The Travel and Tourism Business Toolkit

This document discusses the principles of revenue management and human resource management in the travel and tourism industry. It also explores the legislation and financial statements used in the industry, with a focus on TUI Travel Plc. The document provides insights into specific sectors of the industry and offers a performance management plan for a travel and tourism job role.

The Travel and Tourism
Business Toolkit
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Contents
INTRODUCTION...........................................................................................................................3
TASK 1............................................................................................................................................3
P1 Discuss the rationale and principles of revenue management for the travel and tourism
industry........................................................................................................................................3
P2 Investigate how a specific sector of the travel and tourism industry applies revenue
management tools to generate and maximise profit....................................................................4
TASK 2............................................................................................................................................5
P3 Review the different stages of the HR life cycle applied to a specific travel and tourism job
role, and their importance for retaining and developing talent....................................................5
P4 Develop a performance management plan for a specific travel and tourism job role,
applying techniques to resolve negative behaviour and to overcome issues of staff retention.. .6
TASK 3............................................................................................................................................7
P5 Explore specific legislation that organisations in the travel and tourism industry have to
adhere to.......................................................................................................................................7
P6 Using specific examples, illustrate how company, employment and contract law has a
potential impact on business decision-making in the travel and tourism industry......................8
TASK 4............................................................................................................................................8
P7 Explore the different types of financial statements and reporting mechanism for
organisation within the travel and tourism industry....................................................................8
P8 Explain the importance and value of budgets for controlling business performance and
identifying variances....................................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
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INTRODUCTION
TUI Travel Plc is a Travel and Toursim group which was formed in the year 2007 and the
company has its headquarters in Crawley, West Sussex. The company operates in more than 180
countries all over the world and has a large customer base. In the following project report, an
attempt is being made to examine the principles of revenue management and principles of human
resource management with respect to effective strategy for HR cycle. The report also aims to
evaluate the legislations in context of Travel and Toursim industry and the various financial
statements and reporting mechanisms used in the organisations in this industry with a context of
TUI Travel Plc.
TASK 1
P1 Discuss the rationale and principles of revenue management for the travel and tourism
industry.
Revenue management refers to the use of analytical tools for predicting the consumer demand
with respect to various price levels and optimising the products availability and price with a
primary objective of generating the maximum revenue possible (Guillet and Mohammed, 2015).
Revenue management is a very important and crucial concept in hospitality industry where
nature of demand varies according to season and it is important for the company to recover the
fixed operational costs and earn profit as well. With an effective implementation of revenue
management systems in the company, the management of TUI Travel Plc can ensure that the
company is able to manage and recover its fixed costs even when the demand is particularly low.
Stock which is held by the travel and tourism company is perishable in nature which implies that
if a room is not occupied by the end of the night, it refers to a stock which remains unsold.
Hence, revenue management is imperative for tourism and travel industry to create and develop a
better streamline which helps in increasing the profitability and revenue to the maximum level
possible (Board and Skrzypacz, 2016). Some of the principles of revenue management which
needs to be considered by the management of TUI Travel Plc are:
Demand forecasting: Demand forecasting is the most important aspect of revenue
management for travel and tourism industry. It is important for the managers of TUI Travel Plc
to make forecasts related to demand which are accurate and assists in better inventory control
and management.
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Overbooking control: Overbooking refers to the process where the company confirms
more bookings than its capacity. It is also an important principle of revenue management which
needs effective application to ensure and determine a overbooking level at which revenues for
the company can be maximised. However, it is only desirable in scenarios where a lot of
cancellations are made otherwise it may affect the image of the company.
Market segmentation: Market segmentation is another important principle for revenue
management in tourism and travel industry. The management of TUI Travel Plc should
categorise its potential customers based on similar attributes to determine an appropriate mix of
price and quality which assists in revenue and sales maximisation.
P2 Investigate how a specific sector of the travel and tourism industry applies revenue
management tools to generate and maximise profit.
Accommodation is one of the most important sector of travel and tourism industry which has
witnessed a huge growth in the last few years. Tools of revenue management such as duration
control and demand-based pricing are being applied in this sector to maximise the generation of
revenue and earn more and more profits. The management of TUI Travel Plc undertakes duration
control which involves monitoring the length of the stay with respect to the days in the week. It
is a very effective tool of revenue management which helps in maximisation of profit and sales
(Ivanov, 2014). Usually, Monday to Thursday are considered as slow days in the accommodation
sector and Friday to Saturday are considered busy days where demand is high. The company
adopts a strategy wherein the combination of slow days are sold at a lower price to any guest and
combination of busy days is offered at a relatively higher price which leads to maximisation of
revenue and sales for the company. Another important strategy for revenue management which is
used by TUI Travel Plc to capitalize on revenue and sales is demand-based pricing. Demand-
based pricing as a tool of revenue management involves using price as variable element and
predicting the nature and extent of consumer demand to optimise the inventory and pricing. For
example, in the busy season where demand is high, prices of rooms in the accommodation sector
are increased to generate higher revenue and only people who can afford increased prices are
offered the rooms (Talluri and Van Ryzin, 2006). Similarly, few of the rooms are reserved for
emergency walk-ins that can be sold at a much higher price if any guests is willing to pay it. On
the contrary, when the demand decreases, use of promotional tools and discounts is evident to
increase sales and achieve the highest level of revenue possible. In this way, the accommodation
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sector of TUI Travel Plc applies the tools of revenue management for maximisation of revenue
and profitability.
TASK 2
P3 Review the different stages of the HR life cycle applied to a specific travel and tourism job
role, and their importance for retaining and developing talent.
HR life cycle can be termed as the different stages which an employees goes through in
any organisation since the time he gets recruited. Each stage of an HR cycle has significance in
employee retention and development. The different stages of an HR cycle can be better
understood and comprehended with the help of its application to the job role of Travel Agent in
TUI Travel Plc as follows:
Recruitment: Recruitment is the first stage in the HR life cycle where an employee is hired
and selected for a particular job role in an organisation. This stage plays an important role in
determining the employee retention and development. For example, hiring the right kind of
person with skills such as organisational skills and good communication abilities for the job of
Travel Agent in TUI Travel Plc is imperative for ensuring their future growth and performance
and retention in the organisation for a longer period.
Education: Education refers to the training and development of employees in the
organisation once they are recruited and the communication of the values, goals, beliefs,
objectives and vision of the company to the employee which plays a very important role in
employee retention and talent development ( Boella and Goss-Turner, 2019). For example, the
training of Travel Agent should be done with respect to fostering the skills which are necessary
such as organisational skills and having a shared vision will help in ensuring the travel agents
stays in the company for a longer duration.
Motivation: Motivation is certainly important for employee retention and effectiveness of
training and development. It has been observed that the employee turnover is highest in the first
three months of the job which is mostly due to a lack of motivation. It is important for HR
managers of TUI Travel Plc to realise that motivating the Travel Agent during the first 90 days
of his employment will help in achieveing better performance and better employee retention as
well.
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Evaluation: Evaluation refers to the performance management and supervision of an
employee in the organisation. It makes the employee feels that the company cares about their
performance levels and is taking adequate care and efforts to improve their performance (Cascio,
2015). For example, performance management and evaluation of Travel Agent in TUI Travel Plc
will help in improving his performance level which increases the job satisfaction as well and
enhances the employee retention for the company.
Celebration: Celebration refers to the recognition and appreciation of employees which
gives them an immense sense of satisfaction and joy. It is important in motivating the staff and
reducing the employee turnover. For example, despite of hard work and great performance levels
by a Travel Agent in TUI Travel Plc, if the company fails to recognise and appreciate his hard
work, it is certain that it will lead to demotivation and lower the morale of the employees.
P4 Develop a performance management plan for a specific travel and tourism job role, applying
techniques to resolve negative behaviour and to overcome issues of staff retention.
Performance management plan refers to a plan which is made to ensure that the highest
levels of efficiency and productivity levels of employees in an organisation is achieved (Bianchi,
2016). Here is an example of a performance management plan for the job role of Travel Agent in
TUI Travel Plc for overcoming the issues related to negative performance and staff retention in
the company:
Step 1: Determination of objectives
First step in the performance management plan for Travel Agent involves mutual
agreement between the management and the employee on the targets and goals which can form
the basis of the performance review and comparison. These targets can be determined based on
the past performance and employee skill and competency.
Step 2: Professional Development Plan
Next step involves identification of the skills which are necessary for the employee to
execute the tasks assigned. For example, it is important for a Travel Agent to have
communication skills and organisation skills. Hence, a plan of professional development should
be prepared for inculcation of such skills.
Step 3: Performance Evaluation
This step involves comparison of actual performance with the standards of performance
to identify any deviations.
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Step 4: Corrective Action
Based on the deviations found in the previous step, the management needs to take
corrective actions such as more training in specific areas to improve the performance levels.
Step 5: Reviewing
Last step involves reviewing the complete performance management plan and identify
the areas where there exists a scope of improvement to enhance the overall efficiency of
performance management plan.
The above mentioned plan of performance management for Travel Agent in TUI Travel
Plc is certainly helpful in gaining employee support and positive attitude by motivating the
employee to improve his performance and overcome the issues of staff retention in the company.
TASK 3
P5 Explore specific legislation that organisations in the travel and tourism industry have to
adhere to.
Some of the specific laws and legislations for which compliance is mandatory for the TUI
Travel Plc are as follows:
Package Travel Regulations Act 1992: It is an act and a legal framework which requires
the companies engaged in booking travel packages for customers to provide every detail and
information about any particular travel and holiday package which is being booked by a
customer at multiple points such as before booking the holiday package, after the package is
booked and before the holidays has started (Downes, 2000). The primary objective of this act is
to provide customers booking travel and holiday packages a better protection and support.
Health and Safety at Work Act 1974: This act defines the responsibility of the employer to
provide safe and suitable working conditions to the employees. Proper provision of ensuring
health and safety should be maintained by the employer at the workplace which mitigates any
sort of risk for the employees. It is important for the managers of TUI Travel Plc to provide good
working conditions to its employees in compliance with this legislation.
Carrier by Air and Road Act 1979: This act defines the responsibility of the carrier to
ensure safety of passengers and in the event of any damage being caused to the passengers due to
the negligence of carrier and irresponsible conduct, carrier is liable for all the damages which
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may impact the passengers. Ensuring safety during travel by air and road is the prime
responsibility of the carrier company.
Licensing Act 2003: As per the provisions of this act, a travel and tourism company which
wishes to sell alcohol in its premises must obtain a license prior to the sale of alcohol. Sale of
alcohol at accommodations and premises without proper licensing is illegal and an offence.
P6 Using specific examples, illustrate how company, employment and contract law has a
potential impact on business decision-making in the travel and tourism industry.
Various laws and regulations have a potential impact and influence the process of decision-
making in the travel and tourism industry with respect to TUI Travel Plc. For example, company
law in the United Kingdom lays down many requirements and compliances for the business
organisations in the country such as Corporate Governance Policies described under the
company law have a great influence on the decision-making process in any company. The
management of TUI Travel Plc needs to evaluate every business decision with respect to the
guidelines of corporate governance which aims to create a maximum positive impact on the
society and the many stakeholders of a business organisation with the help of ethical and legal
trade practices (Greenwood and Dwyer 2014). Under the Corporate Governance laws, TUI
Travel Plc needs to ensure that the practices of the business are ethical and protects the interest
of the customers and other stakeholders which affects its decisions to a great extent. Under
employment law, the management of TUI Travel Plc needs to make sure that health and safety of
the workers is not at risk and arrangements are made to provide safe working environment to the
employees. It also has a potential to affect the decision-making for example every business
decision in TUI Travel Plc needs to be evaluated from the perspective of employees and their
safety and in the process many such potential decisions are not taken which might increase the
profit but any poses any kind of risk on the workforce.
TASK 4
P7 Explore the different types of financial statements and reporting mechanism for organisation
within the travel and tourism industry.
Few of the most common types of financial statements and reporting mechanism used by
the management of TUI Travel Plc are as follows:
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Cash Flow Statement: Cash flow statement is used by the managers of TUI Travel Plc to
analyse and determine the inflow and outflow of cash during a particular period so that the short-
term payment obligations and liquidity position of the company can be maintained.
Income Statement: Income statement refers to the statement of profit and loss for a
particular period or year which is very vital for any company to determine the profitability in the
operations and the amount of revenue which was generated(Vogel, 2016). The management of
TUI Travel Plc uses income statement to compare the past year profits with an objective of
assessing the effectivenss of current strategies.
Cost Reports: Cost reports are prepared for providing information to the management of
TUI Travel Plc with respect to the cost of operations and the various cost which are incurred the
company on various services and products. It helps in mitigating the costs incurred and utilising
the resources in an optimum manner.
Business intelligence reporting: It helps the top management of the company to analyse
and interpret large pool of databases in real time to assist in the process of managerial decision-
making. With the help of high-tech business intelligence reporting, the management of TUI
Travel Plc is able to identify the sectors which yield maximum revenue and profits for the
company and take better decisions with respect to future growth and development of the
company.
P8 Explain the importance and value of budgets for controlling business performance and
identifying variances.
Budget can be defined as a financial plan for a particular or definite period of time. Budgets
are prepared in an organisation for various purposes such as cash budget, capital expenditure
budget, sales budget etcetera. The management of TUI Travel Plc should recognize the
importance of budget in monitoring and governing the business performance and operations.
Budget is a very important which can help the management of TUI Travel Plc to determine
targets and goals on the basis of previous results and past experiences and forecasts made for the
future business environment. With the help of budget implementation, the management of the
company can have a tool which can be used to compare the actual performance of the company
with the standard performance and any deviation can be identified (Grotte, 2013). Hence, budget
is an important tool which helps in identification of the weakness and problems in the policy and
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strategy adopted by the company with the help of identification of deviations between standard
or budgeted performance and actual performance for a particular time period.
CONCLUSION
It can be concluded from the above project report that principles of revenue management are
essential for maximisation of revenue in travel and tourism industry and each stage in HR life
cycle has an impact on employee retention and talent development in the company. Various laws
and legislations affect the business decision-making in the travel and tourism industry. At last, it
can be concluded various tools of financial statements and budgets are effective and imperative
for managing business performance and growth with respect to organisations in travel and
tourism industry.
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REFERENCES
Books and Journals
Bianchi, C., 2016. Dynamic performance management (Vol. 1). Berlin: Springer.
Board, S. and Skrzypacz, A., 2016. Revenue management with forward-looking buyers. Journal
of Political Economy. 124(4). pp.1046-1087.
Boella, M.J. and Goss-Turner, S., 2019. Human resource management in the hospitality
industry: A guide to best practice. Routledge.
Cascio, W.F., 2015. Managing human resources. New York: McGraw-Hill.
Downes, J., 2000. EU legislation and the travel industry. Travel & Tourism Analyst. (5). pp.49-
72.
Greenwood, V. and Dwyer, L., 2014. Challenges to comsumer protection legislation in tourism
contexts.
Grotte, J., 2013. Budget Tourism-Transition Economy. International Journal of Business
Insights & Transformation. 6(2).
Guillet, B.D. and Mohammed, I., 2015. Revenue management research in hospitality and
tourism. International Journal of Contemporary Hospitality Management.
Ivanov, S., 2014. Hotel revenue management: From theory to practice. Zangador.
Talluri, K.T. and Van Ryzin, G.J., 2006. The theory and practice of revenue management (Vol.
68). Springer Science & Business Media.
Vogel, H.L., 2016. Travel industry economics: A guide for financial analysis. Springer.
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