Hospitality Operation Management Report

This report analyzes the hospitality operation management practices of Hilton Hotels, covering aspects like product and service development, pricing strategies, revenue generation, and performance appraisal techniques. It also discusses the importance of sustainable tourism and the role of business analysis, evaluation, and planning in the hospitality industry.

HOSPITALITY OPERATION
MANAGEMENT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
1.1. Analyzing nature of hospitality product and service areas...................................................3
1.2: Different influences affecting patterns of demand within hospitality operations.................4
1.3: Comparing customer profiles and expectations and requirements in respect of Hilton.......5
1.4: Analyzing factors affecting average spending power (ASP) in Hilton.................................5
2.1: Evaluating the key stages in product and service development applied within Hilton........6
2.2 Analyzing the features which contribute towards the customers’ perception of products and
services........................................................................................................................................7
2.3 Assessing the opportunities and constraints affecting product and/or service development
within a Hilton............................................................................................................................7
2.4: Evaluating different merchandising opportunities for products and services of Hilton..........9
TASK 2............................................................................................................................................9
3.1 Evaluating different methods of pricing considering additional pricing considerations.......9
Which of these pricing and additional pricing considerations are applicable in your
organization, and how are they applied?...................................................................................9
3.2: Assess the factors which affect revenue generation and profitability in hospitality
operations...................................................................................................................................10
TASK 3..........................................................................................................................................10
4.1 Appling a range of performance measures and appraisal techniques to individual
aspects of Hilton........................................................................................................................10
4.2 Determining the usefulness and limitations of the various quantitative and qualitative
appraisal techniques and their application to hospitality operations.........................................11
4.3 Appling approaches to business analysis, evaluation and planning appropriate to Hilton.
....................................................................................................................................................12
CONCLUSION..............................................................................................................................13

REFERENCES..............................................................................................................................14

INTRODUCTION
The term hospitality refers to the guest and host relationship. Hospitality industry refers
to as a category of fields broadly (Radosavljević, Jevtić and Klimenta, 2016). It includes service
of lodging, event planning, theme parks, transportation, travelling, food and beverage etc. The
term operation management refers to that area of management that is concerned with design and
it is a controlling process of production and redesigning operations of business that includes
production of goods and services. Thus, in this report hotel Hilton has been taken into
consideration. Hilton is a multinational company that manages a portfolio of hotels and resorts
broadly. It has been founded by Conrad Hilton in 1919.
Thus, in the following report, the overall context of hospitality business is discussed
along with its pros and cons. The nature of products and services areas that influences the
affecting pattern of demand within hospitality industry is analyzed. Further, factors that affect the
average spending power of people and various pricing methods that Hilton considers has also
been highlighted in this following report. Hence, usefulness and limitations of various
qualitative and quantitative appraisal techniques and their applications to Hilton have been
illustrated in this assignment.
TASK 1
1.1. Analyzing nature of hospitality product and service areas.
In Hilton hotel business, nature of Hilton hotels hospitality products and service areas are
discussed as per following context-
Product areas of Hilton
 Perishable- The products are perishable in larger content as they don’t have much
durability. Foods and beverages are perishable products that get contaminated easily.
 Tangible and intangible elements- the service quality of Hilton along with their respective
strength and weakness has two aspects which is known as tangible and intangible. Thus,
tangible service includes interior and exterior design of hotel Hilton along with

equipments available, ambient condition all those things that are easily visible by the
customers. Intangible elements are reliability, responsiveness of customers or assurance
which is not visible by customers of Hilton.
Service areas of Hilton
The main type of service areas for customers are as follows-
 Room division- This helps the customers to get the room of their choice in Hilton. This is
an important sector of hospitality.
 Food and beverage service- This sector offers foods and services to the guests. The
offered foods and beverages must be of high quality with low price that attracts huge
volume of customers.
 Conference hall and banquet- Conference hall is used for meeting or discussions, while
banquets help customers to arrange big feast like lunch or dinner or parties.
1.2: Different influences affecting patterns of demand within hospitality operations.
The demand of customers regarding hotel is not same (Davis and et.al., 2018). Thus,
demand varies according to different factors that includes the following-
 Seasonality- The major customers of Hilton are hikers, climbers. So, they prefer worm
season to visit Hilton. So, there is increase in demand in worm season as compared to
another season.
 Time of the day/week- the group of customers that are most important visitors of Hilton
are families and couple. They mainly choose weekends in order to travel. Thus, demand
is highest in weekends rather than weekdays.
 Healthy living- As customers is health conscious they choose high standard level and
healthy sanitation. So, they prefer hotels having high quality sanitation. These factors also
affect demand of customers to large extent.

 Economic factors- Any kind of regional or national crisis affect the hospitality industry.
Thus, if the income of the customer falls, it may also affect hospitality industry to large
extent. Because customers rarely prefer Hilton if their income is low.
1.3: Comparing customer profiles and expectations and requirements in respect of Hilton.
Thus, based on customer profiles and their expectations in Hilton Following profiles are
prepared.
 Type of Business- The business involved in Hilton are Food and beverage,
Accommodation and tourism. Thus, Hilton is based on accommodation for customers.
 Pricing considerations - The types of customers that mainly visit hotel as customers are
family or couples. This people are concerned for their service rather than the price of that
particular service. This further leads to higher price for services offered.
 Meal experience- Meal experience differs from person to person. If there are customers
like team or sportsmen they prefer light meal rather than others.
 Expectation requirements- the demand of customers varies from one other. Hilton offer
services as per their demand, whatever the demand may be.
1.4: Analyzing factors affecting average spending power (ASP) in Hilton.
Average spending power reveals overall desire of customers. Thus, factors that vary ASP
are as follows-
 Size of income- Size of customers’ income mainly relates to ASP. As if customer is
earning high income then the spending power of client will also increase.
 Status- Status is also an important factor that relates to ASP. Thus, if customer’s status is
high as a royal person then that guest will spend more and prefer high quality services at
any cost.
 Social/ cultural influence- Social or cultural influence the ASP of customers. Some
customers prefer spending more on special occasions or main festivals.

Economic situation - Economic factors are the main reason that affects the spending power
of customers. if economic condition is not good then the customer will lack their average
spending power (Randhawa and et.al., 2016).
2.1: Evaluating the key stages in product and service development applied within Hilton.
Product development can be identified as improvement in products and services in order
to increase profit and customer satisfaction (Van der Wagen and Goonetilleke, 2015). This
process is priority important in case of modification of products that are existed in order to cope
with opportunities and modern marketing trends that are identified. It may help in increasing the
improvements of products and satisfaction of customers. In order to develop products and
services, Hilton must have good and skilled knowledge about the weakness and strengths that are
present in modern marketing trends which has been facilitated by the technology that is
advanced. Thus, according to the principle of the development of product, it includes three key
stages as are core product, augmented product and tangible product.
Thus, five major steps can be identified in product development process that includes the
following-
 Generation of Idea- this stage develops result that is generated by marketing research. It
would be a confirmation that product of Hilton is required is based on existing need of
customers. Generation of idea helps Hilton in order to meet the needs and requirements
of customers easily and earn huge profitability.
 Screening process- In this stage, the ideas are generated or collected by media, potential
customers and employees. Thus, with help of these ideas, Hilton can identify the
competition of products and services according to the market trends and accordingly
produce goods and services that will lead Hilton towards success.
 Evaluation of Idea / Development of Concept- in this step of evaluation of idea, revenue,
cost and also the profits that is expected can be identified easily. Thus, market research is
important in reaction to this step and the first customers that are expected may be
described theoretically. According to the idea generation and screening process, the
concept regarding product and service improvement is developed by Hilton.

 Product development / Business Analysis- in this step of development of product, the
physical production of product and its manufacturing process is done and thus, selling
price is also determined. Further, testing of product is also done in this step. Business
analysis is done in order to achieve high term profitability.
 Commercialization process- in this step the campaign process of production of goods and
services of Hilton is done. In this stage new products and services are introduced to
market so that customers get easily attracted towards Hilton.
2.2 Analyzing the features which contribute towards the customers’ perception of products and
services.
In globalized economy it is hard to find the differences between products and services as
compared earlier (Bowie and et.al., 2016). Therefore, substitutes to products and services
become major problem in Hilton. So, Hilton used price reduction methods in order to cope with
this problem.
The process of purchasing and attitude of customers can be considered as function of
quality, level of satisfaction and value of product. Thus, customers past experience and
information provided by media may facilitate process of trailing. But, after the process of
purchasing customers awareness regarding products and services may be affected mainly by
satisfaction level, quality and value. Thus, optimum factors for customers is always available.
The value of goods and services is therefore related commonly with price. But customers are
excelled to pay high amount to high quality products and services in Hilton.
2.3 Assessing the opportunities and constraints affecting product and/or service development
within a Hilton.
Opportunities are those that helps in boosting up business, that helps in increasing sales
revenue and profit. Different constraints restrict operation of business that leads to decrease I
sales revenue and profit. Thus, various opportunities and threats have been discussed below with
help of Swot analysis.

Illustration 1: Swot analysis
(Source: SWOT Analysis: Theory, 2018)
Strengths-
 Hilton has strong property portfolio and vast scope of business.
 They also enjoy high level of service customization that is achieved with help of
technological integration.
Weakness-
 They depend on US market at high level.
 Hilton is large scale industry so they have lack of flexibility. Any situation can affect
them easily.
Opportunities-
 They may establish their presence in mid-level budget sector.
 They can further expand their market internationally.
Threats-
 Macro-economic climate changing easily acts as a biggest threat for Hilton.

 Loss of key talent and loss of key personnel is also a threat for business.
2.4: Evaluating different merchandising opportunities for products and services of Hilton.
Due to globalization, people have to travel much for purpose of business (Chan and Hsu,
2016). Thus, this increased the business of hospitality industry all over the world. Thus, Hilton
gets many different merchandising opportunities as follows-
Hilton will have opportunity of creating more value with premium pricing as guests
prefer high quality of foods and services depending upon their income or standard of living.
Besides this, if economic condition of the tourists or their country are stable than it gives
good advantage or opportunities to increase or expand their business over there.
TASK 2
3.1 Evaluating different methods of pricing considering additional pricing considerations.
 Cost oriented pricing - In this, price is based on production cost
 Market oriented pricing - Marketing research is conducted in order to understand
competitors and according to that price is conducted.
 Service charge- It is a type of fee that is paid for primary product or services in addition
to initial price.
 Cover charge- Cover charge is a sum of money that is paid in addition to the bill. There is
cover charge of 10% on final bill.
 Minimum charge- It is a least amount on interest that is paid by someone o\in a credit
card company if balance has been accrued.
Question 1
Which of these pricing and additional pricing considerations are applicable in your
organization, and how are they applied?
Hilton adopted market-oriented pricing that means the cited company sets price
according to the price of competitors. Hilton makes research of the prices that are applied by

competitors, then measure the cost of products and services offered by them and accordingly set
prices that are low from competitors and may not face any financial crisis.
3.2: Assess the factors which affect revenue generation and profitability in hospitality operations
• Thus, factors that affect revenue generation of Hilton has been described below-
• Shelf life- raw or processed food products deteriorate during processing, distribution and
storage. Thus, presence of micro- organizations and their growth may affect the quality of
the particular product. Thus, Hilton has to come up with this and make changes
accordingly so that it won’t affect revenue generation.
• Elasticity of demand- demand will be high if product or services offered by Hilton will be
fashionable. Thus, products with less demand leads to low profit for company. Hilton has
successfully carved out brand loyalty in making customers demand increase.
• Product - They must produce goods and services in a unique way so that they can easily
achieve or attract large number of customers.
• Price - they can use premium pricing for customers. The price of a product must be
affordable so that they can easily attract huge volume of customers.
• Promotion - Hilton can use unique promotion strategy for promoting goods and services
that is offered to the customers. Innovative and creative ideas may lead in achieving huge
profit.
• Place - Hilton can provide comfortable and family environment to the customers. This
will help customers to enjoy service comfortably.
TASK 3
4.1 Appling a range of performance measures and appraisal techniques to individual aspects
of Hilton.
Performance measures are termed as the best application in order to find the
performance of Hilton and various employees that are working there (Wood, 2015 ). The

operational manager of Hilton has to consider service cost and quality along with the time
management. Thus, it is based on different techniques as discussed below-
Quality management - In this method, the operational manager of cited company
has to analyze the quality of the product and find ways to improve it more to attract large
number of customers. Thus, quality management also helps in expansion of business and
diversification of Hilton.
Speed of delivery- The manager of Hilton has to monitor on speed of delivery of
products and accomplishment of desires. This leads in attracting huge volume of guests due
to fast service of Hilton.
Developing qualitative and quantitative data - Thus, to measure the operational
performance the manager has to collect data by researching on service offered, customer
satisfaction, product pricing, number of royal customers.
Data analysis - The data that are collected are later compared with the expected
performance. Thus, with help of this the operational manager can evaluate the actual
performance and improve it accordingly.
External comparison - This includes pricing or quality of service which are further
compared with target business of Hilton.
Sales performance- This is also one of the techniques that is used by Hilton that
includes performance of sales in increasing revenue of business. Thus, it later leads in
achieving high profitability.
4.2 Determining the usefulness and limitations of the various quantitative and qualitative appraisal
techniques and their application to hospitality operations.
The performance appraisal techniques are based upon the sample data sometimes, which
cannot be taken as the actual performance of Hilton (Amirudin and et.al., 2017). Thus, quality of
service and products and employees along with their attitude are considered as quantitative
appraisal methods. These questions can be arrived with help of meetings, group discussions or
interviews.

Thus, main drawback of this techniques is that they cannot be applied where there is
wider population. The products or services offered by Hilton are satisfying desires of some
people that doesn’t mean that it will satisfy each customers desire, as requirements vary from
person to person.
Usefulness of qualitative techniques-
 It allows in exploring the topic in depth and in detail than quantitative one.
 It is less expensive than quantitative data because Hilton don’t have to use extensive
methods.
 It offers flexibility because interview is not done with large number of people.
Drawbacks of qualitative techniques-
 It cannot identify the volume of the audience that has to answer.
 Topics are not generalized easily by Hilton.
Usefulness of quantitative techniques-
 The data is collected very fast so analysis can be done quickly.
 It allows Hilton to generalize findings beyond the group of participants.
Drawbacks of quantitative techniques-
 The experiments that are done in terms of quantitative techniques are very costly.
 People who are willing in order to respond may share characteristics that may not apply
to audience
4.3 Appling approaches to business analysis, evaluation and planning appropriate to Hilton.
Such operation includes catering as well as accommodation, marketing, and also demand
generating source. Before, customers were provided with lodging facilities but nowadays Hilton
offers them with various services or facilities that increases the value for customers of Hilton
(Robinson and et.al., 2016).

Thus, there are three major categories that may generate profit for the Hilton. These
categories mentioned includes in house guests, nonresidents and organized groups. Further,
Hilton also includes three types of sources of demand that involves institutional, transitional and
recreation. All this helps in impressing customers and building good demand of products in
demand. Thus, the additional services offered by Hilton helps in attracting large number of
customers towards the brand and increase the brand image.
Business analysis is termed as research in order to identify needs of business and appropriate
solutions to problems of business. The term business evaluation is referred to as review of entire
business and is conducted in order to determine overall operation of business before owner sells
it (Lope, 2016). Business plan is a statement of goals of business and making appropriate plans
in order to reach them.
CONCLUSION
Thus, from above report it has been concluded that sustainable tourism can be identified
as one of the effective attempts that helps in generating employment for people and also creates
minimal impact on culture and environment of country. Thus, in the above report, Hilton is taken
into view where there is development in business. Thus, product of Hilton is expanding as per
the development.

REFERENCES
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Journal of Contemporary Hospitality Management. 27(3). pp.340-361.
Van der Wagen, L. and Goonetilleke, A., 2015. Hospitality Management, Strategy and
Operations. Pearson Higher Education AU.
Wood, R.C. ed., 2015. Hospitality management: A brief introduction. Sage.
Online
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https://en.wikipedia.org/wiki/Hospitality_industry>
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<https://research-methodology.net/theory/strategy/swot-analysis/>