Financial Contribution and Pricing Principles in Premier Inn

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
1. Explanation of financial contribution that room's revenue producing areas make to the
business unit.................................................................................................................................1
2. Demonstration and application of principles of pricing to the room's product and evaluation
of potential benefits of effective practices to profitability...........................................................2
3. Evaluation of methods which are used to optimise profitability as applied to a fixed capacity
inventory, recognizing dynamic growth in related technological developments........................4
4. Explanation of the way in which codes of conduct, legislation and best practice directly
affect accommodation procedures...............................................................................................5
5. Identification of expectations of customers from diverse markets and explanation of the way
in which providers of accommodation meet their needs through effective use of quality
management processes.................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Revenue management can be defined as the process which is focused by business entities
for the purpose of using distribution and pricing tactics to sell their inventory (rooms) to the right
guests at right time in strategic manner. With the help of it all the resources are managed by them
in more effective way (Camilleri, 2018). Main aim of this report is to analyse the way in which
hotels are managing their room strategically. The organisation which is selected for this report is
Premier Inn which is a British hotel chain and currently it is operating business in various
locations all around the world. It was founded in year 1987 and its headquarter is in Dunstable,
UK. This assignment covers various topics which are financial contribution made by room's
revenue, application of principles of pricing, evaluation of methods used to optimise
profitability. Additionally, explanation codes of conduct, legislation and best practices along
with expectations of customers from diverse markets are also covered in this project.
MAIN BODY
1. Explanation of financial contribution that room's revenue producing areas make to the
business unit
Premier Inn is considered as one of the biggest hotel chain which is rendering its services
world wide in different locations. Currently it has 800 hotels in various nations including United
Kingdom, Ireland, Germany, United Arab Emirates, India and many more. It was founded by
Whitbread in year 1987 and it is mainly established in Dunstable, UK. There are various rooms
revenue producing areas which are making contribution in the business unit. All of them are
described below:
 Room rentals: It is one of the main source of generating revenues in hotels. Premier Inn
also generates income by renting rooms to different guests which are visiting from
different locations all around the world. The rental rate of the organisation fluctuates
according to the demand in the market (El Haddad, Hallak and Assaker, 2015). Guests
visit the hotel at reception and then room is allocated to them according to their
preferences which helps to enhance their satisfaction level of result in higher revenues of
the organisation. Currently the annual revenues of the organisation are 3295 million
pounds for year ending 2018 (Financial contribution of room rental, 2018). The direct
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booking percentage for room rentals is around 97% which is 1317.1 it means it makes the
highest financial contribution in the revenues of the organisation.
 Food and beverage sales: All the hotels provide best food and beverage items to all the
guests according to their preferences. Management in Premier Inn makes sure that
customers get best eating and drinking products so that higher revenues could be
generated by the organisation. Food and beverage revenues growth for year 2017 of the
entity was 4.6% which is increased in 2018 up to 5.4% which means in this financial
period this areas has contributed a large amount in income as compare to previous year
(Financial contribution of food and beverage sales, 2018). The contribution for year
2018 is 1275.5 of total income.
 Meeting room rentals: Most of the large hotels provide facility of meeting rooms to
their clients in order to acquire higher profits. Premier Inn also provide this service to its
customers to conduct official get together. All the rooms which are made for this purpose
are air conditioned and have free wifi services. The hotel provide two choices to the
clients for the place for meeting in which first one if room only and second is day
delegate. It also make financial contribution in the revenues of the whole group (Meeting
rooms in Premier Inn, 2018).
2. Demonstration and application of principles of pricing to the room's product and evaluation of
potential benefits of effective practices to profitability
Pricing principles: In all the organisations different types of values are used for the
purpose of setting appropriate price for all the products and services which are rendered to the
customers these are known as pricing principles. With the help of them management decide the
appropriate and best suitable rates for all the items that are sold to clients. In Premier Inn these
are also utilised by top level executives. Description of all of them is as follows:
 Cost plus principle: Under this principle the pricing of the services are driven by the
organisations them selves according to the cost structure. It may be heavy on the
unwarranted overheads of the entity. It could be applied by the managers of Premier Inn
to set the prices of rooms according to their predetermined cost structure (Evans, 2015).
 Competitive principle: While using this principle companies set prices for their products
and services according to the situations of competitive market place and competitors
which are carrying out operations in same sector. If it is selected by organisations then
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