Product and Service Development in Hospitality Industry

The provided assignment delves into the realm of product and service development within the hospitality industry. It highlights the significance of new product development processes, brand image and quality, as well as elasticity of demand in determining revenue and profit. The assignment references various books and journals that discuss human resource management in the hospitality industry, sustainability, customer experience, loyalty, and word-of-mouth. It also touches upon outsourcing and trust within the industry. The key stages of product development are illustrated, and the importance of soft skills in hospitality management is emphasized.

Hospitality Operations
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Analysis of nature of hospitality product and service areas..................................................1
1.2 Evaluation of various types of demand within hospitality operations..................................2
1.3 Comparison among customer profiles and their expectations and demand..........................2
1.4 Analyse factors which affects average spending power (ASP) of customer in hotel..........3
2.1 Evaluate the key stages in product and service development applied within a hospitality
operation......................................................................................................................................4
2.2 Features contributes to customers’ perception of products and services..............................5
2.3 Assess opportunities and constraints affecting product and/or service development for
Hotel “Montcalm Royal London House”....................................................................................5
2.4 Evaluate different merchandising opportunities for hospitality products and services........6
TASK 2............................................................................................................................................6
3.1 Evaluate different methods of pricing taking into account additional pricing considerations
.....................................................................................................................................................6
3.2 Analysis of factors which affect revenue generation and profitability of Hotel “Montcalm
Royal London House”.................................................................................................................7
TASK 3............................................................................................................................................8
4.1 Apply a range of performance measures and appraisal techniques to individual aspects of
hospitality operations, the product and the whole operation.......................................................8
4.2 Determine advantage and disadvantage of various quantitative and qualitative appraisal
techniques and their application to Hotel “Montcalm Royal London House”............................8
4.3 Approaches to business analysis, evaluation and planning appropriate for Hotel
“Montcalm Royal London House”..............................................................................................9
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Operations management means a process through which planning, organising and
supervision of business operations can be done in effective and relevant manner. This is the best
technique through which higher profits can be achieved (B. DiPietro, Cao and Partlow, 2013).
Operations management can be done with some required skills such as proper understanding
process, coordination among departments, creativity, use of technology, etc. Hospitality is the
industry which deals with lodging, event planning, cruise, travelling facilities, amusement park,
etc. Hotels, restaurants, space for events, banquet, halls, etc. are some example of hospitality
facility, etc. This report is based on Hotel “Montcalm Royal London House”. This is one of the
finest hotel in London situated at heart of England. In this report there is discussion about
operational and economic characteristics of hospitality operations, environment through which
product development can be done, pricing and profitability concept, use of appraisal techniques
are discussed.
TASK 1
1.1 Analysis of nature of hospitality product and service areas
Hospitality is the sector which provides space for parties, meeting, official or personal
meeting, accommodation, etc. This is the area where person reside to enjoy external region apart
from their native place. These days people want good and lavish services which are significant
and relevant for providing internal peace and satisfaction to customers.
Product or services offered by Hotel “Montcalm Royal London House”
Perishable- Perishable is the product which does not resist for longer time. Fore e.g.:
various food items which can not retain for longer time (Bharwani and Butt, 2012).
Tangible/intangible- Apart from food items, there are many other services such as space
for party, banquet halls, etc. are tangible. While at the same time there are some facilities such as
pick and drop service from airport, brand image, logo, excellent ambience, etc. are part of
intangible services offered by Hotel “Montcalm Royal London House”.
Service areas of Hotel “Montcalm Royal London House”
Food and beverage: Hotel “Montcalm Royal London House” has main aim to service
dishes and beverages to customers. As there is difference in demand of customer's according to
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occasion, taste or geographical background hence it must be considered by managers to make
good brand image in hospitality industry.
Conference and banqueting- Hotel “Montcalm Royal London House” has space as
banquet halls. These are offered to customers for meeting, official parties, private dinner, etc.
There are big conference halls also with luxurious facilities to clients.
1.2 Evaluation of various types of demand within hospitality operations
There are varieties of people who come to avail service in hotel. There are varieties of
reason for which hotel services are needed. This is the responsibility of managers to evaluate and
analyse customer demand. This is effective for achieving good brand image in hospitality
industry because customers are satisfied (Boella and Goss-Turner, 2013).
Seasonality- Season of the reason which affects demand of customers. There is
difference in demand for which hotels are booked. For instance: in vacation time, hostels are pre-
reserve. While in off season, hotels are unreserved.
Time of day/week- At week end, there is more booking by couples, friends, family
functions, etc. hence banquet halls are reserved. While in week days, business meeting and
conferences are booked, so conference halls, town halls are reserved.
Cultural, regional factor- There is difference in culture, religion of customers. Due to
geographical reason, there is difference in demand of food as well. Hence this factors must keep
in mind by managers of Hotel “Montcalm Royal London House” so they can satisfy customer's
demand.
Economic factors- Finance is one of the biggest factor which affects demand of product
and services from Hotel “Montcalm Royal London House”. For instance: Customers having less
budget does not ask for fitness and Spa facilities.
1.3 Comparison among customer profiles and their expectations and demand
There is difference in expectation of customers because of difference in their desire,
expanding power, income level, etc. Operations managers of Hotel “Montcalm Royal London
House” is responsible to manage commercial activities of various departments so satisfaction can
be attained (Cetin and Dincer, 2014).
Spending power- Spending power is one of the essential factor of customers which
differs among them. For instance, if customer is residing at Hotel “Montcalm Royal London
House”, with family then they have good budget. While vice versa in case of official tours.
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Expectations and requirements
Family have expectation of full furnished service with good room service. They have
expectation for some complementary services. In case of vacation with family, customer have
demand for kid’s zone, swimming pool, etc.
While in case of official trip, basic services are expected such as proper room, dining area, etc.
Official team have demand for alcohols, other hard drinks with pub facility.
Menu/accommodation range- Hotel “Montcalm Royal London House” have vast range
of food. This is one reason for which customer visit and stay in hotel. There is difference in
demand of customer as per reason to reside in hotel. For instance: vacations are for longer
duration as compared to college trip (Gunasekaran and Ngai, 2012).
Expectations and requirements
Expectation of a family on vacation is related to their cultural values. For instance: if
family background has vegetarian background. Then theyt prefer vegetarian beverage. While at
college trip, there is difference in food demand.
Pricing considerations: Pricing consideration is one of the important aspect which
affects demand of customers of Hotel “Montcalm Royal London House”. For instance there is
difference in room fare of Triple and President suite.
Expectations and requirements
In this case, there is expectation of lavish ambience of president suite as compared to
triple room. Triple room have bed for three twin bed. While president have grand facilities with
luxuries supplies. For this room customer have expectation of tailor made services.
1.4 Analyse factors which affects average spending power (ASP) of customer in hotel
Average spending power refers to ability of customers to spend for hospitality services.
There are varieties of customers who visit Hotel “Montcalm Royal London House”. This hotel
provides many services such as restaurants, Hot Tub, Spa, Fitness centre, etc. But there is
difference in customer's expending power (Leeman and Reynolds, 2012). There are some factors
such as income, status, etc. which affects expanding power of customers. They are discussed in
detail as under-
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Size of income- Budget determined by customer is one factor which affects expansion
power. For instance: if customer has low income, then they expand low on hotels.
Status: Status is also factor which affects expansion power. If person is single, then he
book single room which is cheap. While in room of three they will book, triple which is costly.
Social/cultural influences- Social and cultural factor also affects expansion power. If
cultural value does not allow to intake alcohol, so they do not expand on it.
Economic situation- If financial condition of customer is not stable then they do not ask
for more lavish and luxurious services in Hotel “Montcalm Royal London House” (Legrand,
Chen and Sloan, 2013).
2.1 Evaluate the key stages in product and service development applied within a hospitality
operation
Hospitality industry is one of the fastest growing sector because there is more demand for
different hotel services. Hence there is competition in this sector. So operations manager of Hotel
“Montcalm Royal London House” take some steps to launch new services i.e. “Herbal Spa”.
Idea generation- First of all operations managers of Hotel “Montcalm Royal London
House” gets idea to develop new product and services for customer satisfaction. In Hotel
“Montcalm Royal London House”, there is demand of herbal spa, hence operations managers
thinks to add this service.
(Source: Key stages in product and service development, 2018)
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Illustration 1: Key stages in product and service development

Idea screening- There are different ideas which occurs in mind of managers. Hence best
idea is selected among thenm in this step. There are two ways through which this service can be
launched i.e. outsourcing or add this service to hotel.
Concept development and testing: There is requirement of testing both option in terms of
quality of service and cost to customers.
Business analysis- While launching this service, there is requirement to analysis profits
for Hotel “Montcalm Royal London House”. Source through which managers are able to earn
good profits can be earned is selected.
Product development- After analysing both aspect herbal spa services is launched
throughout sourcing. This is relevant because this provides latest and best services as per
customer demand (Myung, McClaren and Li, 2012).
Test marketing- In this step, testing is done. This is done among hotel employees. In case
of any default, corrective measure can be taken.
Commercialisation and launch- This is the last step in new product development. After
testing and taking corrective measure actions are taken to launch in market for customers.
2.2 Features contributes to customers’ perception of products and services
In current market, customer expand money with proper analysis and want full return of
their money. Managers of Hotel “Montcalm Royal London House” feels that there are some
factors which affects perception of customers. These are discussed as under-
Brand image- Brand image is one of the important aspect which is considered by
customer before selecting hotel for accommodation. Brand image of Hotel “Montcalm Royal
London House” can be improved with better quality of services (Nickson, 2013).
Nutrition and dietary requirement- These days customers wants proper dietary food. If
Hotel “Montcalm Royal London House” is not using food of up to the mark quality, then this
affects customer's perception.
Disabled access- In current market, there is equal rights to disabled person also. Hence if
proper services are not available for disable, then this affects customer's section regarding quality
of services.
Availability of resources- In hotel, there is difference in demand of customers on
different basis. Some demand arises which is not predetermined. In such cases if demand is not
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fulfilled by managers of Hotel “Montcalm Royal London House”, then this affects perception of
customer in negative way. For instance, room service personnel is not available at time.
2.3 Assess opportunities and constraints affecting product and/or service development for Hotel
“Montcalm Royal London House”
In hospitality industry, there is much competition, so it is essential for Hotel “Montcalm
Royal London House” to make strategies through which competitive advantage can be gain.
There must be value addition to exiting product and services, so this helps to attain good image
among customer (Pegg, Patterson and Gariddo, 2012).
Opportunities for Hotel “Montcalm Royal London House”
These days’ consumers want more hygiene service with good quality food. People are
more health conscious food. Hence if some dishes or beverages with full vitamins and fibres are
considered. This provides edge to Hotel “Montcalm Royal London House” over others. With
good and improved quality services, brand image gets improved.
Constraints for Hotel “Montcalm Royal London House”
There is requirement of some constraints in hospitality industry which may give negative
impact on image of Hotel “Montcalm Royal London House”. As many as firms are opening in
hospitality sector, some threats such as difference in demand of consumer also arise. For
instance: if cultural and regional value of customers does not allow to eat non vegetarian this
restricts growth of company of such dishes served in front of them.
2.4 Evaluate different merchandising opportunities for hospitality products and services
Merchandising means actions taken in order to promote product and services. Promotion
of product and services is the best way through which sales and profits of association can be
increased. In hospitality services new arrival of product and services are taken place so they
merchandise product and services with different measures (Rodríguez-Antón, and et. al., 2012).
They are discussed as under-
 Merchandising of product and service in Hotel “Montcalm Royal London House” can be
done with personal selling. When customer visits hotel, then manager introduce new
product or service launched. There must be discussion about its positive points of it.
 Apart from this promotion of promote and services can be done through TV
advertisement, hoarding, making celebrity as ambassador, etc. This helps to give positive
impact on perception of consumers.
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TASK 2
3.1 Evaluate different methods of pricing taking into account additional pricing considerations
Price is the component which is charged in lieu of availing some services. There are
different services raised by customers, hence these services can be produced with different
resources, so this is part of cost. After adding profit to it, it become price for customers.
Hotel “Montcalm Royal London House” use cost oriented and minimum charge pricing
strategy. With these strategies, it is easy to cover basic cost.
Cost oriented pricing- This is the cost which covers actual and basic expenditure
occurred in priding services top customer. Managers of Hotel “Montcalm Royal London House”
charge basic amount and make some profits which is relevant for attaining profits (Sisson and
Adams, 2013).
Minimum charges- This pricing strategy is adopted by Hotel “Montcalm Royal London
House” in off- season. This is price when discounts and offers are running,. This is relevant
because it make company to retain some percentage of cost. This is the cost in which margin of
profit is nil.
3.2 Analysis of factors which affect revenue generation and profitability of Hotel “Montcalm
Royal London House”
Revenue generation and profitability is one of the important aspect which has to be
considered by mangers of Hotel “Montcalm Royal London House”. This is the basic reason for
which association run in society, hence managers take innovative actions. But there are some
factors which affects revenue generation and profitability are as under-
Labour Intensity- Labour are the asset for big organisation. Labour intensity is measured
in proportion to produce goods and services (B. DiPietro, Cao and Partlow, 2013). In case,
employees are not available with Hotel “Montcalm Royal London House” then this affects
customer's satisfaction and has negative impact on revenue and profits. In Hospitality sector,
there is more use of labour because they intearct with customer more to provide them services.
Hence in case of rise or fall in labour market, then there is direct impact on profits and revenues
of Hotel “Montcalm Royal London House” in negative way. In case labour cost increase then
profits gets reduces and vice versa.
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Elasticity of Demand- Rule of price elasticity states that there is negative relationship
between price of services of hotel and quantity demanded. In case price of product and services
increases, then demand decreases and vice- versa. Hence when price rises, demand of services
from Hotel “Montcalm Royal London House” decrease. This gives negative impact on revenue
and sales of association.
Standardisation- There must be some standardisation of product and services offered by
Hotel “Montcalm Royal London House”. These days, customer wants hygienic and clean
services, hence in case of low standard services revenue and profits of Hotel “Montcalm Royal
London House” gets affected in negative way.
Price- Price is one of the crucial factor which affects organisational goals and objectives.
If services of Hotel “Montcalm Royal London House” is overpriced, then customers do not
prefer to avail services. While if price of service is under priced, then customer think services are
not up to the mark and ultimately sales and revenue gets affected.
TASK 3
4.1 Apply a range of performance measures and appraisal techniques to individual aspects of
hospitality operations, the product and the whole operation
Performance measurement is the measure which is used by managers of Hotel
“Montcalm Royal London House” for collection, gathering and analysing information related to
performance of consumers. This is the way through which positive and negative performance can
be measured.
Managers of Hotel “Montcalm Royal London House” different aspect which is relevant
and significant for performance appraisal. Some techniques are discussed as under-
Speed of Delivery- In hotel industry, delivery of services must be on time and speedy.
This is the one way through which managers can judge performance of individual (Bharwani and
Butt, 2012). If service is fast, then other operations do not halt. Hence this helps to reduce cost
and time of operations.
Quality Management- Quality of services offered is also a measure in hospitality sector
to analyse performance. There is provision of feedback from customers to analyse performance
of employees. In case of negative feedback or dissatisfaction among customer, employees are
marked as negative and vice versa.
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Net profit- Profit is measure for which Hotel “Montcalm Royal London House” operates
in society. If good profits are earned by particular unit, then this is relevant for attaining good
image and performance of employees can be appraised
4.2 Determine advantage and disadvantage of various quantitative and qualitative appraisal
techniques and their application to Hotel “Montcalm Royal London House”
Qualitative approaches are the method which is used in older days. Hence this approach
is also known as traditional approaches of performance management (Boella and Goss-Turner,
2013). These are the approaches which is based on worker's personal experience, skills,
knowledge, etc. Some examples of this qualitative approach are checklist, rating scale, forced
distribution method, etc.
While quantitative method is known as modern method. This is the method of appraisal
on the basis of performance of workers. As per performance of assigned task, managers measure
performance. Some approaches of quantitative method are 360 degree feedback, 720 degree
feedback, management by objectives.
In Hotel “Montcalm Royal London House” quantitative method is used because this is
free from personal judgement of individual. This is the best way through which positive result at
work place can be known. Researchers set some benchmarks which has to be attained by
employees through hard work and supervision. Hence this improves performance of Hotel
“Montcalm Royal London House”.
Basis Advantages Disadvantages
Qualitative approaches There is set standards and
benchmarks on the basis of
which appraisal is done. So
less time is required to perform
it.
This method is based on
personal biassness. Hence
possibilities of wrong appraisal
arises.
Quantitative method Managers of organisation
maintain log book of each
employees. So performance
appraisal results in positive
way.
This is time consuming
process because there is proper
maintenance of past year
records.
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4.3 Approaches to business analysis, evaluation and planning appropriate for Hotel “Montcalm
Royal London House”
Business analysis means to make strategies according to external environment. This is
essential for organisation because this provides opportunities to resolve problems (Cetin and
Dincer, 2014).
Business evaluation means analysis of some options which are relevant and significant
for attaining positive results. This gives emphasise on approaches to improve sales of Hotel
“Montcalm Royal London House”.
Business planning is the approach which is relevant and significant for making strategies
so business operations can be attained on time and within specified budget.
These days, there is difference in demand of customers. So it is essential to make
strategies which helps to increase goodwill in industry. Hotel “Montcalm Royal London House”
are not offering facility of herbal Spa, but after business analysis, managers make strategy to
launch this service. This service is launch after evaluation of resources to select best among
available. At last, business planning is done related to how business activities are done. This is
relevant and significant for attaining goals and targets.
CONCLUSION
From the above discussion it is clear that operations which is performed by different
departments of association are organised in synchronise manner. In hospitality industry different
elements are covered such as amusement park, food and beverages, space for events, etc. In this
sector, there is difference in demand and expectation of lower income and high income
customers. Innovation in product and services can be done through new product development
process. Brand image and quality of services are important elements which affects image of
brand. Elasticity of Demand is crucial factor which affects revenue and profit of association. 720
degree of approaches is the best technique to judge performance of employees at work.
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REFERENCES
Books and Journals
B. DiPietro, R., Cao, Y. and Partlow, C., 2013. Green practices in upscale foodservice
operations: Customer perceptions and purchase intentions. International Journal of
Contemporary Hospitality Management. 25(5). pp.779-796.
Bharwani, S. and Butt, N., 2012. Challenges for the global hospitality industry: an HR
perspective. Worldwide Hospitality and Tourism Themes. 4(2). pp.150-162.
Boella, M. and Goss-Turner, S., 2013. Human resource management in the hospitality industry:
A guide to best practice. Routledge.
Cetin, G. and Dincer, F. I., 2014. Influence of customer experience on loyalty and word-of-
mouth in hospitality operations. Anatolia. 25(2). pp.181-194.
Gunasekaran, A. and Ngai, E. W., 2012. The future of operations management: an outlook and
analysis. International Journal of Production Economics. 135(2). pp.687-701.
Leeman, D. and Reynolds, D., 2012. Trust and outsourcing: Do perceptions of trust influence the
retention of outsourcing providers in the hospitality industry?. International Journal of
Hospitality Management. 31(2). pp.601-608.
Legrand, W., Chen, J. S. and Sloan, P., 2013. Sustainability in the Hospitality Industry 2nd Ed:
Principles of Sustainable Operations. Routledge.
Myung, E., McClaren, A. and Li, L., 2012. Environmentally related research in scholarly
hospitality journals: Current status and future opportunities. International Journal of
Hospitality Management. 31(4). pp.1264-1275.
Nickson, D., 2013. Human resource management for hospitality, tourism and events. Routledge.
Pegg, S., Patterson, I. and Gariddo, P. V., 2012. The impact of seasonality on tourism and
hospitality operations in the alpine region of New South Wales, Australia. International
Journal of Hospitality Management. 31(3). pp.659-666.
Rodríguez-Antón, J. M. and et. al., 2012. Use of different sustainability management systems in
the hospitality industry. The case of Spanish hotels. Journal of Cleaner Production.
22(1). pp.76-84.
Sisson, L. G. and Adams, A. R., 2013. Essential hospitality management competencies: The
importance of soft skills. Journal of Hospitality & Tourism Education. 25(3). pp.131-
145.
Online
New Product Development stages. 2018. [Online]. Available
through:<http://www.innovationcoach.com/2013/05/8-step-process-perfects-product-
development/>.
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