competitors in the hospitality industry. If the hotel score less than 100, it
illustratesthat the hotel is doing poorly and under the market average and if it is above 100 it
means the hotel is performing better than the competitors.
Calculation:
a) Hotel occupancy %/market occupancy % x 100
As a whole, it is important for the hotel to understand the industry metrics and it allows the
hotel to get a better insight on its performance and helps in better tracking. Hence, to improve
performance by increasing sales and profits, it is important to understand the right KPIs for
the hotel. Also, it is important to analyse the data in a continuous process where it will give a
strong base to take the right decision and make the hotel successful.
M1: Review the impact of RM on hospitality businesses in terms of performance
and organisational response.
The outbreak of the pandemic has made the revenue manager to take a more precise role in
Constance Belle-Mare Plage, Hotel’s commercial strategy where marketing strategies and
campaign will be run to create truly relevant offers to attract customers. Revenue
management consists of the prediction of consumer behaviour to sell the products and
services at an optimal price every day. That is, where the right room is sold to the right
customers at the right rime at the right price using the right distribution channel while
benefiting from the best commission efficiency.
Impacts of revenue management on the hotel in terms of performance and
organisational response.
1. Optimise Prices
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The hospitality industry is fast changing environment where the hotel has no choice but to
adapt to the environment. The level of demand will vary based on various factors affecting
the hotel industry hence making use of an automated revenue management system (RMS)
will enable the hotel to price their products and services competitively and confidently under
any circumstances. The hotel will be able to easily adapt themselves through any
circumstances in order to survive in highly competitively industry. While RevPAR indices
and ADR will take time to recover, thus, to generate revenue efficiently is to ensure that the
hotel capture the right business at the right price. Empowering the revenue manager and the
marketing team of Constance Belle-Mare Plage, Hotel to focus on the strategic initiatives to
drive demand and optimise both pricing and availability.
2. Make informed decisions with confidence
It allows the hotel to provide confidence in innovation, data, predictive analytics, group
management, online reputation data, remote accessibility, and support to deliver the most
optimal decisions. The revenue management systems evaluate the future pace, price
sensitivity, external data points, unconstrained demand, and even prices by the different room
types and based on the different market segment that the hotel have. Thus, it ensures that the
hotel drive the most profitable business to your property to help the hotel recover faster
during the pandemic and crisis situations.
3. Customer expectations
RM allows the hotel to get a better and deeper understanding of what the expectations of the
customers with the hotel products and services. It will give a deeper insight of the specific
needs and wants of the customers and will enables the hotel to design the products and
services packages in such a way that it works effectively and ensure profitability. Nowadays,
there tend to be increase in business travellers who need to have quick and easy access to the
internet hence the revenue management might develop a policy where Constance Belle-Mare
Plage, Hotel provide free wireless internet connection in all the hotel rooms.
This will make the customers feel valued and important as the hotel takes into consideration
their needs and wants which will encourage them to come for their next journey, thus ensure
loyalty. Additionally, this will lead to good feedback and recommendation which will ensure
customer loyalty and attract potential customers to come to the hotel, their will be increase in
the number of purchase and profitability of the hotel. Also, the hotel will have a better and
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improved reputation which will ensure continuous success as customer expectations are taken
into great consideration by the hotel.
4. Competitive pricing
Revenue management enables the hotel to create a competitive pricing strategy that will
allow the hotel to have a competitive edge over its competitors and draw in the customers. In
fact, revenue management is very pervasive within the hospitality industry that if Constance
Belle-Mare Plage fail to implement revenue management strategies effectively and
competing effectively, this will lead to failure in the long-run. Like in the new-normal, the
hotel should carry out research to identify the customers who are willing to make purchase
from the hotel and whether they are struggling with the prices set. As a result, the hotel can
boost its competitive advantages by setting suitable and lower price in the new normal to
encourage customers to make purchase in the hotel. Like, offering free water to all the
customers on a limited of 5 bottles per persons during their journey at the hotel.
This will make the hotel remain competitive even though there are various challenges
through the years where the hotel does not have the choice but to adapt to the situation. As
the main concern of the hotel is to get the highest number of customers and satisfying their
needs and wants successfully without lack in to ensure satisfaction, loyalty and attract
potential customers to come the business.
5. Company division
Revenue management creates a strong awareness between the activities of those working on
sales and marketing, and on the front-line service. That is the sales and marketing department
of Constance Belle-Mare Plage, Hotel that must develop and implement strategies to reach
customers and attract them to make purchase in the hotel and it is the responsibility of the
various frontline who are responsible for carrying out part of these activities. Thus, making
use of revenue management allows the hotel and provide the opportunities to coordinate their
divisions more closely and thus create the most effective program possible to ensure
profitability of the hotel.
Additionally, this will ensure that the hotel has a good and clear direction of what it wants to
achieve and will work towards achieving the aims and objectives of the hotel. That is, all the
department will coordination and work with their team preventing any sort of confusion and
misunderstanding and work towards maximising the revenue o the hotel.
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Revenue management will allow the various department especially the front office
department to plan for the success and profitability of the hotel. The various ways that it will
help includes the following:
 The number of staffs required in the various department to ensure efficiency and the
well-functioning of the hotel.
Depending on the fixed capacity of the hotel which consists of the number of guests that
the hotel room can accommodate and the number of rooms that it has. Based on this, the
hotel should recruit staffs in order to satisfy their needs and wants successfully, as if the
hotel do not have sufficient staff this impact negatively on the service. And if the
customers are not satisfied this will lead to negative feedback, bad image and no loyalty
hence revenue management will give an idea of the required staffs to ensure efficiency in
the hotel.
 Minimum inventory required by the different department to carry out their tasks
efficiently.
The minimum of inventory required in the hotel as there are various factors that should be
considered like there are perishable products which have a specific lifetime. As allocation of
the various resources to satisfy the customers needs and wants in the best possible way
requires the hotel to have sufficient inventory in each and every department to successfully
meets customer expectation at Constance Belle-Mare, Plage.
 Maintenance of the hotel furniture, fixtures, the property, and more depending on the
number of customers.
The fixed are not necessarily influence by changes in occupancy rates but it is importance for
the hotel to ensure maintenance of the furniture, the buildings and more. Thus, managing
revenue to carry out yearly maintenance is crucial where contract fees for the materials is
important even though the various challenges in the industry, machinery and software should
be updated to adapt in the hotel industry.
 Arrangement to be made for the special customers like group of people, commercially
important persons, or VIPs.
Differential pricings are set for the different types of customers where the price will vary
depending on the segment. That is, special attention should be given to VIPs guests, elders,
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couple with children, thus the packages will vary to better meet the expectations of the
customers.
 Forecasts of reservations will provide the necessary data to the reservation manager.
There is evolvement in the number of bookings throughout the years especially with the
outbreak of covid-19 which have major impact on the industry. Hence, based on the
forecasts, it is crucial for the hotel to keep in touch and updated on how demand keep on
changing according to seasonality, unforeseen events and more. Thus, developing strategies
to cope with the quick changing environment.
 The food and beverage functions should be viewed considering the potential for
booking groups that need a meeting space, F&B service and guest rooms.
The costs of the food and beverage department is crucial as it will vary depending on the
number of booking and it is important for the hotel to have the required resources to satisfy
the customers successfully. As it is crucial for the hotel to the required number of staffs to
ensure satisfaction and maximisation of profits, increased loyalty and attract potential staffs
to come to the business.
The impacts of revenue management will be critically examined in the following paragraph
with recommendation in order to successfully achieve the aims and goals of Constance Belle-
Mare Plage, Hotel.
LO2 Assess the relationship between RM systems and processes
and how these link to strategic, tactical and operational
hospitality business goals.
P3 Examine how structural, procedural and other elements of RM support the
achievement of business goals within a hospitality organisation.
Types of revenue management tools used in hotel industry:
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Over time, the department of revenue management, formerly called yield management, has
become more and more important in the world and more particularly in the hospitality and
tourism sector. In addition, advances in technology have meant that the principle of revenue
management could be computerized and give rise to more types of revenue management
systems (RMS).
What is RMS?
Basically, a Revenue Management System, also known by its abbreviation RMS, is a
software which enables a business, and particularly, a hotel to implement and do revenue
management tasks in a more effective and efficient way.
Those software’s function from historical data about the hotel and from ancient as well as
freshly update market data in order to help the organization make the best possible decision.
Characteristically, an upright Revenue Management System will use the data and its own
algorithms to proceed to a real-time analysis of the state of the market, of demand and then
estimate pragmatic and ideal room rates according to the demand of the market.
Therefore, most of the important decision that must be taken by the hotel in term of revenue,
can be done through the Revenue Management System.
Global Distribution System (GDS):
Airlines and travel agencies have been using global distribution systems also known as a
GDS for over 30 years and travelling today would be difficult without a GDS. Global
Distribution system is an online network for companies within the travel industry which
connects travel agencies, cruise lines, hotels and car rental companies and airlines. A GDS
takes the content from suppliers and makes it available to distributors.
Let's take airlines as an example of a supplier and a travel agency as distributor airlines have
reservation systems that keep track of their inventory, the inventory is the number of seats
that are booked or available to book. The GDS has access to this inventory through a
contract. The GDS then gives this access to travel agencies, if a travel agent works to book a
seat, the GDS make sure that the information is sent to the airlines reservation system and
inventory is updated just like in this airline example has access to many other suppliers.
To illustrate this, let's see how a customer books his trip to another country. gene causes
travel agency to book a flight from London in the United Kingdom to Trou Aux Biches in
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Mauritius. He needs a hotel and a rental car for the three weeks. A GDS will be used by his
travel agency to access thousands of flights from hundreds of airlines and thousands hotel and
car options for him. GDS filters all these options to give the travel agent the best set of travel
options. After reviewing these options with their customer, the travel agent can then use the
same GDS to book between multiple flights, airlines, rental car rental and hotels and reserved
the option that fit the best to their customers.
A GDS helps suppliers reach more travellers and helps agencies give travellers more options.
We can conclude that this Global Distribution System is more used in travel agent sectors,
however, it is informally as it helps to obtain booked rooms and to have an overview about
the hotel occupancy forecast. There is different brand of GDS, the most popular are:
1. Amadeus
2. Sabre
3. Galileo
4. Worldspan
5. Pegasus
Central Reservation System (CRS):
Nowadays, through the drastic advances in terms of technology, reservation online has
experienced a great increase with a figure of 75% of all hotel bookings are made online,
containing 21% coming from the hotel's website, 40% from Booking.com and the 32 %
through other aggregators. All the figures clearly show us the magnitude of online
Booking.com and all this requires tools capable of managing all reservation data whether
online or offline. Which brings us to the Centra Reservation System (CRS).
Centra Reservation system refers to a computerized software system containing the hotel’s
availability, rates, and inventory (ARI) data and helps manage online and offline bookings.
Once the data is entered into the system by the front office manager, reservation manager or
the channel manager, the software will notify all distribution channels such as of the ARI
updates the hotel's head office (if the hotel form part a hotel chain), GDSs, OTAs,
independent travel agents, and its own website in order to coordinate reservations and process
transactions.
The implementation of a CRS enhances overall effectiveness and productivity through the
automation of several processes. For example, the instant updates of hotel’s ARI across all
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distribution channels or sending confirmation emails. That increases performance, reduces
errors caused by manual and human operation, and lowers the cost of human labor. In
addition, the CRS booking capabilities provide an easy way for customers to manage their
own reservations which increases their satisfaction and loyalty.
Property Management System (PMS):
Property Management System (PMS) refers to a software which make reservation
management as well as a hotel administrative task easier and everything is digitized and as
everything is digital, it eliminates the limitation that this kind of management would provide
in "physics". This software mainly covers functions related to front-desk operations, channel
management, housekeeping rate and occupancy management, and payment processing.
PMS is like a single command centre for managing all essential functions of a hotel from
sending booking confirmations and reporting at basic KPI or API. The software may include
a few or many functional components or modules. Those modules consist of and what
functions each component has depended on the vendor a hotel's custom system until vendor
may develop solutions for properties of different sizes and types and the number of modules
will depend on their needs and operations but there are some modules every property
management system has. Those modules consist of:
1. Reservation:
As with entered in a modern era and as the covid 19 has drastically accentuate
technologies in the hotel industry, it has been noticed that nowadays most booking comes
from the online booking as main sales channel. The reservation modules which is
incorporate in most hotel's PMS enables the organization to manage those bookings more
efficiently by holding inventory data and dates and sending this information to the front
desk.
Chain hotels generally have one central reservation system for the whole chain, whereas
independent hotels have their own reservation systems. The keys functions of the
reservation module are:
 Room bookings
 Collection of e-payments
 Management of room inventory and allocation
 Reservation emails
 Activities (entertainment) bookings.
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2. Front desk operations:
This module concerns front-office tasks such as update room reservation status, check
guests in and out, and process payments. This module is design to help the front office
manager to have a better supervision on those aspects. For example, when a guest has to
proceed to the check-in at the hotel, they mostly want it to be done as fast as possible.
This module is of great support to the receptionist is very important in this case, so front-
desk staff should have time to help the guest.
3. Room management:
Through this module access to room status become very easily as all information about it
is immediately upload for example information about current and upcoming reservations.
It also gives the possibility to the front office department to allocates rooms easily as all
data about the rooms are shown and it also helps in terms of room change.
4. Channel management:
Channel management software is a single interface of the Property Management System
which provide to its user the possibility to monitor, manage and distribute inventories
throughout several channels such as GDSs, OTAs, wholesalers or direct booking
platforms. The connection is immediately made with a central reservation system that has
information about the availability and cost of hotel rooms and then share this information
through the distribution channels. This interface provides room inventory accessible to
travellers who want to book a room or property online, listing rooms on different sources.
Also, a channel management module facilitates booking-related transactions.
5. Revenue management:
As itself, the main function of a PMS is to evaluate a hotel's financial success through
revenue management indicators such as Occupancy, RevPAR (Revenue per Available
Room), and ADR (Average Daily Rate). Based on forecasting and economic theory of
demand and supply, this module enables its users to pragmatically decide when to raise or
lower inventory(room) prices.
6. Housekeeping:
To put it simply, the housekeeping module on the PMS makes the link between the
department and the housekeeping and front office staff and this takes majorly form of
communication. It is a two-way process communication between the two departments.
For example, a housekeeping manager can update room status whereas front-office
manager can make a list of tasks to assign.
7. Reports and analysis:
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Basically, a PMS can serve as a business intelligence tool for gathering appropriate data
and offering hoteliers with a variety of computerized reports. Varying among the
software, PMS can make night audit reports, room and tax reports, shift audit reports,
departure/arrival reports, housekeeping reports or other ongoing reporting.
Customer Relationship Management (CRM):
By definition, “CRM or customer relationship management system is a software solution
which helps to manage Leads, Sales, Marketing and sales Team.”. In other words, CRM is a
software that allows hotels to maintain a good and connected relationship with its guests,
knowing that one of the objectives of all hotels in the world is to retain their customers and
this software fully contributes to this.
As a great tools in terms of revenue management, the customer relationship management
system enables hotels to manage customer relationships across the entire customer lifecycle,
spanning marketing, sales, digital commerce, customer service interactions, contact
information, identify sales opportunities, record service issues, and manage marketing
campaigns, all in one central location.
The very essence of revenue management for the hospitality industry relates to the concept of
occupancy as it will generally reflect the profitability. Being able to delight, retain and
engage customers means to ensure the profitability of the hotel and this is where CRM comes
in. A proper Hospitality CRM will help retarget existing customers as hotels are having
multiple sources of leads and it is crucial to miss any one of them. This software will give
opportunities to the hotels to proceed to a deep follow-up and providing the hotel several with
insights of customers data. This will lead to service personalization which will help in
engaging the guest and minimizing errors or faults.
Point Of Sale System (POS):
POS system refers to a software and hardware that restaurant operators utilize to run a great
part of their business as from taking orders to managing the floor plan, reservations, reporting
on sales, doing inventory counts, scheduling staff and pricing menus. Often, a restaurant’s
point of sale system is a complete restaurant management system. Most of the top restaurant
POS systems on the market are cloud-based, meaning that the data it stores (sales data, menu
prices, inventory levels, reservations) are all stored on a secure internet server.
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Normally this software is linked to restaurants, but since a good majority of hotels have one
or even several restaurants within their establishment, the POS allows the F&B department to
have all the necessary insights in order to be able to collect the data to improve the service
and to be able to carefully monitor the income that the restaurants bring to the hotel. From
there, strategies can be put in place by the department concerned in order to always seek
profit maximization. One of the best known and the most service for its efficiency and
reliability is the Micros Fidelio POS system.
Human resource needed to do revenue management:
Revenue Manager:
Revenue management is quite closed to the finance department as they both plan strategies
for the hotel to experience profit optimization. To do so, the hotel should rely on a specialist
in order follow the hotel results in term of revenue and plan strategies in order to maximize
profit for the establishment. And the perfect job for doing this will be a Revenue Manager.
According to Xotels, the main tasks that a revenue manager will do is:
 To oversee revenue management and distribution strategy of the hotel and manage day to
day yield operations.
 Daily pick-up analysis, strategy adjustments and reporting to the General Manager and
sometimes to the head of departments during board meetings.
 Create and maintain a 13-month rolling demand calendar.
 Create and develop pricing strategies in conjunction with the individuality of each hotel.
 Provide weekly dynamic forecast of expected results, variances and budget comparisons.
 Manage and oversee strategy for all 3rd party distribution
 Responsible for assessing, analyzing and pricing group business strategies
 Analyze overall monthly hotel performance and provide summary report with
recommendations to improve long term strategies.
 Ensure all related systems are configured correctly, validated and working to full capacity
 Oversee and audit the standards and operations of the reservations department.
 Ensure web site booking process is maintained up-to-date and functional.
 Ensure hotel personnel is fully competent in the use of all systems
 Work in liaison with hotel sales and reservations departments as a team.
 Regularly check the input and the quality of data (segmentation, denials tracking) points.
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 Conduct quarterly property performance review and develop strategic and tactical action
 Responsible for best practice standards to include competitor analysis; environmental
scanning; market modeling; distribution yield management; business mix yield
management; length of stay yield management; inventory availability by channel; pricing
control and new pricing concepts
 Evaluate performance of distribution partners and contracted rates (OTA, FIT, tour
operator, corporate, consortia, crew, groups)
 Reduce the cost of distribution by finding new less expensive means of delivering
business
 Prepare outline for and support the annual revenue budget process.
 Inspire Hotel’s HODs to further embed a revenue management culture.
 Advice and coach the client in other operational areas.
 Visit the hotels to get first-hand knowledge of all revenue management issues and other
key areas.
However, it is more common to see a revenue manager taking care of (being employed by) a
hotel group than for individual hotels because it is rare that one of the individual hotels will
be willing to pay a revenue manager on a full-time basis, they may employ a revenue
manager as consultant or turn to management contractors. It is true that the revenue manager
will be mainly in charge of this "department", however he will also assist the head of
departments, and he will brief them so that each head of department manages their respective
department so that it is as profitable as possible for hotel revenue.
For example, Room division, the Front Office manager, the Reservation manager or even the
Food and Beverage manager will apply the principles of revenue management such as
RevPar, RevPor, GoPAR, GoPor (Revenue per seat for the F&B manager) and moreover they
will use daily RMS and POS tools to run out their department. From there they will be able to
report to the revenue manager on reports from a practical point of view and participate in the
development of strategies concerning their respective departments. The key word for these
operations will obviously be interdepartmental communication and coordination as the hotel
is like a human body and the departments metaphorically represent the organs. Each organ is
indispensable in order to the body to function efficiently.
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M2: Critically evaluate how RM supports the achievement of hospitality business
goals within a hospitality organization.
Like all businesses, each hotel has a business objectives or goals which is based on SMART
objectives which stands for specific, measurable, achievable, relevant and time-based to the
business to grow. Let’s assume that the hotel where we will implement a revenue
management structure has this listed business objectives:
1. Increase the market share
2. Reduce employee turnover and increase satisfaction
3. Maintain or increase profits
4. Strengthen customer service
5. Install tools and systems to increase productivity
6. Grow the organization
7. Establish the brand message and voice
8. Improve company value
9. Enhance the quality of a business's product or service
10. Become a thought-leader in the industry
Based on those objectives, the revenue management structure will help the hotel to reach
them through different aspects. As previously discussed in part M1 of the report, revenue
management has a multitude of positive impacts on the hotel. In this part we will focus more
particularly on how the structure of the revenue management department responds to the
target of the hotel business plan (all mentioned in the previous paragraph). To do this, it will
be approached in two parts, the first will be how the business objectives are achieved via the
RMS and secondly how the human resource of this department helps to achieve this objective
as well.
How RMS helps in achieving business objectives:
Having given a brief overview of what different types of RMS do, we will go into more detail
about their function and how it fits to the hotels politic. In the P3 part, we listed different
types of Revenue Management Systems that may be used by hotels and other hospitality and
tourism agencies in order to boost their revenue. In this part, we will be focused only on those
who directly contribute to revenue management in accordance to fit the hotel's business
objective as well.
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Goal’s achievements through CRS:
There are several "brands" of CRS, however, most central reservation systems offer the same
options whose primary purpose is to focus on reservations.
Synchronization:
Sometimes during peak season, being able to effectively monitor reservations from different
types of distribution channels can be a challenge and very time consuming as the person who
is allocated with this task should monitor multiple properties and work with various
distribution channels.
Central reservation system gives possibility to this person an effective software to instantly
synchronize all the bookings in one system and by the way not allowing double-booking or
overbooking rooms.
This option is necessary from several points of view. First, it projects an accurate estimate of
room inventory so the hotel knows exactly which room is free, already booked and so on and
then based on the numbers the revenue manager, marketing manager and reservation manager
can work out future strategies in order to be able to sell the rest of the rooms at the best
possible price, because with the help of an accurate forecast, they will be able to apply the
demand and supply principle and then depending on that increase or decrease rooms price in
a way to make the hotel reaches the maximum occupancy rate.
As mentioned before, the CRS drastically decreases the chance of a double order. In this case
we are more on the defensive aspect that the CRS provides to the hotel. Being able to
completely eradicate double rooms booking and overbookings, this prevents the hotel from
having bad feedback on the platforms from customers who are unhappy with the error made
by the hotel, and which penalizes them. According to statistics shows that 13% of unsatisfied
customers tell 15 or more people that they're unhappy with a particular product or service
which will affect the hotel's brand image, then it's goals to gain in market share as statistics
provided by ReviewTrackers data on prove that 94% of consumers say a bad review has
convinced them to avoid a business. As a result, the CRS acts as a shield for the hotel by
avoiding all these issues that may be linked to poor synchronization.
Increase in direct booking:
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Nowadays, it is more common to obtain bookings through channels of distribution such as
Online travel agencies and besides the statistics show us this clearly with 90% of people do
all their holiday research online and 80% of them continue their booking online. However, it
is true that OTAs increase the occupancy rate of many hotels but the disadvantage with this
practice is that most of them take a minimum average of 30% commission on every sale they
make. 30% is an important number in terms of revenue and one of the strategies that hotels
need to put in place in order to be able to keep the 30% in their pocket and increase their
profit is to increase their direct bookings.
This is achievable but will not be possible without being provided with a modern, mobile-
optimized booking engine integrated with the hotel’s website and the CRS allows to have this
option. In addition, this with a to a hotel has a great advantage over its competitors as many
small hotels do not process online booking capability and therefore cannot exploit their
website’s full potential. Those options are already pre-integrated with a booking engine
having all content management capabilities already pre-se. The only thing that the reservation
manager or front office manager will have to do is customize the look to fit to the brand’s
personality.
Nowadays, with 90% of travelers booking with the expectation of receiving a personalized
experience, being able to display the ARI (Average rate index) information and processing
reservations, a booking engine must additionally deliver personalization possibilities like
sending special requests, scheduling an airport transfer, pre-stocking room with preferred
amenities, or a “choose your own room”.
With this kind of option that the hotel will give to the potential customer via the booking
engine module of the CRS, the hotel would be able to stand out from some of these
competitors and achieve several of these business objectives such as increasing the market
share, maxim profit as this mode will convert more potential customers or visitors to
customers, will strengthen the customer service, improve the company value by ca
personalization de service et ca during the first step of the consumer decision making process
journey and of the customer journey mapping and will also show that the company (hotel) is
one of those who are quite developed in terms of technology.
Goal’s achievements through PMS: (which is the best one who fits the hotel)
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PMS is tool which performs many functions, and which brings many benefits to the hotel and
particularly in term of revenue management and insure the good performance of present and
future operations too. These include:
Better guest experience:
When the service of the operational departments of a hotel runs seamlessly, it does not
benefit the customers who benefit from the service in error and can fully enjoy their stays at
the hotel and it also benefits the staffs who can rely on the PMS for doing task mentioned in
the P3 part and has more time to focus on giving excellent guest service in term of what can
be humanly bring to a service a personal attention, being more focuses on guest requirement
or being able to tackle guest issues with a clearer mind.
According to a survey by Hospitality technology, 72% of guests assumed that they are likely
to return to a hotel that has all the required technology. The top three technologies that
influence their decision being- Wi-Fi access (84%), easy and efficient online booking process
(61%) and being able to clearly view photos and videos of the property (59%).
In addition, performing high quality hotel service enables the hotel to firstly enhance
customer satisfaction, increase loyalty, it leads to positive guest feedbacks, referrals and drive
repeat business. A property management system gives the possibility to a hotel to record
guest preferences and key features of their previous visits that will enables the hotel to make
the repeat guests feel special and more at home with extra personal service based on their
preferences.
Increase housekeeping efficiency:
Having a housekeeping and maintenance functionalities incorporated via hotel PMS results
that a hotel's property can operate smoothly. Those modules on the PMS flags housekeeping
staff when a room is vacated, or even when there are early arriving or departure in a way that
they will be able proceed and performed the necessary hygiene standards and keep hotel’s
guests safe especially during this period of covid 19 where hygiene is the key word for
everyone's daily priority. Being able to update housekeeping and maintenance staff in real-
time also means that those inventories will not be assigned and will run the risk of providing
bad service. This will result of more flexibility of the room management by having faster
availability of rooms and excellent guest experience.
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Improve revenue through distribution manager:
A hotel PMS associated with a channel manager enables the hotel to market its services but
also improves the maintaining of inventory throughout several distribution channels.
Updating room inventory, pricing, and source-specific packages will come to be more
effective. Additionally, revenue strategies like dynamic pricing will give the opportunity to
sell hotel’s room for the right price, at the right time.
Customer data management:
Having a rich data base can only be prolific to any business and additionally is one of the key
factors of revenue management. Creating a protected and reliable database of customers such
as information like their contact details, details about their previous stay, their preferences,
and the room they took, the package a got, their preference in term of restaurant and
beverages contributes to an enhanced experience for your guests. Every single small detail
matters and having the right use of those details will make guests want to return to the hotel.
However, this can also be applied during the pre-purchase stage of the consumer decision
making journey or the customers journey mapping. In this context, each phase of the two
journeys will have to be taken into consideration. With analytical tools such as Google
Analytics combined with PMS, giving visitors, potential customers and customers (guests)
can be studied and dissected in the best possible way by the professionals concerned to
capitalize on the strengths of those journeys and improving the weakness of those journey
that can be spot through Google Analytics. In both cases, strategies will be put in place to
maximize the conversion rate of all hotel's website visitors and potential consumers.
D1: Critically evaluate the impact of RM and provide justified recommendation
for the use and application of RM in the hospitality industry to achieve business
goals and objectives.
It is important for Constance Belle-Mare Plage, Hotel to manage revenue effectively and to
overcome all the various challenges in the hotel industry where the various impacts should be
identified, and strategies should be developed to achieve the goals and objectives of the
business.
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The various revenue management strategies that the hotel can use:
During peak seasons there are various ways that the hotel can use to maximise revenue of the
hotel and attract customers to make purchase which will be examine in the following
paragraphs.
1. Taking into consideration increase rates instead of giving discounts.
It is important for the hotel to take into consideration the various aspects where the customers
are willing to pay whatever the price set during the peak seasons. The customers will be
willing to pay the price set for the various packages by the time that the hotel is providing
quality of products and services to the customers. The moment that the customers enjoy
themselves and feel that they are receiving value for money, this is crucial as their will be
increase satisfaction and loyalty which will maximise the revenue of the hotel.
As there are various factors that the hotel should take into consideration based on its forecast
like fixed capacity, perishable products, advance purchase, fixed and variable costs and many
more. The fact that the hotel can accommodate a specific number of people with 137 junior
suites, 92 prestige rooms, 6 deluxe suites, 20 villas with private pool and 1 prestige villa.
Hence, the hotel should consider the various factors as it is not always the same and the
number of guests will fall during off-peak and unexpected events, consider all this to
maximise revenue as much as it can to survive during the difficult situations.
Even if the hotel develops packages, it should be done in such a way that it will be persuasive
and influence the customers to encourage purchase. That is, the hotel should consider the
different needs and expectations from the customers, thus set and develop packages at such a
price that the customers will prefer to come to Constance Belle-Mare Plage, Hotel instead of
going towards the competitors. As if too low price is set during the high demandable period
the customers will give no value to the hotel and prefer to go the competitors to benefit from
better prestige and other influential factors.
2. Guarantee and cancellation policies to avoid at the last moment no shows or
cancellations.
Nowadays, this have become a priority for the hotel industry to better manage its revenue as
it appears that very often customer confirm their booking but at the end do not show off. If
this happen during the peak seasons, this make the hotel incur a major loss as there are
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various expenses that the hotel has incur like the housekeeping costs, maintenance, other
related facilities, f&b and many more.
Thus, having a guarantee and cancellation policy is important to avoid any sort of such issues
where the customers do not show off and where the hotel remain confuse. That is, when the
customers confirm their booking, they should make 50% of the total price while agreeing if
they cancel 3 days prior only 10% will be refundable to them. This will ensure that the hotel
does not incur major losses which may prove fatal if part of the customers does the same.
Additionally, this policy will prevent the hotel from all cancellation and ensure that all the
customers come apart if there is a serious problem where the customers negotiate with the
hotel to move the date. Thus, customers also will feel secure in some ways as the hotel give
them a sense of security where their reservation confirmation is of great important and that
they are valued by the hotel. This gives a sense of security to the customers which will attract
the customers to come for next times as they know that once confirmed there will be no
problem from part of the hotel.
3. Reduce group room allocations as they benefit from low rates.
During of peak seasons, there are various types of customers that come to the hotel starting
form leisure, business, couple, family, or groups, for groups of people they tend to benefit
from lowest rates. This is so, as the customers are buying in large quantities where they
expect to benefit from lower rates but if the hotel compared to that of couples the rates set is
more beneficial to maximise the revenue of the hotel.
Constance Belle-Mare Plage should concentrate itself on target customers who are not in
groups as this will impact on the overall revenue during the peak seasons where it is more
beneficial to the hotel to maximise profitability. As to generate revenue that can be used
during though time it is important for the hotel to work towards as such when it has an
occasion.
However, this might have negative impacts on group customers where they may inferior or
apart from the hotel and this will impact on the overall reputation of the hotel. Hence, what
the hotel can do is to design packages for groups in such a way that they feel that they are
receiving optimise price from part of the hotel. Thus, they will not go towards competitors
and will make purchase from Constance Belle-Mare Plage where they feel that they are
getting affordable price.
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4. Apply minimum length of stay restrictions carefully.
This consists of a length of stay policy by the hotel where the customers are allowed to stay a
minimum of 2 days to get confirmation for the booking during the peak seasons. This will
help the hotel to ensure that the customers make purchase during these days where the
customer enjoy the products and services of the hotel during a minimum period of times.
Instead of staying for only one night, the customers are more willing to stay and may even
want to extend their stay if they are satisfied.
However, if there is no such policy the customers may take decision to stay one night where
they don’t really get the opportunity to enjoy the hotel products and services. And in the other
hand, there were guests who were more willing to stay for longer period of times and the
hotel refused them to confirm those customers who will only stay for one night. Thus, this
will impact negatively on the revenue of the hotel as the hotel will lose customers and cannot
predict that after the one night they will get required customers.
Hence, this policy will be beneficial for the hotel as the hotel can be sure that during the two
days the customers will be spend on the various part of the hotel and will generate revenue.
The customers may even want to extend their stay to enjoy themselves further in the hotel as
during the two days the hotel has successfully provide them with outstanding services.
During low demand periods:
1. Sell value and benefits like spa treatments
It is important for the hotel to carefully manage the revenue of the hotel during off-peak
seasons to boost up sells for the hotel in order to generate revenue and recover the various
costs of the hotel. This will help during low demand where the hotel has to boost up sales and
revenue of the hotel during the crisis people.
As if the hotel does not boost its sales during this period, it will be difficult to cover its fixed
and variable costs, and this proves to be fatal in the long-run as they hotel will not survive in
the long-run. As there will be falling customers, increased costs, and low revenue in the hotel.
Even if the hotel will not benefit from high profits, at least it will be able to cover up its fixed
costs and ensure survival in though times.
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Adopting strategies to sell value products and services to the customers is crucial where the
customers will be able to benefit from various facilities which will influence and encourage
customers to make purchases. Also, this will lead to improved image and good reputation as
the hotel will be satisfied with the various offers provided in the hotel. That even if, they are
unable to carry out certain activities outdoor due to bad weather but at least they are able to
enjoy the various facilities which will ensure customer loyalty and attract potential customers
to come to the hotel.
2. Offer packages and special offers
This will help Constance Belle-Mare Plage, Hotel to differentiate itself from its competitors
where packages have been designed according to the customer’s needs and expectations to
encourage buying and purchases. As the situation is totally different from that of peak
seasons. This will help the hotel to better achieve its aims and objectives.
L03: Examine the information requirements of the RM process
and the role of market segmentation in effective business analysis
and forecast creation.
P4: Examine the information requirements of the RM process for core
hospitality industry.
The aspect of the hospitality industry in Mauritius compared to many other in the lodging
comes in various sorts of shapes and sizes where some tend to have extensive resources while
others don’t dispose from these resources. Hence, managing revenue in the hotel will allow
the hotel to optimise its revenue performance of an assets when though there are various
market conditions. There are four criteria for the revenue principles to apply which include
the fixed resources available for sales, perishability, customer segmentation which consists of
the willingness of the different customers to pay and predictability. With the various aspects,
it will allow the hotel to better understand of how the revenue management principle can
apply in a various part of the hotel which include restaurants, bars, accommodations, golf and
more.
There are various ways that the hotel can analyse its market to better understand and cope
with the different situation of the market to better satisfy in a highly competitive market.
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 SWOT analysis
1. Strength
The hotel will have various strength which will help to differentiate itself from the customers
which will attract and influence customers to come to the business. Thus, the hotel should
maintain and continually improve the hotel strength to retain and attract potential customers
to come to the hotel. Firstly, is that the hotel have high profits margins as there high
customer’s loyalty like when the customers come for their first stay they usually pay for their
next vacation, the day they check-out. This is so, as the hotel have already created their brand
in the mind of customers which will remain loyal as the hotel value their needs, wants and
special requests to ensure high satisfaction to the guests. Hence, this creates a sense of
security as the hotel have been able to achieve the expected profits and increase revenue for
the given period of times.
Also, the staffs are high skills, professional, and knowledgeable as it is important to known
that Constance Branch has a school academy where the staffs are trained in order to provide
high quality of service and products to the customers. On the other hand, not all the
competitors who have knowledgeable staffs which will impact on customers satisfaction as if
the staff does not have the required skills and knowledge this will give a negative impression
on the image of the hotel which will impact negatively on the revenue.
Moreover, there is an employee policy where all the staffs should respect each and everyone
to prevent any sort of harassment or humiliation of staffs which will impact on their moral in
the long-term. If the hotel did have this policy, there would have any sort of issues as it is
very common within the hospitality industry. Thus, this will strengthen the value chain of the
hotel starting from the top of the hierarchy and below the organisational chart. The staffs are
always smiling, in good mood, very responsible and feel valued in the hotel. And when the
employees are happy, this will automatically make the customers happy as they are the one
who provide service and great the first impression on the customers.
Also, the brand of Constance have high impacts on the customers from different background
as it has a very common branch known as Constance Prince Maurice. This is very help to
influence customers as they know that the quality of products and services will always meet
their expectations in order to maintain and continuously improve their image.
2. Weaknesses
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The hotel are sometimes independent on the international customers as according to them
they are the one who help to generate more revenue as they make use of $, £ or more which
when converted tend to be higher compared to local rupees. Thus, this has greatly impacted
on the revenue of the hotel during the covid-pandemic when the hotel has to target only local
customers due to closure of port and more. Thus, the hotel should consider this factor and
develop strategies to work with the local population to better increase the Gross Domestic
Product of the country.
High price strategy, the fact that the hotel has a very good reputation and is very well-known
internationally this will impact on its price as the price set should represent its value. Thus,
for some customers this may discourage and demotivate them from going there and in the
long run affect the revenue. But the hotel cannot decrease its value as it is a 5-star Hotel
where the price set should be according to its image to satisfy the customers.
Also, the single brand strategy may make the hotel feel that they are already successfully and
neglect other marketing strategies which will affect the hotel. Hence, the hotel should work
according and continually represent its image.
3. Opportunities
The hotel benefit from both local and international customers which is very important for
future opportunities, as with high number of customers they will have the opportunities for
expansion across the island. Thus, with the collaboration of all the customers and the hotel
strategies like the packages, special offers and more this will continue to attract customers
from different segment to meet their aims and objectives.
Partnership with the local providers and suppliers is very important for the hotel but also for
the country economy where all shareholders works towards attaining the same aim. This will
help the hotel in terms of better costs and good relationships with different providers and
ensure the resources are available when it is needed to ensure satisfactions.
Emerging segments, the customers segmentation keeps on changing and evolving other the
times to better survive and be successful ensure satisfactions of the customers. This there are
various types of travellers that exists like workcation, bleisure travel etc.
4. Threat
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There are a lot political issues which greatly impact on the hotel industry where clashes
among the politicians are spread on social media where people all across the world can get
access to it. Like in 2021, there have been a disorder where the pacific walk was shown on
BBC News which have tarnish the reputation of the country. This uncontrollable situations
should be managed through negotiations and agreement among the people to ensure the
success of the country.
Furthermore, the covid-pandemic have been so unexpected that even other unforeseen
pandemic can appear where the hotel will suffer. As during the pandemics, there were various
costs that the hotels had still to incur like the salary of the employee, fixed costs,
maintenance, sanitary equipment and many more. Hence, the hotel should develop strategies
to overcome all the possible threat that might affect the hotel and affects its image.
Lastly, high turnover is not within the control of the hotel especially during the pandemics
and in the new normal where people prefer to move to other jobs. Thus, this affect the hotel
in terms of quality service as the hotel as the staffs have been trained and the hotel made a lot
of investment to make the profession. And the fact, that turnover is not within their control is
a threat.
Thus, the hotel should the required information to better understand the market and satisfy
the customer successfully with no lack and ensure loyalty will be examine in the following
paragraphs.
1. Customer Segmentation
It is one of the most important aspects for Constance Belle-Plage Hotel which help in the
marketing and pricing process as it allows to define the different types of customers coming
to the hotel and meet their expectation differently. As their different types of customers like
for the business customers, will be search of high internet connection, conference rooms, easy
transfer compared to leisure travellers who be search of relaxation, activities, spa treatment
and many more. Hence, the hotel should be aware in order to target the different of customers
and maximise its revenues, hence being well-aware of the different types of customers will
allow the hotel to develop packages and set pricing strategies to attract customers.
The various categories to consider:
 Demographic factors which consist of age, gender, marital status etc.
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 Purpose of coming to the hotel- leisure, entertainment, business, wedding, sporting or
more.
 Duration of stay
 Status of the traveller whether they are regular, new, or returning customers.
 Booking channel, whether it direct booking, online travel agencies, walk-in guests and
so on.
This information will be beneficial to the hotel as they different types of customers with
different needs and preference offer the hotel opportunities to gain extra profits. Constance
Belle-Mare Plage can offer discounts to loyal customers, design packages for the different
types of customers like for couples, family and elder people to create loyalty and attract
potentials one and negotiate with agencies to benefits from better commission rate.
2. Demand Forecasting
Customer demand is never static as it depends on different factors which will influence
demand in the hospitality industry. The different factors includes seasonality, unforeseen
events like viruses, macroeconomic conditions, and fast changing customers needs.
Forecasting consists of the analysis of information about past demands, current demands and
future events across the various consumer segment. Based on the various information, the
hotel can predict demand of whether it will increase or decrease thus adopt the right pricing
strategies, marketing, and distribution strategy to maximise revenue.
As market condition is moving in a fast-changing environment where new supply should be
considered by Constance Belle-Mare Plage, Hotel where customer segmentation may shift
the economic climate and the external factors need a need balance of expectation and thus
become key to forecast demand. KPIs within the different segment different from number
aspects related to sales, marketing, prices, distribution strategies, products, and services
positioning. Like business customers may stay for longer period of times after their purpose
to explore Mauritius and other related trips a combination of both business and leisure
activities with their colleagues. In terms of consumer behaviour forecasting channel
performances consists of the rate plan with additional revenue to enhance profits. Further
information will help the hotel to discover other important trends in customer behaviour like
high cancelations rates or no show-off, thus it is important to focus all this. That’s why a 50%
should be paid three days prior to confirmation to avoid any sort of such problems.
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It is an important part in revenue management where the data will help in setting of prices for
the hotel products and services, distribution channels, promotional strategies to engage the
different customers and increase level of occupancies.
3. Yield Management
It is crucial as it helps the hotel to define customer behaviour and set the best process to sells
room with maximum profits. Revenue management concepts tend to be narrow as it focuses
on the whole revenue of the hotel. While yield management will focus on prices and volume
of sales and is close related to both inventory management and demand forecasting.
The various to manage inventory and maximise revenue include:
 Maximum Length of Stay MaxLOS, where the reservations is restricted to
maximum duration and useful to limit the availability of discounted and promotional
rates.
 Minimum Length of Stay MinLOS, which will restrict the reservation to a
minimum duration and is mostly used during peak seasons to encourage longer stay.
 Closed to arrival, no reservation allowed when there is arrival on a particular day.
 Allotment, usually given to wholesales, travel agents, or event organisers with pre-
negotiated number of rooms at discounted prices.
 Last room availability, contract between a company and hotel that fixes the room
rate to support last-minute reservations to business trips for pre-negotiated price.
4. Tracking
This consists of the Historical Key Performance (KPIs) like availability of units, units sold,
occupancy, average retee and revenue per available room with help the stakeholders to better
understand trends and spot opportunities. These data is crucial and very useful for the
planning purpose in the hotel. That, tracking on a day-to day basis will reveal the day-pf
week patterns that will vary from seasons to seasons.
Benchmarking this performance against competitors is a good idea and there is more advance
analysis and tracking the above KPIs based on the broad customer segmentation with better
insights. The information may be divided into three broad customer segments into sub-culture
segment such as corporate, discount, package and more. This will help the hotel to identify
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spots trends and opportunities more rapidly where it can be done on a monthly basics across
the various department of the hotel. With technological advancement conducting tracking on
guest behaviour, loyalty and demographics may also be possible which will allow the hotel to
setting the right rate, availability, policies in order to attract and retain customers that are
more likely to spend on ancillary services and willing to return more often.
Having the ability to compare what are the booking pace for a given period of times in the
future and help in taking better decisions. With the evolvement of technologies, it will be
beneficial in the overall revenue process.
5. Availability Management.
The pricing will help the hotel to shape demand that will best fits with the needs of customers
and available property to capitalise on revenue potentials. Like a large group booked for a
given night which assumes that the revenue remains unchecked, shoulder nights on side of
the peak group will become more difficult to sell. It is most common to raise rate during the
peak demand night to maximise the amount of revenue that can be generated which may be
the wrong strategy.
Taking into consideration the remaining demand that may exist for the peak night even
though of the capacity constrains introduced by the group piece if business and optimising
revenue performance. Take the example, of it may be appropriate to place an availability
restriction on discounted rate categories so that longer lengths of stay are accepted and one-
night stays on the peak night are not. Alternatively, shrinking the level of a given discount off
the best unrestricted rate (BAR) from 15% to 5% on the peak night, while overselling a base
unit type to help get to a sell-out on that night, may be the right strategy. It all depends on the
situation.
6. Conceptual framework
As explained above there are various variables and service attributes that can influence the price level,
conceptual model was develop that isolates three main types of variables which include:
 Tangible variables: in the form of physical objective characteristic of the service sold.
 Reputational variables: in the form of ratings/ reviews provided by third parties.
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 Contextual variables: characteristics of the location and the competitive environment faced
by the tourist operator.
The variables consist of the strategic and tactic dimensions, where prices are set because of the
combined interplay of these factors whose will differ depending on what is more decisive for the
consumer. This framework pays particular dimension to the tactical dimension as it is the one that is
more volatile overtime and where the hotel will have the ability to react rapidly to the competitors
moves. To overcome this challenge making use of dynamic pricing techniques will help to adjust
prices in real-time situation based on the market condition.
Tangible attributes
It tends to be strategic in nature and can be used in a tactical dimension where the tourism service
presents heterogeneous characteristics. The hotel industry may differ from various classes upgrading
depending on the availability of rooms and seats in restaurants. Constance Belle-Mare Plage have
different types of rooms can tactically allocate them depending on the booking time and the target
clients. The specific contribution of the tangible attributes based on the number of rooms, the room
size, spa and more which will impact on the price of the hotel. It will also depend on the various
facilities available in the surrounding environment (Abrate et al.,2011) and the and the presence of a
pool for more leisure-oriented locations (Espinet et al 2003) and star rating of the hotel. It will
help the hotel int terms of physical characteristic of the product offered and have the strongest roles to
determine prices with a strategic and tactical dimension.
Reputation variables
This consists of the tools given to the customers to evaluate Constance Belle-Mare Plage based on the
numerical ratings and proves to be very useful for the customers when making their reservations. This
will influence the decisions compared to more detailed information, as it provides a shortcut to assess
and evaluate the hotel in terms of products and services. The reputation on online platforms will affect
the choice of the customers either positive as it tends to be more persuasive and complete and
negative image due to negative feedback or bad buzz. This information will help the hotel to provide
excellent products and services to the customers as online reviews prove to be a tactical tool for
improving reputation as it keeps on updating constantly.
Contextual Variable
A contextual variable closely linked with competition and will be suitable for tactical price strategies
is the booking time Su (2007). According to Bachis and Piga (2011) shows the importance of
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adjusting prices depending on booking in order to understand the willingness of customer to pay and
their status. The customers that give high value to the products and services of the hotel are those who
buys at the last moment and those who gives low value is patient and willing to pay in advance thus
the best strategy is to increase prices through check-in.
P5 Evaluate the process of market segmentation, the creation of profit through
customer definition and forecast creation using a range of hospitality examples.
Understanding the dynamics of the hotel market is an integral part of revenue management. This
process involves identifying different segments of the audience and grouping them into segments to
improve efficiency and profitability. Each hotel business has its own unique characteristics, and by
grouping them into segments, a business can more effectively manage its sales and pricing strategies.
Recognizing the market segments makes it possible to determine which channels to use to market
Constance Belle Mare Plage hotel in the most efficient and cost-effective manner, allowing
it to combine sales and marketing strategies in accordance with both the trends and actions of each
segment.
Segments are chosen by booking behaviours and expense responsiveness; even so, merely segmenting
the audience by 'business' or 'leisure' traveler is no longer sufficient. A few of the best ways to
determine and search the segments is based on their purpose for travel, such as a family vacation, a
marriage, a special event, adventure, relaxation, or convention participation.
Market segmentation could also help Constance Belle Mare Plage Hotel stay ahead of the
competition by providing them with detailed information about its target market. Some methods of
identifying the hotel customer base are:
 Duration of stay
 Days of weeks’ stays
 Total revenue per room
 Total revenue generated per client
 Booking time frame
 Cancellation-to-No-Show Ratio
 Food and Beverages requirement
 Amenities needed
This can assist in creating different roles for the hotel segments – what are their travel wishes, what
kind of small details do they consider when choosing hotels, what is their expenditure, what is their
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duration of stay, or how do they book their travel. Once the business has a clear understanding of
these segments, the hotel can determine which would be most advantageous for generating revenue
and, as a result, place more emphasis on the hotel marketing, forecasting, and pricing strategies to
target customers.
As the tourism and hospitality industry has evolved and booking channels are becoming more
complicated, hotels have started to use a mixed segmentation approach that incorporates both the
purpose for stay as well as the process of booking.
Each one of the hotel defined market segments will originate from a range of business references, also
identified as channels. Online travel agencies (OTAs) are now becoming more and more important
factors of business, but communication channels such as phone, email or the hotel website are still
good alternatives. Recognizing where the profit comes from will allow companies to better manage
operating costs for every market segment. Uncertainty is the biggest threat of running a large
accommodation business. The clearer the hotel software solutions are, the simpler it becomes to
handle and safeguard its customer data.
Why should Constance Belle Mare Plage do Market segmentation?
Seeing as market segmentation entails analyzing the target market, this strategy enables the hotel to
divide market segments depending on booking habits and pricing attentiveness. Market segmentation
in the hospitality industry assists hoteliers in better understanding their customers or the overall target
audience in order to improve services and boost total revenue through better pricing strategies.
This can help to determine why something occurred. If there has been a fall in bookings, segmentation
can assist in determining the reason. If there is a true decline, hoteliers can obtain all of the data they
require to produce creative product offerings to enhance both bookings and revenue, as well as
develop dynamic pricing based on the needs of their guests.
It also enables the hotel operators to fully understand the significance of various market segments,
like:
 Transient – transients are guests that are traveling alone and are therefore not part of any
business or group. They make individual reservations on their own.
 Corporate – These are all the guests who stay at the hotel because of business discounts and
incentives. They receive better vacation packages because corporate customers receive
discounted company rates.
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 Groups - Hotels typically allow groups of customer to use their facilities at contracted rates
that seem to be versatile and adapted to the needs.
 Wholesale – a segment of the market that interacts with booking agents and tour operators
who purchase large quantities of tickets at reduced prices.
Why is market segmentation important?
A few of the primary strategies used by revenue managers to achieve maximum revenue is variable
pricing. Hotels charge different rates to customers for the very same service or product. Price
discrimination enables hospitality businesses to offer rooms at the highest rates that consumers are
willing to pay while also attracting customers who would not have purchased somehow at lower rates.
For example, a guest paid Rs 10 000 for a single room three months in advance. The very same room
category was sold for Rs 15 000 on the day of arrival.
First step in creating a successful price discrimination strategy is segmentation. Hotels must determine
the size of the market. Guests with more cost consumption will pay more than guests that are
a budget. A leisure traveler, for instance, who books beforehand is much more price-elastic and
requires a special cheaper rate. A last-minute business traveler would be price-inelastic and therefore
will accept to pay higher rates.
Customization and personalization of products offered is another advantage of segmentation.
Constance Belle Mare Plage hotel must not compete solely on price. Price is how successful hotels
perform. Segmentation assists in identifying the wants and needs of different consumer groups and
creating special deals. For instance, a snack package for foreign travelers or an animal package for
dog owners that involves a dog bed, treats, and also in check-in. Preferably, each guest should be
given a unique price as well as a customized value add-on.
Customer segmentation is also used in marketing strategies. It is unlikely to effectively market
the hotel before even determining the segments. Hotel operators can use segmentation to establish
promotional campaigns, increase sales, and boost the economy from current markets. For example,
a summer special offer for international customer or a customized offer for people with children.
Booking waiting times vary depending on the market segment. It is critical to understand when
customers are booking in order to improve price and marketing strategies. Local guests, for example,
book one day beforehand or even on the day of arrival. The hotel should be aware of this last-minute
market and devise a pricing strategy in response.
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Forecasting sales forecast must be done using the hotel market segmentation, and even more
specifically by particular market. Forecasting is an important factor of revenue management strategy.
The forecast is used to make all pricing and stock control decisions. The forecast has past data, pick-
up, booking speed, and open reservations. Forecasting by segment of the market is critical because
each segment has its own booking frame and past and present booking structure.
The use of digital technologies for data mining and statistical analysis
In the recent years several industries have adopt data analytics as they recognize its importance. The
hospitality industry is not exempted to this trend. This is due to the hospitality industry's mass of
information. And sustaining a competitive edge has fall down to 'how hotels control and analyze all
the data.' With all the developments in the hospitality industry, data analysis can assist Constance
Belle Mare Plage hotel in gaining significant information that could reshape the way the hotel
continues to do business. Because the hospitality industry continues to serve huge amounts of guests
each day, data analytics are critical. They each have their very own set of options, demands, and
requirements for the journey. Here are some of the ways that Constance Belle Plage can benefit from
implementing data analytics in its daily operations.
 Helps in the improvement of services and the guest experience
Using data analytics, the hotel can obtain data such as customer feedback on services and their overall
hotel experience. This data is accessible through media such as social media, magazine and the hotel
website reviews, or even reviews left for the hotel. Nevertheless, for reviews, a conventional
questionnaire method can be used, which would be more detailed and offers insight into aspects that
affect guests' booking judgements. The hotel could learn about their property's advantages and
disadvantages using this data. Other hotel operators could also improve their operations as well as
provide better experiences to their guests. Different innovations in the hotel sector can be obtained by
using data analytics for hotels. Hotels can find better approaches to use big data to lure customers and
increase sales.
 Data analytics can help hotels enhance the effectiveness of marketing efforts.
By understanding precisely what to advertise to target audience, Constance Belle Mare Plage
hotel can improve and create its marketing more effective with appropriate data analysis. This
allow marketers to create more distinct segments, which may help identify important consumer
groups who regularly visit hotels or any other relating places. If a customer books the hotel for
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an entire family, data analytics can be used to sell the family activities currently offered at the hotel. If
a person normally arrives for business, they will showcase business-related activities, that will
successfully persuade them to stay at the hotel. the hotel can also use promotional strategies to
outperform its competition by promoting to a particular audience.
 Helps in the implementation of various services
Helps in the implementation of various services communicate with current and prospective guests in a
range of methods, enabling them to gather huge amounts of data. Once data is adequately processed
and analyzed, it reveals a lot about not only the strategies that customers use, as well as the services
that they are using. Moreover, the hotel can determine what innovative products and services to offer.
If guests frequently demand sports equipment which the hotel does not have, this can help them
renovate their gym. Data analytics could also assist in decision-making when it comes to establishing
partnerships with other businesses such as taxi services, bars, restaurants, as well as tour operators.
Contribution to analysis and the creation of rooms and other forecasts including demand, operational
and financial forecasts
Forecasting Constance Belle Mare Plage hotel demand can indeed be difficult, regardless of whether
there is a revenue manager, an operations manager, or a hotel business manager. This can feel like
such a single point that is almost hard to reach. Forecasting, on the other hand, is a highly useful
process that assists the hotel in predicting the timescales year round that will result in higher or lower
than expected occupancy, demand, and income. Across appropriate occupancy rate decision making,
staff distribution, maintenance services, and hotel operations, a good forecasting can eventually
ensure the most of every 'peaks' and prevent the 'valleys.' Data analytics are helping to make this
much more efficient and productive, allowing hotels to better predict future promotional pricing
strategies to create successful improvements.
When it comes to forecasting in a hotel, there seem to be generally three types of forecasts:
operational, financial, and revenue management. Hotels frequently ignore the contrasts between any
of these forecasts, and it is essential to distinguish them since they serve different purposes.
 An operational forecast is frequently used to control the hotel's assets, such as how many
cleaning staff would be required to clean rooms, how many diners would be checked in, or
even how many customers will eat in the restaurant.
 Financial forecasts are frequently used to estimate end-of-year financial results in order to
provide executives and shareholders with a viewpoint on sales and profits.
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 A revenue management forecast, on the other hand, is meant to measure a hotel's anticipated
annual demand so as to maintain that demand to meet the hotel's overall income goals.
It is also known as an unrestrained sales forecasts. Unrestrained demand calculation is indeed an
essential forecasting necessity because its accuracy greatly influences the pricing, inventory, and
revenue management process. For precise revenue management forecasts, Constance Belle Mare
Plage hotel must have in-depth data that includes both current and future details. The records must
include amount of occupied rooms and also the daily revenue reached by market segment.
Potential data must include available room capacity and profits on the books by day for at least next
90 days. Once information is recorded on a daily basis, the hotel can create simple booking forecasts
by product category on a certain day and compare them to historical data. Once done effectively,
the hotel can easily determine when demand rises and falls and modify their marketing and sales
strategies consequently. Across most market segments, it is essential to comprehend how the
hotel competitive set's prices have increased as well as, more notably, how this has affected its own
forecasting and pricing. For such a well, competitive strategy, it is suitable to critically implement
competitor data into demand and pricing.
Forecast are essential in revenue management since it influences not just the price decisions and
strategies, but also any displacement reviews for possible future group business. Constance Belle
Mare Plage hotel can use displacement circumstances to determine whether a part of group company
will eventually wind up removing higher-paying transient travellers and harming their potential
income efficiency.
The more information Constance Belle Mare Plage hotel have about its customers, the best they will
be able to distinguish them. Better segmentation contributes to better pricing and personalized value
add-on deals that increase profits and customer gratification. The hotel should take the time to learn
about their customers, for example; what they like and loathe, how and when they book, or why they
stay at the hotel. Acquiring such data in various stages of the customer journey, recording it, analysing
it, and then use it for potential segmentation, selling prices, and advertising campaigns is a useful
method.
M3: Critically evaluate the necessity for market segmentation in
RM decision-making and its contribution to the creation of
reliable forecasts using a range of hospitality examples.
A hotel filled with customers is not always a cost effective business. The main aspect of a successful
business is revenue. Hotels must use a variety of revenue management methods and practices in
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order to increase their bottom line.Revenue management, according to Robert G. Cross, author of
Revenue Management: Hard-Core Tactics for Market Domination, is "the art and science of
predicting real-time customer demand at the micro market level and optimizing the price and
availability of product."Overall, many hotels initiate the revenue management process with market
segmentation in order to establish the multiple segments of every market for the hospitality
business.
Customer segmentation is an important component of any marketing plan: once Constance Belle
Mare Plage hotel knows its audience, they can develop a marketing mix that caters to the specific
needs of each guest inside that specific market. The marketing mix consists of steps and procedures
implemented by the company to promote its products to the segment. These steps are classically
divided into four categories, known as the four Ps: product, price, promotion, and place.
Segmentation implies forming similar groups of persons who share distinguishable characteristics.
These could be their location, age, lifestyle, and even how they interact with the business website:
these are known as segmentation criteria. Consumers in the same segment are expected to have
similar needs as well as to respond similarly to a proposal, type of topics, or specific message.
There are four main criteria that are taken into consideration when conducting a segmentation.
These are demographic, psychographic, geographic and behavioural.
Demographic Segmentation
Demographic segmentation is by far the most widely used set of criteria because it requires
information data that is quickly gathered and allows the hotel to quickly aim a range of customers.
Gender, age, nationality, education, job title, income, and family status are some of the criteria. For
example, Constance Belle Mare Plage Hotel may target customers based on their income, thus the
advertising done would not be targeted towards the individuals that cannot buy the products. The
hotel can offer a selection of offers that satisfy its current and potential customers.
Psychographic Segmentation
Psychographic segmentation is based on the personalities and preferences of the customers. The
Constance Belle Mare Plage hotel could take a glance at customers and categorize them based on
Personality traits, hobbies, life objectives, values, beliefs and lifestyles. In comparison to
demographic segmentation, it can be a more difficult set to distinguish. Once implemented right,
psychographic segmentation could enable for extremely efficient advertising that customers will
experience relates to them on a far deeper level. For example, by knowing that a large group of the
hotel’s target market is always attentive in getting the best prices there are. The hotel increases its
sales by promoting a campaign specially made for them.
Geographic Segmentation
Geographic segmentation, on the other hand, is perhaps one of the simplest to define, clustering
customers based on their physical place. It can be described in various ways, including country,
region, city, and postal code. For example, it is useful to categorize customers over a certain
perimeter of a specific location – a fantastic choice for live performance marketers looking to attain
out to local customers. Knowing where their customers are enables the hotel to make a variety of
decisions when promoting the products to them. Due to the covid-19 pandemic many hotels have
shifted their target audience to local consumers.
Behavioural Segmentation
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Behavioural segmentation is determined by how guests engage with the online platform. Some
report is based on one ‘s current internet activity (online), while some are based on their previous
offline habits (offline) when attempting to deal with the company.
 Online: time spent on social networking sites, pages visited, exit point, buying possibility,
consumer buying behaviour, customer loyalty, web search and tool used, traffic source, and
so on.
 Offline: the quantity of visits, the purchase history, the date and volume of the most current
transactions.
For example, to provide its targeted customers new products and services, the Constance Belle Mare
Plage hotel can use its customers previous experience with the hotel on their social medias to
segment its target market.
The benefits of market segmentation
Market segmentation facilitates the development of highly focused and efficient advertising
campaigns and strategies by marketing departments. Here are some benefits of market
segmentation:
 Identifying Hotel Market Possibilities
Exploring different market and business possibilities is among the most important advantages that
hoteliers can gain from adequate market segmentation. One can gather insights through each
market segment to learn about possible potential buyers' needs as well as how to attract them
before the competing brands. It is one of the best methods to boost the customers' current
satisfaction. Exploring various customer groups in which the hotel can strengthen their services
more, introduce a new line of customer care, and much more.
 Marketing allure
If Constance Belle Mare Plage hotel is about to start a new customer experience, hotel market
segmentation will help it make the necessary changes to the service and sales pertains. Rather than
launching a single marketing campaign to encourage all prospective customers, the hotel can
develop distinctive marketing strategies and release multiple campaigns to meet the various
requirements of the target demographics. Appropriate revenues and advertising Promotional
demands can all be custom made and personalized to better meet the needs of various target
groups.
 Selection of media
The choice of marketing channels has a significant impact on the outcome of the marketing
initiatives. More notably, it has an impact on how much money the hotel will invest on its
promotions. Constance Belle Mare Plage hotel can assign resources to different media based on
its target audience to expand their scope into growing sectors.
 Increased concentration
Finally, insightful customer segmentation will enable the company to put more emphasis on every
aspect of its operations in order to positively influence those it provides. The sales promotion
becomes more centred on its customers' demands, the research and development may be more
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focused on satisfying those needs, and the expenses will be more motivated to accomplish these
rather than being discarded on misdirected advertising and planning.
It all becomes more adapted to providing the customers of Constance Belle Mare Plage hotel with
what they require, and so as an outcome, the business becomes precisely the type of company they
would like to purchase from. It can significantly improve the return on the investment of most of
their marketing activities.
Forecasting hotel prices
Forecasting is very important not just for rate setting, as well as for financial planning. Forecasting
with accuracy and effectiveness necessitates a solid base in past data. Constance Belle Mare Plage
hotel have more than enough money and opportunity to create strategic planning changes if
the budget and forecast is ahead of time. If the hotel know one time of the year is especially
meaningful to the hotel, they must make a forecast for that time frame a year beforehand. For
example, on January 1st, 2021, consider writing the December 2022 forecast.
The following are essential elements of a successful forecast:
1. Occupancy
2. Occupancy
3. Rates for rooms
4. Turn away/Regrets/Denials – monitoring of booking that are turned down or not scheduled,
which is an important indicator of demand. The turn away should preferably be collected
and evaluated on both online and direct requests.
5. Spend in each room
6. Reservations
7. Market developments
Budgeting for hotels and forecasting demand
It is important to create a demand plan before developing the budgeting strategy so Constance Belle
Mare Plage hotel understand exactly what they are up against. The majority of hotels forecast every
day for the first 30 days and every week for the following 90 days. Many hotel operators do it in a
spreadsheet upon gathering useful data from their Performance measurement systems, but this is
possible when the hotel have an established system and new technologies in one place.
Consider some factors from the previous year as well as those from the next year. Record the
following as activities to keep a focus on:
1. Last year's RevPAR
2. Last year's groups or events
3. Last year's demand level indicator
4. Public and bank holidays
5. School vacations
6. Indications of rising demand
This will enable Constance Belle Mare Plage hotel to make sensible pricing decisions based on factual
data sources.
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Before the hotel can arrive at its ideal budget, it must consider factors such as sales resources, digital
marketing and distribution, renovation requirements, and developments made by the rival
companies established. The budget must be based on the following topic: at what price and also
how many rooms can the hotel offer on each upcoming day? For example, how does the
hotel forecast leisure and business travellers demand per country? How much can the hotel sell in
the following months? How will the most important business customers act?
Hotel benchmarking
Hotels frequently compare their performance to that of their competitors. That is not the only way
to monitor performance, nor can it be regarded as influential, but it does allow businesses to see
where they stand and also how guests may react.
Constance Belle Mare Plage hotel will be expected to benchmark against criteria such as:
 Product pricing (luxury, mid-range, or economy?)
 Service quality
 Channel of distribution for location
Keep in mind that a competitor is really only a rival if they are trying to target the very same
segments as the other hotel are, but even still, one may not be going head to head for the very same
segments simultaneously. Nevertheless, if a business could somehow predict their methods, one will
find it very easy to make its own changes.
A business can try the following to gain an edge over its competitors:
 Convert OTA bookers to direct bookers.
 Provide extra bonuses or services.
 Make unique packages.
 Work on their evaluations
There are various range of marketing segmentation that Constance Belle Mare Plage hotel can use to
identify its target audience in order to successfully advertise its products or services. Each choice
taken by the customers is evaluated based on whether the outcome is what they really want and
what they require. Market segmentation makes it possible to identify such needs and sell directly to
them, eliminating the need for duplicative communication.
D2: Provide justified recommendations to improve market
segmentation analysis in RM decision-making for a range of
hospitality examples.
Even if hospitality businesses revenue management does not evolve quickly, strategies to enhance it
keep evolving in full agreement with newer market and technology trends. Here are some revenue-
boosting practices used by hotels and can be use at Constance Belle Mare Plage.
Management of channels and overbooking
The reservation channels that customer use have a significant impact on revenue. Supply chain
management has an impact on revenue management by avoiding overbooking and controlling the
aspects of customer bookings. To prevent double bookings, channel management system such as
Site Minder, Axis Rooms, as well as Channel RUSH automatically uploads information on the
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availability of rooms throughout all segments. However, there are times when a hotel's profits can
gain from overbooking. To close revenues on all these touchpoints, a financial department should
evaluate everyday statistical data by channel to know where all the reservations show up from and
observe for the causes of double bookings. Whenever a cancellation is expected, a bunch of
overbookings may be insignificant. If there is not a cancellation, the hotel could also send the guest
to some other hotel, compensate them, or provide an upcoming discount, which is less expensive
than a room with no guest.
A great revenue management strategy is to offer possibly a bit more stock levels than might be fully
available. It is, for example, extensively used by US airline companies. Cancellations and no-shows,
that are unavoidable, result in spare rooms. Overbooking could enhance maximum capacity while
increasing revenue. In the event of no-shows or cancellations, a hotel could still replace a normally
reserved room. Based on past cancellation and no-show data, a revenue manager, in collaboration
with the front desk, could allocate more room in a stated amount of time to prevent empty rooms.
Using artificial intelligence and Chatbots
Ai technology and data science are not only popular in the hospitality industry; they are also having a
huge impact on revenue. A chatbot on an online platform and within an application could
reply commonly asked questions, boost sales or merge extra services, and interact with a buyer in a
normal conversational way 24 hours a day, seven days a week. A chatbot on social media, such as
Constance Belle Mare Plage Facebook group, could be used as an additional revenue channel.
Chatbots can response to travellers’ questions about a product, services, as well as facilities –
reallocating more complex queries to human employees and gather data from the target audience,
such as consumer expectations and trip purpose.
Increasing revenue from ancillary sources
The term ancillary revenue in the hospitality business relates to revenue derived from channels
apart from the main product line, the rooms. Food and beverage offerings, transportation,
recreation, spa and wellness, and miscellaneous services like additional beds and flower delivery are
examples of these channels. Various types of services, such as corporate, leisure, family, or group
travellers, could be bundled and given to a defined audience. Extra services seem to be in great
supply among all age categories of business travellers, whereas packages are more common among
leisure travellers. GOPPAR is influenced by ancillary revenue, thus a hotel that provides packages will
be far more cost effective than those that do not. Domestic and foreign packages are available. An
internal package mainly consists of products made, managed, and given by the hotel, such as an
airport pick-up, spa offering in a hotel, availability to the gym, and dinner at the restaurant.
A following product or service, such as rental cars, transportation, or discount codes, is included in
an external package. Travelers, for example, can make reservations with an airport-to-hotel transfer
through a single platform, while the hotel obtains a fee from the exchange partner. A hotel can
collaborate with a third party or use a versatile packaging system, that is another revenue-increasing
approach.
Dynamic pricing
Dynamic packaging is an approach that enables travellers to personalize their travel by incorporating
services needed via dynamic packaging engines. By using only one application online, travellers can
book from various sources. Individuals prefer this method because it is more adaptable than
purchasing pre-packaged excursions or travel as well as reserving all of it interactively.
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When a hotel uses a dynamic packaging system, room prices and other inventory prices could be
altered in conformity with them. As a result, if the guest of Constance Belle Mare Plage
hotel purchases costly utilities, the price of a room might well vary in accordance. However, pricing
strategies might be a little more challenging than it seems.
Introducing loyalty programs
Customer loyalty is an essential component of generating revenue. As a result, loyalty rewards
initiatives for established guests aid in the retention of people who have previously used the
services. For these kind of customers, Constance Belle Mare Plage hotel can create specific email
marketing campaigns with special offers.
Discounts could also entice people who are undecided about staying in a particular hotel. For
example, the hotel can attract more attendees to a music event in the area by offering segment-
based discounts to contestants. Loyalty cards can indeed be introduced autonomously or by joining
a web loyalty program such as Stash Hotel Rewards or IHG. Based on the hotel, guests may be able
to collect points for travel packages and even for skipping housekeeping. They could then redeem
their points for other facilities or hotel accommodations. These practices not only allow hotels to
gain the trust of their guests, but they also raise profits: According to a study conducted by Cornell
University's School of Hotel Administration, hotels that entered Stash Hotel Rewards saw a nearly 50
% annual increase in room-nights for every guest as well as a 57% increase in revenue per year.
These recommendations could be used in improving the market segmentation in revenue
management at Constance Belle Mare Plage hotel. However, there are challenges that the revenue
management faces in the hospitality industry. some of these challenges are: a lack of experienced
workers, a lack in technology and lack of communication and trust between the staff and the
company. But, the hospitality industry must not lose focus from its goals and objectives. The covid-
19 has impacted several hospitality businesses, nevertheless, the industry has adapted to it and
started new and innovative trends.
LO4 Apply pricing and non-pricing tools in dynamic hospitality
contexts to formulate and justify revenue optimisation decisions.
P6 Develop a functional RM plan and strategy to optimise pricing and revenue
decisions using pricing and non-pricing tools for the chosen hotel.
Revenue strategy is vital for the success of any hospitality business’ revenue management philosophy.
These strategies allow the revenue management team to discuss, strategize and understand the goals
of the hospitality business and how to achieve them.
The Constance Hotels & Resorts has implemented a new revenue strategy in seven Constance resorts
across the Indian Ocean. A cloud-based “Duetto” has been implemented. Duetto’s GameChanger
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application is said to be able to yield rates more rabidly and great flexibility. ScoreBoard, a revenue
intelligence application, will enable Constance to gather and cluster reports, display custom report and
deliver the insights of these reports across the entire company in one click.
Revenue Management Cycle (RMC)
Revenue Management Cycle or RMC is a 5 step cycle to simplify the revenue management process.
It consists of; Competitive analysis, forecasting, pricing, inventory control and performance review.
This process helps to optimise the income flow and strategies of a property during low and high
demand.
By applying this cycle, Constance Belle Mare Plage will focus on demand behaviour, prediction,
building of strategies based on forecast and enables them to sell rooms at the right price to the right
audience. The image is a representation of this cycle:
1. Competitive Analysis:
A competitive analysis
helps a hospitality business
to understand what
their main competitors are
doing best and what makes them stand out from the competition. It can be that they are selling
or offering something your business doesn’t and if so, how to utilise this or adapt to it. The
main competitors of Constance Belle Mare Plage is; LUX* Belle Mare, SALT of Palmar and
Ambre hotel. In order to compare themselves from their competitors, Constance Belle Mare
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Figure 1: RMC

Plage will have to draw a grid and compare about different factors such as; product, price,
distribution, advertising and sales in order to know where they stand among their competitors.
2. Forecasting:
Forecasting helps in understanding expectations regarding realistic goals and target. It is a
way of analysing past trends and data to predict future behaviour. Some ways to conduct
forecasting are:
● Operational forecasting: for example, the number of tables required in the restaurant
● Financial forecasting: help to determine end of fiscal results and set financial goals
accordingly
● Revenue management forecast: determine future demand in order to set strategies to
maximise revenue. It is done by forecasting the number of rooms sold, average daily
rate and revenue.
Forecasting is a tool that helps to compare current results with last year’s growth or
downfall or customer led time to understand buying behaviour or patterns, which can help the
hotel to predict future demand.
3. Pricing:
After understanding about the competitors and forecasting, comes the most important part,
pricing. It involves in setting up the correct seasonality rates (high or low season), and
supplements based on the previous analysis to be able to achieve the expected target.
Some strategies that a hospitality business can apply are;
● Establishing Rate Parity; it is the practice of maintaining consistent rate across all
distribution channels. For example; OTAs will take a 15% commission whereas if the
hotel had for example a booking engine implemented in their website, customers will
be more intrigue to do direct booking if the website is; user-friendly, responsive and
clean. The difference between OTA’s and your business is that they can’t offer free
tours, welcoming gifts or even free breakfast buy you can, these offers will attract
more customers and increase your profitability. Another way to increase direct
bookings will be to offer special offers on social media such as Facebook, twitter,
Instagram etc...
● Customers segmentation; by properly segmenting your target market, it will be more
efficient to do the marketing and distribution. And also to implement basic rates such
as:
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a) Best Available Rate
b) Corporate and/or Partners rates
c) Group rates
There are also many other pricing strategies that will later be discussed
4. Inventory control:
Next step is to monitor inventory, it ensures that the products and services that are available
are supporting the strategies implemented and are in line with the forecasting. It also ensures
that the availability set and restrictions are solid and are supporting the desired outcomes.
Some inventory measures that hotel businesses usually use are;
● Hard control; Closed to Arrival or CTA, stops guests from arriving on the day it is
implemented. For example, an event is being organised and is a three-day event, the
business only wants guests to come on the first day of the event, they can put a CTA
on the second day, this means that the guests won’t be able to arrive on the second
day but, will still be able to make a booking.
At Constance Belle Mare Plage and also at the Prince Maurice there’s a culinary
festival being organised so by using this inventory control will definitely be
beneficial for the organisation as it has a high chance of being fully booked especially
in the restaurants.
● CLO; Closed, by completely closing off the hotel from business on the day it was
implemented, help to stop any booking from coming in to be able to manage
inventory.
CTA vs. CLO; CTA allows guests to still stay on specific day if they book a longer stay
while CLO, no one can stay on that day no matter how many nights they are coming in.
When to used hard controls; they are used to manage inventory better on busy days such
as holidays, events or any other specific reason for limited inventory.
5. Performance review:
Hotels need to continuously monitor and review their performance, by reviewing results
against forecast, budget, last year’s data or competitors. It helps to indicates area that needed
for improvement and highlights necessary changes.
Revenue Management Cycle is an ongoing process it must be done over and over to finest
strategies, understand the market, customers and competitors in order to maximise revenue
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and growth. It is a crucial process considering the fact that there will be an ever changing
market segment, customer behaviour and trends.
Pricing vs. Non-pricing strategies
Pricing strategies use the price of products or services to engage new customers while maximising
profit from current customers for example, a reduction in price of products. However, non-pricing
strategies are the use of methods such as marketing helps in managing periods of high demand and
cancellation while increasing profit. Non-pricing also includes advertising, enhancing service quality
and longer opening hours.
Pricing strategies;
● Discount codes for direct booking;
Guests that book your hotel via a third party usually are offered a promo/ discount
code for future reservation. They can do it directly on the website when doing their
booking, at the reception or send it via email. This strategy is proved to be effective
rather than passing through OTA’s and also it increases the number of repeaters
guests. At Constance Belle Mare Plage, customers are able to enter the promo code
on their website, see the picture below:
● Cancellation policy;
Customers will pay a better price if they book at a non-refundable rate. An hotel can
sell rooms at a profitable price while at the same time cutting losses, in other words,
when a guest cancel, they won’t get a refund depending on the cancellation policy of
the organisation, since they’ve already locked in revenue from the hotel, but they can
charge the room at a lower rate. This strategy is often use during high season.
Another cancellation policy is the free cancellation which is becoming the new norm,
it enables customers to cancel at any given time before their arrival.
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Figure 2: Promo code
Source: Best 5-star Hotel Belle Mare Plage | Constance Hotels & Resorts

Figure 3: Cancellation policy at Constance Belle Mare Plage
● Create and offer packages;
Attractive packages where the price of the room together with additional services, for
example, at Constance Belle Mare Plage, when guest book for a villa, they can add on
a spa massage of 90 minutes. However, packages should be personalised and created
based on your target audience. By using this strategy, it helps to generates additional
revenue as it will encourage guests to purchase more than just the room.
Another interesting pricing strategy that Constance Belle Mare Plage has recently
adopted is that guests can book a table for an exclusive dinner during the culinary
festival week as from Rs 3500 and Rs6500
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Figure 4: Dinner at indigo restaurant
Non-pricing strategies;
● Minimum Length of Stay(MLOS):
It requires a reservation to be made of a certain amount of nights. When it is
implemented in advance, this strategy is a great way to get the most out of a high
demand season. For example, the annual culinary festival by Constance is taking
place at both Le
Prince Maurice and
at Belle Mare Plage,
and exclusive
dinners are offered, so it
can result in a
significant increase in
demand and exceed
the supply.
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● Overselling:
It occurs when overbooking practices are not well implemented, in order to have less
chance of saying no to customers; one should divide No Shows and Cancellation.
No shows occur at the last day, they should analyse historical data and overbook at
the last day based on these figures however, cancellation are tricky, an hotel must
create a forecast cancellation curve and create a sheet and note the predicted amount
of cancellation for each day.
● Managing booking channels:
Booking channels include; direct booking, OTA’s, walk-ins, travel sites and agencies.
To be able to manage them, the revenue management team will need to group those
from “most profitable” to “least profitable”. After that, when the hotel is sell out from
the “most profitable” one, the “least profitable” should be close, this will result in the
ADR (Average Daily Rate) to increase and boost the hotel profit.
Non-pricing strategies were found to be as effective as the pricing strategies. It will
only depend on which one the hotel prefers, by following these steps it will maximise
the hotel revenue.
M4: Evaluate and apply pricing and non0pricing tools in support
of pricing and revenue optimisation decisions within a hospitality
context.
Benefits and limitations of pricing and non pricing strategies;
Pricing:
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To be able to list the benefits and limitations of pricing strategies, the Pricing Strategy Matrix must be
taken into consideration, it is divided into 4 commonly used pricing strategies, it can be shown on the
image below:
1. Economy:
It only works when an organisation have a lower overheads and costs than their competitors. By
setting a low cost base, it allows them to sell at a discount price, which result in gaining a high market
share. For instance, “quality” might not mean low product quality. It can be that the range of product
is limited or that the environment or even the packaging that the product is sold could be basic.
Advantages:
 It helps organisation to survive during times of economic instability, the covid-19 pandemic
for example.
 Strong competitive edge
 Sell similar item at a lower price
Disadvantages:
 Struggling to remain profitable
 Loyalty not guaranteed
 Profit margin can become unstable
2. Penetration:
It focuses on setting an artificially low initial price on a high quality products. It relies on the
expectation that customers will switch to a lower cost with higher quality product that helps you to
penetrate the market quickly. It is a great option if you are launching a new product in a market.
Advantages:
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 Fastest way to win market share
 Rapidly increases sales volume
Disadvantages:
 Profit margin will suffer until increase in price
 Brand can be considered as a “low quality” or “budget”.
 Difficult to retain customers
3. Skimming:
It involves in setting a high price on a low quality product, it aims in generating as much revenue as
possible from the overall number of people then lowering the price once this market is saturated. It is
used in markets that have a high level of new product launches
Advantages:
 Maximises profits in a market
 It ensures that it covers production costs
Disadvantages:
 It can damage brand loyalty as early buyers have paid for a premium price
 When the price is kept at a high level for too long, it can lose the interest of future potential
customers.
4. Premium:
It is when the costs of production is high and have a unique or prestige product that will appeal to
potential buyers
Advantages:
 Potential to achieve a high profit margin
 It helps to enhance your brand identity
Disadvantages:
 It is difficult to maintain and initiate
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 The risks associated with over and under producing a premium offering can be that: they’ll
be unable to meet demand, it is essential that they provide an accurate plan and forecast for
sales.
Pricing versus Revenue optimisation
Pricing optimisation:
Gaining a deep understanding of your customers is the first step in determining the correct product
pricing strategy—a price that maximizes value for customers while also maximizing profit for you.
Understanding who your greatest consumers are, what features they enjoy, and what features they
require is the foundation of price optimization. You should also be aware of your target market: shops
will have different considerations than B2B businesses. Once you know this, you can adjust your
pricing to reflect what people value, tracking the results of your price changes and improving over
time.
How to optimise pricing?
It is a 5 step process that include the:
1. Dig into data:
It includes both quantitative and qualitative data to understand how much customers are willing to pay
for the product and services.
2. Define goals and constraints:
While most companies focused on profit based goals, it is also important to improve in customer
loyalty. Up selling or attracting new customers to meet these objectives that will result in gaining
more profit.
3. Know your value metric:
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The way customers are charged needs to align with the value people get from the product or services.
It is important to find the right metric for price optimisation because it shows how your product is
valued by the customers and what can be charged for this.
4. Create pricing tiers:
Each tier should correspond to a particular customer segment that was found in your research and
should align with your value metric. If these metrics doesn’t apply to your products or services, try
going for bundles or sakes selection.
5. Continuously monitor pricing:
Last but not least is to monitor your pricing to make sure that the value that is being offered is aligned
with customer’s needs and pricing expectations.
Revenue optimisation:
It is the management of acquisition, retention, expansion and pricing strategies in order to improve
business health and profits.
There are four level strategies when working on optimising your revenue:
1. Acquisition: first they will need to define their buyer personas and the ideal customer profiles
which is the foundation of doing your customer acquisition strategy. It helps to ensure that the
organisation is investing in marketing and sales resources n order to attract the right
customers. After that they’ll need to determine which customer acquisition channels generates
the most and have the hi0ghest ROI.
2. Retentions: retaining customers is much cheaper than engaging new ones. By exceeding their
expectation by giving staff training for example and providing with better equipments.
Another aspect that need t be taken into consideration is the customer feedback, it can help
you to improve where we lack on but also which customer are the best fit
3. Expansion: in the long term, expansion revenue is more sustainable than acquisition. It is
gained through up selling and cross-selling to existing customers, they’ll need to take
customer feedback into account and ensure they’re seeing success with the product they’re
currently using.
4. Pricing: lastly is the pricing, they just need to set a price that makes a profit while also
enabling them to sell a sufficient number of units. Unfortunately, the price that enables them
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to close the most sales doesn’t always result in the highest profits and neither does setting the
highest price. They will also need to take into account the pricing strategies of their
competitors because it can influence how the product and company are perceived and how
likely customers will be willing to pay. When thinking about pricing long-term, they need to
consider how they can maximize the profit from both individual sales and individual
customers at the same time. Since retention and expansion are more sustainable and profitable
than acquisition, the goal behind the pricing strategy should be to support generating repeat
purchases
D3: Critically evaluate pricing and non-pricing tools to justify a
coherent RM plan and strategies to optimise pricing and revenue
within a hospitality context.
By applying the above strategies and methods, Constance Belle Mare Plage ensures that they operate
the business successfully and maximising their profits. In this report they will understand the overall
process of how to correctly set their price on their products and services and the revenue management
cycle that will benefits them in various ways such as:
1. Eliminates the redundant processes
2. Simplifies the complexities of the revenue management and
3. Improve guest experience.
However, there are some drawbacks in it such as;
1. Need to increase profit margin
2. Self-service methods to improve guest experience.
But when using correctly it can be very useful, so we need to record every step and provide with more
and more training because of the ever changing market change and trends that affect the way we do
business.
Some other ways that can be used to increase profitability in revenue management are:
1. Segmentation; as it was previously discussed segmenting the target market is the basis of an
optimal pricing strategy. It can be continuously reassess and increase profit by applying
targeted pricing by segment.
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2. Guest valuation; with the help of the RMS it provides with a complete picture of total guest
value and can then maximize the profitability of each customer through more accurate
demand forecasts, and by setting rates that optimize both room and ancillary revenue across
segments.
3. Connecting with CRM: the importance of online review sites in customer booking decisions
leads to the need for an RMS that connects with a customer relationship management (CRM)
system. It creates a lift in the bottom line through tailored upgrades, targeted pre-stay offers,
and onsite activity purchases, all based on guest preferences, behaviors, and past purchases.
4. Utilize Data to Measure Marketing Programs: by sharing with marketing you are able to
match marketing calendars up with demand reports to measure success in campaigns. It also
allows you to personalize marketing efforts in ways that engage your most valued guests and
fill need dates.
5. Increase Brand Performance: it allows them to have one comprehensive platform that tracks
and reports data company-wide, so they have every team member, on each property, working
with one single source of truth. Employees can collaborate on the same goal of driving profits
across your entire brand and identify trends and even issues before they even happen.
6. Advanced Forecasting and Optimization: It is critical for revenue managers to understand
upcoming demand to project occupancy, maximize revenue, and manage operational
needs for the upcoming year. It can also be shared with marketing to identify periods of low
demand and use promotional offerings more tactically, helping them to achieve performance
goals in terms of revenue and profit.
7. Optimal Pricing for Transients & Groups: it can accurately analyze displaced transient
bookings, as well as other group. It helps in optimizing your entire property and maximizing
profits.
8. Navigate OTA Conversations: They can distinguish between the incremental revenue OTAs
bring in during need periods versus their diluting effect during peak periods. Monitor demand,
market factors, and booking patterns to optimize their pricing and take advantage of OTA
marketing power at a reasonable ROI.
These strategies can further more be recommended to Constance Belle Mare Plage to increase their
profitability.
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