Hotel Room Pricing Analysis

This assignment delves into the factors that influence hotel room pricing. It highlights the impact of time (favorable and off-season) on prices and emphasizes that room price fluctuations are influenced by various amenities offered within each room. The analysis also considers the dynamic nature of pricing based on market demand.

Room division

Table of Contents
Introduction.........................................................................................................................................3
Task 2...................................................................................................................................................3
4.1 Explaining of revenue/yield management..............................................................................3
4.2 Analysing sales techniques used to promote and maximise revenue.....................................4
4.3 Evaluating the usage of forecasting and statistical data in the room division.........................5
4.4 Calculation of performance indicators used to measure the success of accommodation sales6
Conclusion............................................................................................................................................8
REFERENCES....................................................................................................................................9

Introduction
Division of room is one of the most important task that is performed in hotel industry
because at operational level significance of this task is very high. Current report explains
about the various tools such as revenue management, forecasting and statistical tool, which
can include occupancy percentage, average daily rate etc. Five season hotel is a company
operating in hospitality industry (Bennett and et. al., 2011). They have large number of
customer database in many countries. They are known for quality service and different
variety of rooms that are available in their hotels. Their mission is to provide proper facilities
to the customers who book and reside in their hotel and they want to expand their business in
many countries. They believe in offering competitive price, so every class of customer can
afford their services and memorable experience can be given to them (Hall, Timothy and
Duval, 2012).
Task 2
4.1 Explaining of revenue/yield management
It is essential for hotel business organizations to sell their room to customers and
charging a right price. This is one of the complex and competitive tasks to set a price which
can provide desired profits and revenue. Therefore, the company is required to use various
tools and approaches in order to manage their revenue and profitability in an effective manner
(Yoshioka and et. al., 2012).
Yield/Revenue management: It is a technique which used to increase revenue in various
sectors such as hotels, airlines etc. In the context of given case, the firm can use this method
in order to increase maximum revenue by selling their room to its customers. In hotel
industry, daily room performance is based on occupancy percentage or average daily revenue.
For this, company can use various strategies like discounting in order to increase occupancy
rate and revenue (Fortier and et. al., 2011). This process is known as revenue and yield
management.
Price discrimination: This is one of the best approach in the hotel industry to maximise sales
and revenue. In this method a management charge different prices to its different customers
according to their economy and choices. For example, cited organization is having variety of
rooms such as business class, economy class, premium class etc.

Tariff structure: This is related with the rate which offered by hotels to its customers for their
use of various services and facilities during their stay. The tariff charge of room rates is
depending on the customer choices. There are following basis of room rate charge as given
below:
The 24 hours basis This is most usable method where
management charge on the basis of 24 hours.
For example, if a guest arrives at 10 PM
today. The room cover until 10 PM for next
day.
The 12:00 noon basis This is another approach where a hotel
charge mostly 12:00 noon. The advantage of
such methods that a room can be sold two
time at the same day.
The Nightly basis In this tariff the charge is fixed on the basis
of night spend by the customer in the hotel.
Potential average single rate
PASR formula = Revenue at 100% single occupancy/ Number of room sold
PASR = 55*3000/180
= 2062 (Approx.)
Potential average Twin rate
PASR formula = Revenue at 100% Twin occupancy/ Number of room sold
PASR = 55*2800/180
= 850 (Approx.)
Potential average Double rate
PASR formula = Revenue at 100% Double occupancy/ Number of room sold
PASR = 70*4000/180
= 1555 (Approx.)
Note: Per room rate is assumed for single room = £3000, Twin room = £2800 and Double
room = £4000

Pricing: It is related with the price discrimination strategy where cited business organization
can charge different rates from its customers for the same category of rooms. These prices
can be set according to the customer needs and their behaviour as well as they provide
discounting rate for advanced booking (Kuninobu and et. al., 2013).
Overbooking: This is another strategy which can be used at the time of overbooking by hotel
manager in an effective manner. In the peak season; number of customers is too high due to
which it is required to cancel advanced bookings.
4.2 Analysing sales techniques used to promote and maximise revenue
In the hotel industry, customers can be divided into different classes according to their
needs and behaviour. For example, the business entity can divide their rooms in to economic,
corporate and luxurious class. It will help to generate maximum revenue and profitability
which is the common goal and objective for each and every firm (Koc and et. al., 2014).
Apart from that, there are various sales approaches which can be used by business
corporation which are given as below:
Overbooking practices: It is a situation where the total number of rooms are reserved in
the peak season. In this situation, it is essential for hotel businesses to use revenue
management schemes in order to increase firm’s sales and profitability (Shekelle and et. al.,
2011). Therefore, this is the responsibility of hotel manager to analyse historical data and
calculate maximum overbooking level in the hotel. With the help of such tool, they can attain
100% occupancy rate which is too significant in the accommodation service sector.
Overbooking practices also help to increase the efficiency which can lead to earn higher
profits and overcome the potential risks on their business (Law, Buhalis and Cobanoglu,
2014).
Customer loyalty schemes: This is another approach which can be used by the company in
order to increase their revenue and sales. In this tool, manager can provide reward system to
its customers. With the help of such program, they can influence buying behaviour and
purchasing decision of its customers. Apart from that, they can also provide discount or pre-
booking services in the peak season (Landgraf and et. al., 2012).

Sales lead- It is created when a person shows some interest in booking room in the hotel.
This can have done by using various options like direct mailing, advertising, trade
shows etc. In direct mailing offers and facilities present in company is send to potential
customers so they can make their plans accordingly. Trade shows assist interested
customers to resolve various queries which they have in their mind. Adverting also play
crucial role in attracting more customers towards hotel. Organisation can depict
facilities that they provide in their rooms and suites. There are many other marketing
efforts which can lead to increase in sale.
Referrals – When a person get satisfied by service of hotel he/she refer it to his/her friends
and family members. This play crucial role in enhancing sale of organisation because
mouth publicity is considered as one of the best source of marketing. Company can also
start some offers relating to referral where customers who send new guests will get
some discount when they visit again. Service user who come through referral may also
get some deduction which will help in given more popularity to this scheme. People
who get good experience like to recommend hotel to others.
4.3 Evaluating the usage of forecasting and statistical data in the room division
Forecasting can be defined as a tool of management which helps the organisation to
make an attempt to cope up with the uncertainty that can arise in the future. This is to plan in
advance from the data available from past records and in the present context. Forecasting is
the use of historical information in order to determine the future estimation in an effective
manner. With the help of forecasting tool the cited business unit identify how to use financial
resources in an appropriate way for the near future. This is typically used for identify demand
of goods and services for a specific period of time.
Role of forecasting
With the help of forecasting tool a company can knows the future sales of their product and
services so that they can produce their goods accordingly.
They also distribute their resources among various department which can promote effective
utilization of resources.
Risk forecasting helps to minimise potential risk on their business which is good for the
company.

Forecasting starts with some basic assumptions on the basis of company's experience,
judgement and knowledge (Fortier and et. al., 2011). This can be for short or long term both.
Some of the techniques that are being used in analysing the trends of forecasting are Delphi
method, exponential smoothing, moving average, regression analysis and so on. Statistical
data in context of literal meaning can be understood as the area of mathematics which focuses
on collection, organization, analysis and interpretation of numeric data. Statistical analysis is
the major parameter of data interpretation (Huang and et.al., 2013). Comparison of both the
aspects that are comparing actual performance with projected one is given below as the
performance indicators for last three years:
Performance indicator 2014 2015 2016
Occupancy percentage 70.00% 75.00% 80.00%
ARR £2500 £2800 £3000
ADR £2600 £2700 £3100
From the above presented data, it can be seen that there is an adequate percentage of
increment in the performance. In the year 2014, occupancy percentage was 70%, in 2015, it
was 75% and in 2016, it is recorded to be 80%.
Talking about the project sale and revenue; given below is the table representing
entire data of 2015 and 2016.

Performance base Projected Actual
Sales 192 rooms 180 rooms
Revenue £620000 £599000
After analysing the above data, it is found that the projected target of the firm. But,
there is gradually a good attempt of it. The cited firm projected target is 192 rooms but
actually they attained 180 rooms which is quite good. On the other hand, revenue target the
expected revenue of the company 620000 pound and actually they actually 599000 pound
which is also good.
4.4 Calculation of performance indicators used to measure the success of accommodation
sales
Room Beds Occupancy
Single room-75 75 55
Twin room-60 120 50 occupied by two people, 5
occupied by one person
Double room- 80 160 30 occupied by two and 40
occupied by one person
Total rooms-215 355 180 room left
Room occupancy 180/215*100
80.72%
Sleeper occupancy 260/355*100
73.20%
As per the above calculation there are 180 rooms out of 255 rooms left in the hotel in which
260 sleepers are also left. This data shows that the room occupancy rate of the cited hotel
business is too high but on the other hand sleeper occupancy is quite low as per the

performance standard. The room prices are not too high and which one of the key factor to
promote company’s product in competitive market. Apart from that, management also
required to use appropriate strategy which can provide consistent growth in the long run.
Conclusion
From the above report, it can be concluded that room allotment is essential to provide
quality services to customers. There are various ratios and techniques through which decision
regarding price of room can be taken. There are many types of rooms that are available in a
hotel as well as their prices are decided according to the facility offered in that room. Also, it
has been assessed that price of room changes time to time because of favourable and off
season in hotel.

REFERENCES
Books and Online
Bennett, W. L., and et. al., 2011. Comparative effectiveness and safety of medications for
type 2 diabetes: an update including new drugs and 2-drug combinations. Annals of
internal medicine. 154(9). pp.602-613.
Yoshioka, J., and et. al., 2012. Deletion of thioredoxin-interacting protein in mice impairs
mitochondrial function but protects the myocardium from ischemia-reperfusion injury.
The Journal of clinical investigation. 122(1). pp.267-279.
Fortier, T. M., and et. al., 2011. Generation of ultrastable microwaves via optical frequency
division. Nature Photonics. 5(7). pp.425-429.
Kuninobu, Y., and et. al., 2013. Palladium‐Catalyzed ortho‐Selective C H Borylation of 2‐
Phenylpyridine and Its Derivatives at Room Temperature. Angewandte Chemie.
125(16). pp.4527-4530.
Shekelle, P. G., and et. al., 2011. Advancing the science of patient safety. Annals of Internal
Medicine. 154(10). pp.693-696.
Landgraf, D., and et. al., 2012. Segregation of molecules at cell division reveals native
protein localization. Nature methods. 9(5). pp.480-482.
Hall, C.M., Timothy, D.J. and Duval, D.T., 2012. Safety and security in tourism:
relationships, management, and marketing. 2(1). pp.56-88.
Huang, Y.C. and et. al., 2013. Exploring user acceptance of 3D virtual worlds in travel and
tourism marketing. Tourism Management. 39(5). pp.490-501.
Koc, E. and et. al., 2014. Are internship programs encouraging or discouraging? —A
viewpoint of tourism and hospitality students in Turkey. Journal of Hospitality,
Leisure, Sport & Tourism Education. 15(2). pp.135-142.
Law, R., Buhalis, D. and Cobanoglu, C., 2014. Progress on information and communication
technologies in hospitality and tourism. International Journal of Contemporary
Hospitality Management. 26(5). pp.727-750.
Online
International Tourism and Hospitality Management. 2016. [Online]. Available through:
<http://www.sunderland.ac.uk/courses/businessandlaw/undergraduate/international-
tourism-hospitality-top-up/>. [Accessed on 20th June 2017].