Hospitality Operation Management

This report analyzes the hospitality operations of Hilton Hotel, a leading global hotel chain. It examines the nature of hospitality products and services, factors influencing demand, customer profiles and expectations, and key stages in product development. The report also explores pricing strategies, revenue generation, performance measures, and business analysis approaches used by Hilton. Desklib provides past papers and solved assignments for students.

HOSPITALITY OPERATION
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1Nature of hospitality product and service area.......................................................................1
1.2 Different influences affecting demand..................................................................................2
1.3 Customer profile and their expectations................................................................................2
1.4 Factors affect average spending power..................................................................................3
2.1 Key stages in product and service development....................................................................4
2.2 Features that contribute towards customer perception of products.......................................5
2.3 Opportunities and constraints affecting product....................................................................5
2.4 Different merchandising opportunities....................................................................................5
TASK 2............................................................................................................................................6
3.1 Different methods of pricing.................................................................................................6
3.2 Factors which affect revenue generation and profitability....................................................7
TASK 3............................................................................................................................................7
4.1 Range of performance measures and appraisal techniques to individual aspects............7
4.2 Usefulness and limitations of the various quantitative and qualitative appraisal
techniques...................................................................................................................................8
4.3 Approaches to business analysis.........................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Operation management is essential part of organization. Hospitality industry is the
service sector that has to provide amazing services to its consumers in order to make them
satisfied towards brand (Styles, Schoenberger and Galvez-Martos, 2015). Present study is based
on Hilton hotel, It is the five star hotel that has many branches across the world. The agenda of
firm is o enhance its revenues and expand operations globally. Current assignment will explain
nature of services provided by Hilton hotel. It will describe various factors that influence
demand. Furthermore, key stage of product. development will be evaluated in this report. In
additional, various merchandising opportunities will be explained with reference to chosen
organization
TASK 1
1.1Nature of hospitality product and service area
Hilton hotel is popular for its high quality products and amazing services. It offers, food
beverages facilities, banqueting, conference facilities to its guests. Its products are perishable,
nature of its goods and services are described as below:
 Tangible and intangible services: Tangible services of company includes interior,
exterior. It has eye catching infrastructure, equipment of Hilton are very good. This gains
attention of customers. Whereas intangible services are its responsive nature towards
guests, empathy, assurance etc (Solnet, Kralj and Baum, 2015). Front desk staff deal with
consumers appropriately and give them immediate response. People feel valued and get
respect here.
 Service areas: Hilton hotel offers food beverages services , conference hall to
professionals to conduct their meeting. Furthermore, banqueting system of Hilton is also
good where company arranges big feast for its guests (Radosavljević, Jevtić and
Klimenta, 2016).
The main agenda of Hilton hotel is to serve consumers well and make them loyal towards
brand. It analysis needs of different guests and accordingly offer them goods and services. This
aids business in retaining its clients in hotel for longer duration and enhance their satisfaction
level. Interior and exterior of the hotel always amaze people and they make their mind to come
here next time also.
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1.2 Different influences affecting demand
Profitability of Hilton is increasing with the rapid speed, every year firm is performing
well and increasing its number of customers significantly. But there are many factors that
influence pattern of demand to great extent (Randhawa and et.al., 2016). These are explained as
below:
Seasonality: This is considered as most essential element that impact on decision making
of person. People like to go on such places where climate is good and they can enjoy the
moments. But if season is not appropriate then they do not prefer to travel at that geographical
location. That is why in winter season demand of Hilton hotel gets increased as compare to
worm season.
Economic condition: It is another essential element that affect pattern of demand. If
financial condition if nation is good and people have adequate income sources then they prefer to
spend money to visit such expenses hotels. But if economic condition of country is not good then
it may create difficulty for consumers to spend high amount for their enjoyment. This is most
significant element that impact on buying decision of persona and affect demand as well (Mao
and Yang, 2016).
Healthy living: in the recent time customers are well aware for their health, they always
demand for high quality food and services. Thus, they always want to go to such places where
they can receive standard level of food. This increases demand for Hilton hotel and that is why
Hilton has become the highly demanded hotel globally.
Culture: It can be defined as values, believes of organization. If culture of company is not
good then it may get failed to serve its consumers well. Whereas if the firm has good culture then
it will treat its customers as assets of business. Hilton always emphases on satisfying its guests
thus, creating healthy environment so that customer may feel happy (Zhang and Wang, 2016).
1.3 Customer profile and their expectations
Each consumer has its specific need, different age group, income group people come to
hotel. Thus, their expectations are different from each other. Hilton hotel always concentrates on
fulfilling requirements of its guests so that it can make them loyal towards brand. Based on
consumer profiles different expectations are described as below:
 Pricing consideration: Families, couples, students etc. various customers of Hilton hotel.
Students demand for high quality products at Affordable rates whereas families always
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demand for premium services, they do not look upon cost factor. Hugh income class
consumers like to get premium and high quality services. If they do not get such facility
then they go to other place (El Haddad, 2015). On other hand medium income class
clients like to get amazing food against their paid amount. Hilton hotel provides them
goods and services as per their expectations.
 Meal experience: Hilton hotel provides high standard level of meal. But many health
conscious people also come to this place for them Hilton have healthy food diet.
 Expectation requirements: Hilton hotel has variety of consumers on the bases of age,
income etc. Demand of all these people are vary from each other but Hilton provides
them services as per their expectation that makes them positive towards brand and
enhance their satisfaction level to great extent. Consumers come here to get high quality
accommodation facilities and entity meets their requirement that raises demand of hotel
in market (Law and et.al., 2018).
 Type of hospitality business: there are several kinds of firms that operate in hospitality
industry such as accommodation, travel or tour operators, food and beverages etc. Hilton
hotel is based on accommodate business, people come here to get high quality
accommodation facilities.
1.4 Factors affect average spending power
Average spending power can be defined as overall expected whims of consumers. Factors
that influence ASP are described as below:
 Income size: This is most common and biggest element that impact on buying power of
person. If person belongs from high income group then they can spend high amount in
such condition spending power of then is upgraded. Whereas if the person belongs from
middle income class group then individual things about and accordingly spend money to
get services. This may degrade their spending power (Madanhire and Mbohwa, 2016).
 Social and cultural factor: This is another essential component that impact on ASP. As on
cultural functions people spends a lot as compare to normal days. I For example on
Christmas consumers spend more than other days. Apart from this demographic features
such as age also influence their ASP. Young age group spend a lot without looking at
price of services whatever they want they prefer to buy it.
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 Economic condition: If economic situation of nation is not good then consumers reduces
their spending to save money whereas if financial situation of country is good and people
have adequate income sources then they spend a lot that increases ASP (Factors that
Affect Business Profitability, 2018).
 Status: This is another significant factor that impact on average spending power. If
person maintains a royal status then individual has to spend more amount just to show
their status whereas people those who have average status do not like to spend
unnecessary (Styles, Schoenberger and Galvez-Martos, 2015).
2.1 Key stages in product and service development
It is very important for Hilton hotel that to make changes in existing products and
develop new services that can meet with changing needs of consumers. Key stages in product
development is as following:
 Idea generation: initially operation manager has to generate the idea and has to analysis
its suitability. Idea generation can be done through feedback from consumers, employee’s
suggestion etc.
 Idea screening: Once ideas have been received then Hilton hotel has to screening these
ideas in order to select suitable one that may help firm in achieving its goal. It is essential
to screening is done in appropriate manner otherwise it may adversely affect overall
operations of organization (Solnet, Kralj and Baum, 2015).
 Market research: Operation manager of Hilton hotel will have to conduct research in
order to gather information about market condition, needs of buyers. So that effectiveness
of new idea can be determined.
 Concept development and testing: In this stage company has to implement idea and have
to develop concept. For example in recent time most of the people demand for healthy
food thus, Hilton has to develop its new healthy product that can meet the needs of
guests. Once it has been developed then testing needs to be done. Company has to launch
the new developed services and product for shorter duration in market in order to know
the reviews of consumers. This testing helps in analyzing the success of new product
(Randhawa and et.al., 2016).
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 Business analyses: After that entity has to analysis the business and has to find out its
internal, external market position. This may help in identifying ability of business to face
any consequences if it is arisen due to failure of this new product.
 Product development: In this phase Hilton has to finally develop the product as per the
needs of guests (Mao and Yang, 2016).
 Commercialization: This is the last phase in which actual new item is being launched in
actual market. This helps firm in increasing its sales and gaining competitive advantage.
2.2 Features that contribute towards customer perception of products
There are several factors that helps in influencing the perception of consumers towards
Hilton hotel to great extent. Brand image is one of the major factor that aids in attracting more
people and increasing their interest towards brand. People go to Hilton hotel just to look at its
brand image and they think that entity will offer them satisfactory services. Dietary requirements
are another essential component that impact on overall perception of buyers (Law and et.al.,
2018). Many people like to go in such hotel where they can get delicious food that can meet with
their dietary requirements. Thus, Hilton hotel fulfil their these desires that attract people towards
it. Style of services is also major aspect that contributes towards consumer’s perception of
products and services. Hilton always offers luxurious services to clients that make them loyal
towards firm.
2.3 Opportunities and constraints affecting product
There are many opportunities and constraints that affect product and service development
of business unit to great extent. Accommodation facilities are the major factor. If entity is able to
offer amazing accommodation facility then it gets chance to develop more these facilities but if
there is poor accommodation then it may affect overall operation of Hilton hotel. Availability of
resources is another major element that creates constrain for business (Bamber and et.al., 2014).
If entity does not have adequate financial or human resources then it would be difficult for it to
develop products and services. Hilton hotel has good financial resources that help business in
making changes in existing services and develop it on the bases of consumer’s needs.
2.4 Different merchandising opportunities
Merchandising is basically to execute and promoting the sale of goods or products to the
customer whether online or in-store. Sellers use merchandising so that they can influence
customers to buy their products and they can reach their goals in sales.
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It can use digital merchandising or online merchandising for hotel Hilton. Through digital
merchandising it can promote hotel Hilton and all the facilities provided by it on different
websites or it can even create our own web page and promote all the facilities provided by our
hotel, It can even give best offers to the travel shoppers if they choose out hotel and book it
online. Nowadays, travel shoppers visit at least three websites before finalizing their decision
(Madanhire and Mbohwa, 2016). It can also highlight unique features that hotel Hilton has and
differentiate their hotel from their competitors. It makes competitive analysis easy for the travel
shoppers.
It can also use product merchandising which involves all the promotional activities to sell a
product. Through this they can promote all the facilities or products which they can provide to
the travel shoppers (Factors that Affect Business Profitability, 2018).
TASK 2
3.1 Different methods of pricing
Companies take support of several pricing strategies in order to set product’s price.
Cost oriented pricing
It is the pricing method in which entity fixes its product’s rate by adding cost of entire
operation into it. Hilton hotel implements this pricing methods, it ad cost of production, supply,
purchase etc. and add markup into it. This helps in generating expected profit and recovering
cost as well (Styles, Schoenberger and Galvez-Martos, 2015).
Market oriented pricing
Perceived, going rate etc. are techniques of this strategy. Perceived value pricing strategy
helps the firm in setting product’s rate as per the perceived value. Company generate takes high
cost for high quality products and take low cost for less valued services.
Minimum charges
It is another strategy in which minimum charges are taken for designed products and
services. This is generally implemented by small size firm that aims to attract more customers
towards organization (Radosavljević, Jevtić and Klimenta, 2016).
Question
a) Hilton hotel applies cost oriented pricing strategy, it takes support of mark-up method in
which entity adds cost + expected profit margin in order to set the product pricing for customers.
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b) Minimum charges method cannot be apply in Hilton because It is the big brand and it has to
maintain its luxury image. Thus, it always concentrates on providing high quality services to its
guests. All these luxurious products and services are costly thus, minimum charges method
cannot be applied .If it applies this technique then it would be difficult for business to recover all
expenses that may adversely impact on sustainability of organization (Zhang and Wang, 2016).
3.2 Factors which affect revenue generation and profitability
Hilton hotel has strong brand reputation and has become the global firm. It has many
branches across the world. Still there are numerous element that impact on profitability and
revenue generation in Hilton hotel to great extent. Elasticity of demand is one of the most
common component. Change in demand decreases sales of hotel that may negative impact on its
profitability. Furthermore, Price is the biggest factor that affects revenue generation. Not all
people can afford to have luxurious costly services. If Hilton hotel offers costly services then
limited number of guests will take interest (El Haddad, 2015). This will decreases sales of
business unit and will reduces its revenue generation capability. Procurement is another factor
that increases cost of business unit to great extent. If Hilton hotel purchases raw material from
the supplier that gives material at higher cost then it may increase cost of firm. In such condition,
net profit of firm will be decreased.
Question 2
Price influences mind of consumers and affect their spending thus, sales get decreased. In
addition, procurement strategy enhance cost, If Hilton buys material from wrong supplier then it
may fail to offer quality food to customers that may decrease demand .By this way it will not
able to generate revenues (Law and et.al., 2018).
TASK 3
4.1 Range of performance measures and appraisal techniques to individual aspects
There are various approaches implemented by organisation in order to measure overall
performance of company.
Quality management
It is most common method in which enterprise has to manage quality of goods and
services. For that Hilton hotel applies Total quality management, Six sigma approaches. This
assists in identifying issues and rectifying these problems. This aids firm in offering high quality
services to guests and ensuring standards (Madanhire and Mbohwa, 2016).
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Speed of delivery
It is another essential appraisal technique. Hilton hotel has to look the delivery speed adn
have to compare it with other competitors. This is the best way through which actual
performance of operations can be measured.
Sales performance
Hilton hotel can look upon its financial records and can compare sales of current year
with previous year. This aids in finding out growth and constrains elements. According to its
performance entity find out solutions to improve its performance in market so that organisational
objective can be accomplished (El Haddad, 2015).
4.2 Usefulness and limitations of the various quantitative and qualitative appraisal techniques
Qualitative techniques of appraisal are such as speed of delivery etc. This is beneficial in
gathering immediate reviews and finding out issues in operations. But qualitative technique have
lack of description about real functions thus, sometimes company may get fail to understand the
improvement areas and it may fail to meet its objective. Qualitative techniques are helpful in
understanding needs of consumers and implementing changes in product and services (Solnet,
Kralj and Baum, 2015).
Quantitative techniques are such as reviewing financial records etc. By calculating ratios
and comparing previous year, sales enterprise can forecast demand and can calculate actual loop
fall in operations. On other hand, it is not appropriate because it increases complexity. Needs of
consumers get changed every time thus, by looking upon these data entity cannot find out detail
regarding actual demand of its guests (Randhawa and et.al., 2016).
4.3 Approaches to business analysis
There are various approaches that can be used by Hilton hotel in order to analyse business
situation. PESTLE analysis is the method that supports in evaluating external market position of
organisation. This assists in identifying various macro factors that influence the performance of
company to great extent. By this way enterprise can make changes in its strategies can be plan
for improvement (Law and et.al., 2018). On other hand SWOT analysis is another evaluation
method that assist in analysing internal market situation of Hilton. This aids in utilising strength
effectively and minimising lacking points.
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CONCLUSION
From the above study it can be concluded that hospitality industry is growing fast. It has
many opportunities to grow well and expand operations across the world. Hotels have to look
upon the factors price, economic condition, season and accordingly it has to offer goods and
services to consumers. This supports companies in increasing demand and generating more
revenues. Online marketing is excellent merchandising option thorough which firms can expand
their operations and can make connection with mass audience. Organisations have to offer high
quality products and services to customers so that it can retain its buyers in firm for longer
duration and can raise operational performance of entity.
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REFERENCES
Books and Journals
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hotel chain. International Journal of Contemporary Hospitality Management. 27(8).
pp.1791-1813.
Law, R.and et.al., 2018. Systematic review of hospitality CRM research. International Journal of
Contemporary Hospitality Management. 30(3). pp.1686-1704.
Madanhire, I. and Mbohwa, C., 2016. Enterprise resource planning (ERP) in improving
operational efficiency: Case study. Procedia CIRP. 40. pp.225-229.
Mao, Z. E. and Yang, Y., 2016. FDI spillovers in the Chinese hotel industry: The role of
geographic regions, star-rating classifications, ownership types, and foreign capital
origins. Tourism Management. 54. pp.1-12.
Radosavljević, J., Jevtić, M. and Klimenta, D., 2016. Energy and operation management of a
microgrid using particle swarm optimization. Engineering Optimization. 48(5). pp.811-
830.
Randhawa, P. and et.al., 2016. Hospitality service innovations in private clubs. Cornell
Hospitality Quarterly. 57(1). pp.93-110.
Solnet, D., Kralj, A. and Baum, T., 2015. 360 degrees of pressure: The changing role of the HR
professional in the hospitality industry. Journal of Hospitality & Tourism Research.
39(2). pp.271-292.
Styles, D., Schoenberger, H. and Galvez-Martos, J. L., 2015. Water management in the European
hospitality sector: Best practice, performance benchmarks and improvement potential.
Tourism Management. 46. pp.187-202.
Zhang, W. J. and Wang, J. W., 2016. Design theory and methodology for enterprise systems.
Online
Factors that Affect Business Profitability. 2018. [Online].Available through <
https://www.tutor2u.net/economics/reference/strategies-for-improving-business-
profitability >
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