Hospitality Operations and Revenue Management

This report explores the interrelation between hospitality operations and revenue management. It discusses the financial contribution of room revenue producing areas to a business unit and examines the principles of pricing and their impact on profitability. It also analyzes the influence of codes of conduct and legislation on accommodation procedures. Additionally, it includes a stakeholder PESTEL analysis.

Hospitality Operations
and Revenue
Management

EXECUTIVE SUMMARY
Hospitality operations as well as revenue are interrelated with each other. Moreover,
for generating revenue it is important for hotel group to conduct operations in effective
manner which result in generating revenue by making customer satisfy. Apart from this, there
are several tools and techniques which business can use for operation management purpose.
This report has determined that pricing and revenue strategy in relation with fixed capacity
inventory problem play important role. In addition to this, for a business firm it is important
to follow all the code of conducts and legislation because it may affect accommodation
procedure in negative and positive both manners. Moreover, every customer has different
expectations from diverse market and it is important for an organisation to fulfil these in
effective manner and make customer satisfy.

EXECUTIVE SUMMARY .............................................................................................2
INTRODUCTION..........................................................................................................4
MAIN BODY .................................................................................................................4
Mission.......................................................................................................................4
Stakeholder ..............................................................................................................6
Stakeholder PESTEL analysis .................................................................................7
SWOT analysis .........................................................................................................8
CONCLUSION............................................................................................................10
REFERENCES...........................................................................................................10

INTRODUCTION
Hospitality operation management is the program that offers business skills as well as
acumen to work within wide range of area in this competitive or multifaceted industry.
Moreover, within all these areas will be front desk management, housekeeping operations,
food and beverage management as well as human resources planning. For conducting each
and every activity in better manner it is important for organisation to manage there operations
appropriately (Cetin, Demirciftci and Bilgihan, 2016). Apart from this, revenue is important
for every business without this no organisation can sustain in business environment for long
term. Although, revenue generation for an business will be only possible when they conduct
operations effectively and make customers need and want satisfy.
This report is based on Hilton Hotel & resorts which is part of hospitality sector and it
was founded in 1919 by Conrad Nicholson Hilton. It is headquartered at McLean, Virginia
U.S. and they are serving at worldwide level. It will be going to explain financial contribution
which rooms revenue producing area make to business unit. Moreover, principles of pricing
room products and evaluate potential benefits of effective practices to profitability. Method
for optimizing profitability will be going to discuss which use for fixing capacity inventory,
recognizing dynamic growth in relation of technology development. Apart from this, how
code of conduct and legislation will affect accommodation procedures will elaborate.
MAIN BODY
Discuss about the financial contribution that room revenue producing areas make to business
unit
In business, it is important to focus on all the department units so that goals as well as
objectives are achieved. It is essential to be aware about increasing of productivity in
businesses so that benefits are gained. In hospitality industry, it is also crucial to focus on
how to enhance and increase the profitability scale of business within organization. Rooms
revenue producing areas contributes to wider level ans also it helps in enterprise to reduce
their expenditure.
It is often seen that it is crucial to have relevant knowledge in field of market as well
as business so that effective strategies are used to boost the productivity level of hotel. The
finance department of firm is required to manage all transactions & cost that occur outside
and inside the business. It is duty of manager of hotel to make assure that rooms are properly
well furnished and organized with all necessary equipment so that it is easy to fulfill

customers requirements at every aspect.
Mission
Hilton Hotel & resorts is part of hospitality sector and it was founded in 1919 by Conrad
Nicholson Hilton. It is headquartered at McLean, Virginia U.S. and they are serving at
worldwide level. In addition to this, mission and vision are as follows :-
Mission – To be the preeminent global hospitality company- the first choice of guests, team
members and other alike
Vision – To fill the Earth with the Light and Warmth of Hospitality
Stakeholder
Customers are important stakeholders and company always try to fulfil need and wants of
customers in effective manner. In addition to this, stakeholders are classified within internal
as well as external (Buhalis and Leung, 2018). Thus, customer are external stakeholders of
company but important part. Moreover, there are several stakeholders and everyone of them
has distinct needs as well as expectations. Moreover, there are numerous type of stakeholders
such as owners, employees, customers, suppliers, investors, travel agents and many more.
Explanation of these are as follows :-
Stakeholders Their significance Needs and expectations
Owners They are the people who own chains
of Hilton Hotel and manage each and
every day working. It includes
franchise, referral group as well as
partners.
Maximise value for Hilton
Hotel investment, expect
dividends on their
investments.
Employees They are the one who conduct each
and every activity in organisation.
Employees always try to make
customer need and wants satisfy.
Make customers need and
want satisfy by serving them
what they want.
Customers They are the one who purchase
products and services in exchange of
money for making their needs and
wants satisfy.
They are the buyers of
products and services which
Hilton Hotel is offering.
Suppliers Suppliers are the one who provide
raw material to company for
converting it is finished goods and
accomplish desired goals of company.
They are the provider of raw
material in company.
Investor Investors are important part of
company and they invest their money
for growth and development of
business.
Expectations of investors is
to get high return on amount
they invested in company.
Travel agents They are the one of important part for
Hilton Hotel because by tie-up with
Travel agents expectation is
to get benefits from booking

travel agents they get more and more
customers.
in Hilton Hotel.
For an business firm it is important to get customer’s need and want satisfy in better
manner. In relation of Hilton Hotel, they are using quality management process for
conducting there activities in better manner (Roy, 2017). Total quality management is the
tool which respective hotel can use for conducting activities in better manner and making
customers needs as well as want satisfy effectually. Total quality management is described as
management approach to long-term success by customer satisfaction. Within TQM efforts of
all members of business participate within improving procedures, products, services as well
as culture in that they work.
Critically examine and apply principles of pricing to the room product and evaluate benefits
of effective practices to profitability
In business, pricing play important role as without use of pricing it is not easy to
carry out the exchange process of goods and services. Pricing to the room product is to be
determined with proper considerations so that effective prices are set to rooms in hotel and
accordingly benefits are obtained. In context of selected hotel, they uses and apply various
principles of pricing which are described as follows-
 Discriminatory pricing- It is principle which is being applied by chosen hotel in
which they put prices for guest from higher to lower. This is often seen that
preference of guests are different from each other. On the basis pf preferences, hotel
set the prices of rooms.
 Demand based pricing- This is another principle which is applied by selected hotel.
This principle states that demand for room product is different from each other and
on period basis demand changes from time to time. In order to managhe and keep
occupancy rate, hotel reduces the prices to face competition so that occupancy rate is
filled up.
There are several principles of pricing which Hilton Hotel can use for pricing the
room’s products. Although, each and every pricing practice are profitable for company
according to its implementation :-
 Cost-Plus – As per this approach list of prices are generally driven through own cost
structure of business firm that may be possibly heavy on unwarranted overheads
(Erdem and Jiang, 2016). This is most common approach will small business firm
mainly use for pricing there products and services.

 Competitive - According to this pricing strategy price list of product and services are
simply driven by competitor’s prices which are followed by own cost structures. In
addition to this, customer’s ability as well as willingness to pay only seldom plays a
role. Most of the companies use competitive pricing strategy for gaining competitive
advantages within business environment. This will be only possible when a business
firm come with competitive price of product and services in market area.
 Value-based – This type of pricing strategy uses by company which mostly driven by
the balanced consideration of major three variables which are customer’s ability and
willingness to pay, competitor’s price levels as well as company’s own cost structure
and current price levels (Antonio, de Almeida and Nunes, 2019). In simple term, it
can be said that value based is one of the effective pricing strategies because it is
combination of all the major factors which required for pricing of products and
services.
Hilton Hotel is using value-based pricing of pricing because it is one of the best way
of pricing products and services. Because value-based pricing is combination of all three
major factors such as customer’s ability and willingness to pay, competitor’s price levels as
well as company’s own cost structure and current price levels. In simple term it can be said
that, value based pricing requires collecting data which can be transformed within
consumable information as well as formulate perspective of customers for answer customers
need, product impact those needs as well as perceived value (Capocchi, Capocchi and
Barlow, 2019). Although, by using Value-based pricing principle Hilton Hotel gain is that
they will able to consider each and every factor which required for pricing their products and
services in better manner. Along with this, it also help in accomplishing desired profitability
as well as goals and objectives.
Technology advancement are taking place and which help Hilton Hotel to provide more
digital services to customers such as Hilton is offering high level of service customisation via
technological integration which involve partnership with Uber for creating seamless travel
experience for customers, introduction of digital key of hotel room which is integrated with
customer smartphones as well as customers can customize their hospitality experience by
using smartphone and others (Hitka and et. al., 2018). Hilton gain first mover advantage in
this important direction which help them in grabbing attention of several people within
effective manner and fulfil there need and want.
Thus, it can be said that by providing high technology products company will be able
to make satisfy need and wants of customers in better manner as well as accomplish desired

goals and objective (Selmi and Chaney, 2018). Making customer satisfy is the only way of
generating revenue and long term sustainability in business environment.
Stakeholder PESTEL analysis
There are several codes of conducts, legislations and best practices which given by
governmental bodies of every nation and they have major impact on working of hotel
accommodation procedures in both positive and negative manner (Guillet and Shi, 2019). It is
important for Hilton hotel to implement all the legislation, code of conduct and best practices
given by government in there working. Therefore, they will be able to conduct operations in
effective manner and generate revenue. By implementation of PESTEL analysis it will be
easy to identify codes of conduct, legislation and best practices impact on working of
accommodation procedures. PESTEL stands for Political, economic. Social, technological,
environmental and legal. Explanation are as follows :-
 Political – Due to some political factors visa application of several travels has been
rejected especially by non-European and non-Us nationals which result in wide
impact on accommodation procedure of Hilton as booking of hotel get chancel.
 Economic – Economic down town result in declining overseas tourism that influence
turnover and profits of hotel adversely (Kimes, 2017). Moreover, in tough economic
times some less expensive kind of accommodation has become great threat for Hilton
Hotel and result in wide impact on their accommodation procedures. In addition to
this, recession brings several opportunities for Hilton to target guest with home-based
stay rather then potentially trips abroad which is more expensive.
 Social – In market of United Kingdom incorporates several internationally well-
known brands and chain (Altin, Uysal and Schwartz, 2018). Thus, Hilton is strong
brand and they have advantages of attracting customers and it also cooperate with
other organisation as well as charity companies. Moreover, short break market may
target the ageing UK population and increasing number of adult households.
 Technological – This factor has wide contribution in working of Hilton as they are
providing online booking facilities which customers can judge on the basis of
previous customers. In addition to this, Hilton is offering high level of service
customisation via technological integration which involve partnership with Uber for
creating seamless travel experience for customers, introduction of digital key of hotel
room which is integrated with customer smartphones as well as customers can
customize their hospitality experience by using smartphone and others (Abad and et.

al., 2019). Hilton gain first mover advantage in this important direction which help
them in grabbing attention of several people within effective manner and fulfil their
need and want.
 Environmental – There are several environmental issues which result in negative
impact on working of Hilton Hotel such as Due to Iceland’s Volcanic Ash mostly
flights get delay and airport get close. Thus, this situation directly impacts on hotel as
well as their accommodation procedures.
 Legal – For Hotels it is important to comply with environmental related laws as well
as regulations because it will result in possible impact on environment from
operations of hotels. Part from this, best practices for Hotel is that they must have to
know there customers and keep staff happy. Moreover, there are several legislation
and codes which Hilton have to implement in their working for gaining better
outcomes such as Health and Safety at Work Act 2015 and Food Act 2014.
It is important for Hilton Hotel to implement all the legal factors in there working because
they have wide impact. Because these have positive impact on Hilton and help in conducting
accommodation procedure in effective manner. Although, by knowing customers respective
Hotel will able to serve them in effective manner and made their needs as well as wants fulfil.
Moreover, when company make there employees happy they will also conduct operations in
better manner and accomplish goals and objective of company. Apart from this, through
implementation of all the laws and codes Hilton able to conduct their accommodation
procedure in legal manner which will not going to have negative impact on them and they
will make customers also satisfy in effectual way. Such as Health and Safety at work Act
2015 have major impact in accommodation procedure as it is important for Hilton to follow
all the health and safety measures. Because mishappening with employees or customers in
relation of health and safety have major negative impact on accommodation procedure.
Code of conduct and legislation impact accomidation process
Health and safety: This act is develop in order to protect and ensure health as well as
safety of employees and customer who stay in hotel. It is vital for respective organization to
provide proper precautions so that an effective and healthy service is given to customer which
in turn develop positive mind-set of customer towards brand.
Workplace relations act: This act ensure that staff members have an award stating
the minimum legal rates of pay for jobs in various industries, part time, full time and so on.
Providing of all such benefits to employees develop a potential in staff members and due to
which they give effective services to customers. Therefore such act directly impact on the

accommodation services.
SWOT analysis
Organisation strength have wide contribution in revenue generation by making business unit
so, for determining strength of Hilton SWOT analysis will going to be implement
(Rodríguez-Algeciras and Talón-Ballestero, 2017). This framework not only help in
identifying strength but also help in determining weakness, opportunity and threat which are
available in market area for Hilton.
Strength Weakness
 Extensive experience and vast scope
of the business.
 Effective customer retention
schemes
 Strong property portfolio
 Strong as well as effective
leadership by Christopher Nassetta.
 A high level of service
customisation achieved via
technological integration.
 Overdependence on the United State
market
 High level of debts
 Little global market share, despite
the large portfolio of brands
 Lack of flexibility due to its large
size.
Opportunity Threat
 Further international market
expansion.
 Formation of strategic alliances
 Focusing on research and
development
 Establishing presence in the mid-
level budget hotel sector.
 Threat of terrorism and political
instability
 Adverse change in macroeconomic
climate.
 Ethics-related issues in Hilton
hotels.
 Loss of key talent and key
personnel.
These above mention strengths of Hilton Hotel & Resorts have wide contribution in revenue
generation. Because Hilton use customer retention scheme in which wide range of benefits
are offered through program including discounted prices, digital check-in, free internet
access, late check-out and many more (Alderighi, Nicolini and Piga, 2019). All these benefits
appreciated by customers of respective hotel as well as there are more than 50 million Honors
members at worldwide level (SWOT analysis of Hilton, 2016). Making customer satisfy play
essential role in working of an business firm and this also help in generating high revenue
within market area. In addition to this, Hilton is offering high level of service customisation
via technological integration which involve partnership with Uber for creating seamless
travel experience for customers, introduction of digital key of hotel room which is integrated
with customer smartphones as well as customers can customize their hospitality experience
by using smartphone and others. Hilton gain first mover advantage in this important direction
which help them in grabbing attention of several people within effective manner and fulfil

there need and want. Although, satisfy customer become loyal part of business and also have
positive impact on revenue generation practices through business unit.
When customer are investing high amount in hospitality services then they want high
quality services which make their need and want satisfy in better manner. Thus, Hilton
offering best services to there customers which help them in becoming loyal part of company
as well as respective hotel will be able to generate revenue with such practices in more
effective manner.
Analyze and use methods used to optimize profitability as applied to a fixed capacity
inventory, recognizing dynamic growth in related technological developments
In hospitality industry, it is necessary to use appropriate strategies and principles so
that it is easy to achieve higher profitability. It is essential for manager of hotel to ensure that
yield management is to be adopted with proper considerations so that it is easy to achieve
competitive benefits easily. With use of yield management, it is easy for hotel to use rate
strategies in correct way, aware of seasonality, etc. There are different methods that can be
used to optimize profitability which are discussed below-
 Increasing conversion rate- It is most effective method of increasing profit in which
it is essential for business to convert the leads into potential customers. With this
method, it is easy to manage fixed inventory.
 Review current pricing strategies- In this approach, price is important and which is
needed to be reviewed properly so that goals are accomplished. To reduce
competition, pricing strategies are critically to be reviewed.

CONCLUSION
After going through overall discussion it has been summarised that, hospitality
operations as well as revenue are interrelated with each other. Moreover, for generating
revenue it is important for hotel group to conduct operations in effective manner which result
in generating revenue by making customer satisfy. Along with this, strength of company have
wide contribution in revenue producing and making business unit. In addition to this, for an
business firm it is important to follow all the code of conducts and legislation because it may
affect accommodation procedure in negative and positive both manner. Moreover, every
customer have different expectations from diverse market and it is important for an
organisation to fulfil these in effective manner and make customer satisfy.
REFERENCES
Books and journals
Cetin, G., Demirciftci, T. and Bilgihan, A., 2016. Meeting revenue management challenges:
Knowledge, skills and abilities. International Journal of Hospitality
Management, 57, pp.132-142.
Rodríguez-Algeciras, A. and Talón-Ballestero, P., 2017. An empirical analysis of the
effectiveness of hotel Revenue Management in five-star hotels in Barcelona,
Spain. Journal of Hospitality and tourism Management, 32, pp.24-34.
Alderighi, M., Nicolini, M. and Piga, C. A., 2019. Is low-cost carriers’ revenue management
a firm capability?. Journal of Air Transport Management, 78, pp.15-22.
Erdem, M. and Jiang, L., 2016. An overview of hotel revenue management research and
emerging key patterns in the third millennium. Journal of Hospitality and Tourism
Technology.
Antonio, N., de Almeida, A. and Nunes, L., 2019. Big data in hotel revenue management:
exploring cancellation drivers to gain insights into booking cancellation
behavior. Cornell Hospitality Quarterly, 60(4), pp.298-319.
Capocchi, A., Capocchi, A. and Barlow, 2019. Economic Value and Revenue Management
Systems. Springer International Publishing.
Hitka, M. and et. al., 2018. Strategic tool of human resource management for operation of
SMEs in the wood-processing industry. BioResources, 13(2), pp.2759-2774.
Selmi, N. and Chaney, D., 2018. A measure of revenue management orientation and its
mediating role in the relationship between market orientation and
performance. Journal of Business Research, 89, pp.99-109.

Guillet, B. D. and Shi, X., 2019. Can revenue management be integrated with customer
relationship management?. International Journal of Contemporary Hospitality
Management.
Abad, P. and et. al., 2019. Determinants of successful revenue management. Tourism Review.
Kimes, S. E., 2017. The future of hotel revenue management.
Buhalis, D. and Leung, R., 2018. Smart hospitality—Interconnectivity and interoperability
towards an ecosystem. International Journal of Hospitality Management, 71, pp.41-
50.
Altin, M., Uysal, M. and Schwartz, Z., 2018. Revenue management outsourcing: a hybrid
model of transaction cost economics and organizational capability. Cornell
Hospitality Quarterly, 59(2), pp.112-124.
Roy, S., 2017. A Mixed Integer Efficient Global Optimization Framework: Applied to the
Simultaneous Aircraft Design, Airline Allocation and Revenue Management
Problem (Doctoral dissertation, Purdue University).
Online
SWOT analysis of Hilton, 2016.[Online].Available through< https://research-
methodology.net/hilton-swot-analysis/>