Hospitality Operations and Revenue Management

This report discusses financial contribution, pricing principles, profitability optimization, industry codes of conduct and best practices in Hilton Choice Hotel. It explores various methods to optimize profitability and explains the impact of industry codes of conduct and best practices on accommodation procedures.

Hospitality Operations and
Revenue Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
LO1..................................................................................................................................................3
Explaining financial contribution that room's revenue producing areas make...........................3
LO2..................................................................................................................................................4
Demonstrating principles of pricing to room' product along with benefits................................4
LO3..................................................................................................................................................6
Evaluating the various methods to optimize profitability ..........................................................6
LO4..................................................................................................................................................8
Explaining Industry codes of conduct and other best practices affect accommodation
procedures...................................................................................................................................8
LO5..................................................................................................................................................9
Explaining effective use of quality management processes and design. ..................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Revenue management in hotel can be defined as a procedure where analytics and all
relevant information is utilized in order to predict customer behaviour and take vital decisions
related to pricing strategies. The present report is based on Hilton Choice hotel which is based in
Maryland, united states founded in 1939. Report will discuss financial contribution that room's
revenue producing areas make the businesses. Further, it will demonstrate the principles of
pricing to room's product and potential benefits of such pricing. In addition to this, study will
also analyse methods used to optimize profitability. Study will explain industry code of conducts
and best practices that affect accommodation practices. Lastly, it will identify customer
expectation from diverse markets and design of quality management process.
LO1
Explaining financial contribution that room's revenue producing areas make
A revenue center at a hotel is that center which provides goods and services to their
guests and earns revenue for hotel. These center do not provide direct income but plays very
important and supporting role in earning income for hotel. There re various revenue center like
front office, food and beverage outlets, Spa centre, business centre, etc. The departments have
direct interaction with customers to provide them goods or services (Vives, Jacob and Payeras,
2018). Hilton Choice hotel break down business activities into small revenue center so that
profitability can be examined of all goods and services provided by them.
Room sale:
The major revenue producing area is room sales because most of the income come from
occupying rooms with guest and customers. Hilton Choice hotel provide excellent room sale
services to its customers by giving various sallied services to them and satisfying the most. In
order to do repeat business, making good deals with customers is important which can be done
by segmenting target audience o that nicer offers can be offered to right type of customers. Hotel
does direct booking from online platform to make it easier for guests. Another benefit of direct
booking is that there are no middlemen or agents to be paid commission.
Laundry service:
The main purpose of laundry service is to provide customers with clean laundry. The
small details matter a lot to guests and when they see clean white towels and bed sheets (Liu and

et.al., 2020). It is also cost effective because keeping a huge stock on hand will be very
expensive. Further, laundry service also aids Hilton Choice hotel to comply with licensing and
government regulations and keep inspectors happy.
Telephone / Wi-Fi service:
Customer love free Wi-Fi and telephone service which is already included in room
charges with no extra charges. It allows them to do things that please them on phones and can
also control TV, room temperature, AC, lights, etc. (Sudarto and Hapsari, 2019) This is the best
service provided by Hilton Choice hotel to bring repeat business because guest think that
company is personally taking care of them.
Room service:
In luxury hotel like Hilton Choice hotel, room service is very beneficial to increase
revenue. A facility provided by Hilton Choice hotel for 24*7 shows wishes of guest to have more
luxury and saves time (Abrian, Adrian and Surendra, 2019). Guests can easily order food from
room and can eat and drink at their convenience. Mini bar facilities with small refrigerator to
fulfil needs of guests is not much profitable to business, however, it is provided.
Spa facility:
The facility offered by Hilton Choice hotel gives a secluded realm to their guest so that
they can escape from their busy schedule and enjoy (Bakirtzoglou, Vryoni and Ioannou, 2018). It
is an important revenue generator for hotels because guest are easily attracted to such service
which is already included in room charges. It is an indispensable part of luxury hotel to enhance
revenue and profitability level.
Meeting & Conference sale:
Conference meeting and events is a great way to boost revenue of Hilton Choice hotel by
attracting big professionals and business travellers. Holding big meeting and events increase
reputation & goodwill of company and builds long term business with high-class people. For
example, taking business conference which will include 500 companies will expose Hilton
Choice hotel to such companies and increase business in the future.
LO2
Demonstrating principles of pricing to room' product along with benefits
Quoting prices for goods and services in hotel industry is very important so that guests
are given value for money and satisfying them completely. Thorough planning and strategy

formulation is required before forming pricing policies. It is vital part of Hilton Choice Hotel to
adjust room rates and manage revenue from bookings.
Factors that influence pricing options of Hilton Choice Hotel are as follows;
Accurate Forecasting
Forecasting accurate no. of occupant will help managers of Hilton Choice Hotel to plan
no. of staff and acknowledging tasks so that there is no chaos and confusion. Elements that affect
demand of hotel room are festive seasons, events, weather, etc. Such forecasting includes guest
arrivals, no. of nights they will stay and occupancy rates (Kim and et.al., 2020). A good
forecasting will help Hilton Choice Hotel to be most profitable at the time of 'peak season' and
avoid any delayed decisions regarding room rates, allocating staff properly and maintenance
operations.
Customer Perception Value
Understanding customers i.e. target market for Hilton Choice Hotel is great task which
affect pricing policies. By analysing target market, it becomes easier to attract certain customers
and market hotel products. Company can target market according to location, size, preferred
facilities, type of traveller, etc. Examining customer perception value is vital for Hilton Choice
Hotel so that whatever is desired by customer can be fulfilled by them and are satisfied
completely.
Inventory and demand
Monitoring supply and demand of hotel rooms is a tough job at Hilton Choice Hotel to
enhance revenue and growth. Strategic control of hotel's inventory is important to manage
revenue. Sales and marketing team is very essential to predict demand and supply which will be
very essential to quote prices for room and allied services.
Benefits of pricing methods; Cost-plus pricing; In this type of pricing, additional research is not required because
business is aware about expenses through invoices, etc. So it summarizes the cost and
simple add a profit margin. It is beneficial because all costs are covered and company
earns a consistent return rate. Competition pricing: This pricing analysis will help company to flourish by identifying
competition which will further aid company to prevent loss of customer and share in
market (The advantages of competitive pricing strategy, 2021). In luxury hotel segment,

competitive pricing prevails so that all competitors can have same pricing and can only
compete on the basis of facilities provided and customer satisfaction index. Dynamic pricing: Such pricing strategy assist hotel to enhance revenue and increasing
occupancy because prices are manipulated in real time based on algorithms. It helps in
attracting customer segment which are price sensitive and will react and book a room
when prices fall.
Pricing strategy followed by Hilton Choice Hotel:
Large no. of rooms of hotel belong to upper upscale, therefore, premium pricing strategy
is adopted and followed by charging higher prices for their exclusive products and services.
Hilton Choice Hotel offers product with excellent quality which have additional features.
Hilton is offering five star and four star rooms, so they can charge premium level price.
Along with tangible services, hotel also offers intangible amenities like higher standard of living,
high social status and luxury and sense of accomplishment (Song, Lee and Moon, 2019).
Currently, Hilton Choice Hotel has announced the latest customer centric pricing policy
which will enable customer to add flexibility if they want to pay extra. In this way, it will help in
targetting those customers who are in search of later check-out times and so on.
LO3
Evaluating the various methods to optimize profitability
Optimizing profitability is a method that incorporates total cost and revenue into analysis
in order to understand the profit margins of business at high level in a better way. Profitability
management is followed by Hilton choice hotel in order to increase revenue and reduce costs. To
improve profitability the company can expand competitive market and concentrate on sales and
services efforts. Identifying new ideas and techniques that make the business more effective and
efficient is known as overall optimization in order to gain profit.
Overbooking- overbooking in the hotel is one of the complicated decision-making which
is directly related to hotel revenue. It is the most efficient way of improving Hilton choice hotel
financial results. As revenue management is an important strategy used by hotel to maximize
revenue in order to optimize profits.
Cancellation- In hotel, booking cancellations happen to a greater or lesser extent, thus, it
can influence the profitability. The situation is more complicated if the customer decides to

cancel their booking at last minute. The hotel must focus on cancellation method and reduce
revenue loss (Teng and Cheng, 2021). Hotel managers adopt property management system and
collect data to forecast the number of booking cancellations, under stays and others.
Outstanding service- the most important factor for gaining a sustainable competitive
advantages and customer satisfaction in the highly competitive marketplace is to provide service
quality (Suparman, Kusnadi and Baihaqi, 2021, . Providing outstanding service which includes
staff, materials, technological facilities and others is a functional quality which is beneficial for
optimizing profitability. Hotel's profitability is directly correlates to the services and facilities
provided by them to customers. The hotel must provide great customer service in order to
improve guest experience and maintain its reputation. By utilizing proper presentation, various
activities and quality services, the hotel fulfil the expectations of customers from pre booking to
post stay. Since there are many hotels in the market offering the same services, it is important for
Hilton choice hotel to keep track on marketing strategies used by other hotel. In order to
maintain the performance and to compete in the future, it is essential to offer quality services to
attract customers.
Rooms available to sale- customer experience is the internal feelings of every visitor
which may be satisfied or dissatisfied by services. Improving hotel sales on maximum level will
increase profitability and revenue (Zhang and et.al., 2021). By offering additional packages and
luxury upgrades, the hotel must be able to sell rooms. This sales strategy will ultimately increase
the occupancy level and help realize optimal revenue and profit for available assets.
By setting the best price to sell rooms in order to maximize profit is the clear concept
must be used by Hilton choice hotel. A effective way to increase direct bookings is to offer
exclusive incentives and rewards to customers (Shah, Guha and Shrivastava, 2021). To sell the
right room to the right customer requires a clear understanding of customer needs and their
budget. So it is important to understand the segmentation strategy and customers willingness to
pay. Optimizing the right prices for different categories of rooms and its inventory will help the
hotelier. The Hilton choice hotel offers unique experience and embrace social media marketing
to boost occupancy rates to increase revenue.
Customer loyalty schemes- this strategy is used by retail sector, hotel industry and many
other sectors. It is a marketing strategy that rewards and provide facilities to loyal customers who
frequently engage with a brand and loyal towards the industry. It would be ideal to see customer

loyalty programs in order to boost revenue through providing a effective way to keep in touch
with existing customers and attract more new clients (Provotorina and et.al., 2021). Loyal
program can increase the profitability as it is helpful to promotive positive word-of-mouth
advertising hotel services. Hilton choice hotel provides its discounts, coupon , cashback and VIP
events and other unique offers to attract customers. Thus, it is beneficial to increase profit margin
and customer expectations.
Cross selling- up selling in hotel includes getting a customer to spend more on their
current services such as upgrading choice of room while cross selling means selling services
such as special treatment, spa, local tour and others. It is unique method used by hotel industry
targeting existing customers. When booking a room online the hotel can provide various offers to
clients that will enhance their interest. The hotel develops unique selling points for their property
and reward guts for booking direct. With the cross selling the hotel can increase clients lifetime
value , improve customer satisfaction and increase sales revenue. By cross selling additional
services to their existing customers, the hotel can maintain is financial position.
Repeat business- repeat customers generates more revenues as they spend more as
compared to new customers. If the business is focusing on repeat customers, then it will create
long- lasting profitable relationships. Hilton choice hotel trained their staff in order to make
guest feel important and setting up incentives for staff members that can get regular clients.
Length of stay management- Many hotels have established revenue management
systems in order to incorporate minimum length of stay managements. It means the hotel can
refuse to book a room for customers unless they agree to book for more than two nights.
According to some experts, the hotel must continue to use length of stay controls in order to
maximize revenue and profitability.
LO4
Explaining Industry codes of conduct and other best practices affect accommodation procedures
Hotel industry code of conduct sets standards of behaviour expected from the staff
members and policies to manage different situations (Malefors and et.al., 2021). It protects the
hotel industry business and informs each employee of the hotel expectations. Having a code of
conduct and legislation in hotel industry and any other workplace will provides staff with

standards of how to do their job effectively. It helps them to represent the company and its
business. Some legislation are as follows-
Data protection and booking- hotel industry obtaining and dealing with personal data of
customers, as it is a powerful tool for marketing strategy (Liu and Liu, 2021,). When the guest
book their rooms and fill up detailed personal information, the company needs to protect
important details about their customers. Hilton choice hotel must carefully manage how they deal
with the personal information they maintain. Hotel must be aware about employees expectations
that their data is safe and protected.
Guests with disabilities- The hotel must offer facilities to disable guests by offering a
wheelchair accessible room and plenty of freedom of movement to move wherever they want.
Safety management- The hotel must be aware about security, protection and safety
systems in order to protect their customers or staff members and reduce crimes at workplace
such as murder, health hazards like food poisoning (George and et.al., 2021). By providing
insurance, health insurance and other facilities will be beneficial for employees.
Some ethical codes of conduct:
Integrity and transparency- the hotel management must be honest with their customers
and employees. Always respect others and be transparent or polite when guests coming to hotel.
Honesty and trust- customers are more likely to purchase from person they trust. By
creating privacy policy the any hotel can maintain its codes of conduct. The management should
be honest to their clients and staff, it is beneficial for reputation.
LO5
Explaining effective use of quality management processes and design
According to experts, it is noted that various types of guest want unique facilities from a
hotel, depending on their budget and willingness to pay (DAM and DAM, 2021). The hotel must
provide benefits to guest such as entertainment, hotel amenities, proper customer service,
security and health safety. Thus, it is mandatory to maintain and provide benefits in order to
attract customers to the hotel. A guest who has been travelling all day and wants a comfortable
stay at night with family looking for a budget friendly rooms and facilities like:

Location, accommodation style and quality- Customers need great location and perfect
views from their room. By providing quality service as per the needs and preferences the hotel
management can satisfy their guest.
Value for money- The hotel must be aware about the budget and preferences of their
guest. Providing them what they want will be beneficial for Hilton choice hotel.
Cleanliness and comfort- Having a clean hotel is one of the most important factors that
every hotel industry must be aware (Aryatmaja and et.al., 2021). Hilton hotel offer hygiene
facilities and cleaning benefits to make customer satisfied. A hotel that is well organized makes a
great impression on customers, thus, it will help to increase profitability.
Relaxation- Hilton choice hotel provides entertainment and other special treatment to
their guest. They offer spa treatment, special menu options.
Ways to quality
Determine guest needs- the management must collect feedback from guest to find out the
needs and preferences of customer. Listening to customer complaints and their interest will be
beneficial to get succeed.
Consider the type of guest- Hilton choice hotel provides facilities on the basis of types of
guest. The hotel management classified groups of travellers in various category so that they can
provide facilities and benefits as per their needs. Such as family travellers, disable people,
wellness seekers and business travellers.
Establish procedures for service delivery - As it is an important part of hospitality,
(Measuring efficiency of service delivery process, 2021) Certain variables have been identified
by hotel which contributes to the efficiency measurement in service delivery proper data
collected and analysed by the management team to measure the delivery system in order to meet
customer requirement and satisfy them.
CONCLUSION
From the above report, it can be concluded that revenue management in hotel is a vital
job to analyse earning potential and determine profitability level. Further, it can be said that
various types of services provided by Hilton Choice Hotel such as Wi-Fi, laundry service,
conference meeting, etc. helps them financially to contribute in room's producing areas. In
addition to this, it can also be articulated that there are several pricing policies which can be

adopted by hotel industry. Pricing policy implemented by Hilton Hotel is premium pricing
because of luxurious services offered by them. Further, it can be outlined that cancellation of
hotel booking at last moment can cost huge expenses to Hilton Choice hotel and should consider
reducing such costs. It can also be highlighted that company should maintain all codes of
conduct so that disable persons can also enjoy their leisure time with full involvement. Lastly, it
can be seen that company ensure complete quality management by providing excellent services
and location to guest in order to have maximum satisfaction and brand loyalty.

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