Principles of Revenue Management in Travel and Tourism Industry

The Travel and Tourism
Business Toolkit

Table of Contents
Introduction.................................................................................................................................................3
LO1..............................................................................................................................................................3
P1 Rational And Principles Of Revenue Management Of Travel And Tourism Industry...........................3
P2 Application Of Revenue Management Tools To Generate And Maximize The Profits........................4
LO2..............................................................................................................................................................5
P3 Stages Of HR Life Cycle And Importance In Retaining And Developing Talent ..................................5
P4. Development Of Performance Management Plan, Techniques To Resolve Negative Behavior And
Retention Issues......................................................................................................................................5
LO3 ..............................................................................................................................................................6
P5. Explore The Legislation Follows By Travel And Tourism Industry......................................................6
P6. Impact Of Company, Employment And Contract Law On Business Decision Making ........................7
LO4..............................................................................................................................................................8
P7. Different Types Of Financial Statements And Reporting Mechanism ...............................................8
P8. Importance Of Budget And Identification Of Variance....................................................................10
CONCLUSION.............................................................................................................................................11
REFERENCES..............................................................................................................................................13

INTRODUCTION
Travel is the activity in which movement of people is happening between two different
geographical locations in order to get entertainment or exposure or attain meetings etc. Travel
can be done through vehicles such as car, bus, train, boat, airplane, ship or by foot too. Travel
can be done without luggage or with luggage. Tourism refers to the activity in which people do
travel for the various purposes. It can be national or international. Travel and tourism is an
industry in which various travel agencies are working and operating its business successfully. It
comes under the head of service sector. It helps country to earn foreign currency and develop its
economic conditions.
TopDeck is tour operator which was established in year 1973. Currently TopDeck is
operating in 65 countries (Boniface, Cooper and Cooper, 2016). Report will highlight the
revenue management principles and use of tools in order to generate revenue. The report will
review the HR life cycle stages and its importance. The report will also explain about the
legislation that applies to travel and tourism industry and its impact on the business decision
making. Report will also explore the financial reporting and mechanism of the particular industry
and also explain the significance of budgets in business.
LO1
P1 Rational And Principles Of Revenue Management Of Travel And Tourism Industry
Management of revenue in the organization is the application of analytic which help
industry to predict about the customer behavior, optimize the availability of services and price to
increase the revenue growth. There are various revenue management principles which can drive
and generate revenue in a particular situation in the industry (Board and Skrzypacz, 2016). These
principles are as follows –
PRICING – It can be defined as the process of determining the price of services provided by
industry to its customers in order to gain and generate revenues. The price determination is done
on the basis of various pricing strategies adopted by industry. Generic pricing strategies are most
popular strategies used in the industry.

ELASTICITY OF DEMAND – Revenue is directly linked to the demand of customers for the
services provided by travel and tourism services. Demand Elasticity refers to measurement of
quantity of demand of a service to change in price. If there is an increase in pricing lead to
increase in revenue for the industry, this means there is inelastic demand and vice versa if there
is decrease in price which lead to increase in revenue due to increase in demand for the services.
DEMAND FORECASTING – It refers to the process of estimating the expected demand from
the customers for the services in the future. It also impact the revenue of the industry. If there is
wrong forecasting of demand by the company, this would lead to decrease in revenue due to high
cost and vice versa. Thus, industry should use accurate measurement of forecasting techniques to
estimate the demand and accordingly prepare its strategies (Akan, Ata and Dana, 2015).
AVAILABILITY – Availability of inventory also impact the service of industry which in turn
impact the revenue generation. The company who have more depth and breadth of inventory at
the time of high demand rate of services, will earn more profits and generate more revenue rather
than those company in the industry who don’t have much inventory at the time of demand for the
services by the customers.
P2 Application Of Revenue Management Tools To Generate And Maximize The Profits
Hospitality sector is part of the travel and tourism industry. It is considered to be the
oldest industries in the world. Revenue management is a technique for optimizing revenue
generated from a definite, perishable resource. The challenge is to sell it to right customers.
Revenue management implements the basic principles of supply and demand economics in
strategic way to generate more and more revenue.
There are various essential techniques to apply for revenue management:
There is a certain unit of resources available for sale.
The resources that have been sold are bad. This means that there is a time limit for selling
resources, after which they struggle for value (Pavlova, 2017).
Management of revenue is particularly high relevance in those cases where the fixed cost
is high as compared to the variable cost. There are low variable costs, the more generation of
revenue will contribute to overall profit. In other words, revenue management tries to maximize

revenues by managing a high occupation and lower room rate (customers of vacation) versus low
occupancy and high room rates among business (business clients).
There are several price differentiation strategies used by TopDeck in revenue
management. Some of these strategies and their probable impact are discussed below:
 Discounted pricing:
This is a strategy which is adopted by the company in context with providing certain
customer group with discounts. This is a competitive strategy which allows the company to
engage more customers with the product. The impact of this strategy in context with revenue
management is that it allows TopDeck in generating higher revenue, due to provision of a lesser
rate to specific customer groups regarding their offerings. Thus, a positive impact is showcased
on revenue management by this strategy because more customers are attracted, which help in
higher income and revenue generation.
 Reduced pricing:
Another strategy which is adopted by TopDeck is reduced pricing. Firm lowers the price
range of offerings which are high in demand. This again has a positive impact on revenue
generation as high demand with lower pricing would help in encouraging more customers in
buying the offering from the company. Thus, this strategy engages in incurring higher revenue
for TopDeck.
However, out of both the strategies, the company must choose discounted pricing instead
of reduced pricing as in latter, the demand is already high. Thus, the company need not lower its
pricing with context to attracting lower customers.
Here, TopDeck company applies revenue management tools by using electronic vehicles
which is being used by fewer companies. This helps companies to generate more revenue by not
using too much scare resources such as petrol and fuel etc.

LO2
P3 Stages Of HR Life Cycle And Importance In Retaining And Developing Talent
Life cycle of HR is a human resource management concept which is also refer as
employee life cycle. It explains all the stages which start with the individual to join the company
and end with their exit from the company and roles played by HR team at every stage. It is the
duty of the HR of TopDeck is to go through the each stage of life cycle properly and try to
improve the process and get over rid from the challenges. Continuous improvement is necessary
in nature as this will aid in retention of the employees for longer period of time and contribute in
the success of the employees within the organisation.
There are various stages in HR Cycle applied to “tourism operation manager” job which
are mentioned below –
Recruitment and Selection – Recruitment and selection is the process of notify to the
potential employees who wants to become tourism operation manager in TopDeck Company.
The role of HR team of the company is to finding a capable employee who can become good
manager in future for the company. The decision of hiring the right people for the job of tourism
operation manager is necessary because the ultimate results are seen over the productivity,
turnover and growth of the organisation. The importance of this stage in respect of the retention
of the manager is ascertained from the point that adherence of the right procedure of the
recruitment help to grab fresh talented candidates for the post of manager who is totally capable
to carry on the job responsibilities like ascertainment of target audience according to their
different offerings and building new and exciting offers according to trends and expectations. In
addition to this, internal recruitment is quite essential in boosting up the morale of individuals
within the society. Thus, odds become more evident for their personal and professional growth,
which helps the firm in retaining their employees. The development of the recruited manager is
ascertained from the point that providence of the adequate amount of wages as per designation
and roles always motivate the manger to try something innovative to improve their skills over the
period of time in correlation with job experience. Additionally, the development of talent is also
showcased by the different types of tests and selection stages individuals go through. For
instance, Tourism Operator manager at TopDeck would be required to possess certain attributes.