Revenue Management and Budgeting Techniques

The report provides an analysis of revenue management techniques used by airlines, focusing on budgeting as a key strategy for improving financial performance. The study highlights the importance of managing contracts and company law amendments in the airline industry, and suggests that revenue management is valuable for achieving desired financial objectives. The assignment also discusses various principles of revenue management that can be applied to organizations in the tourism industry, including hotel cancellation policies and performance measurement strategies.

The Travel and Tourism
Business Toolkit

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
P1. Rationale as well as principles of revenue management in travel and tourism sector .......3
P2. Investigating the way British airways applies revenue management tools for earning
higher profit ................................................................................................................................4
TASK 2............................................................................................................................................5
P3. Different stages of HR life cycle applies to specific travel and tourism JOB. ....................5
P4. Performance management plan ............................................................................................5
TASK 3............................................................................................................................................7
P 5 Laws applicable to travel and tourism industry ..................................................................7
P6. Illustrating the way employment and contract law has effect on the business decision of
travel and tourism sector.............................................................................................................8
TASK 4............................................................................................................................................9
P7. Different types of financial statements and reporting mechanism of British airways ........9
P8. Significance as well as value of budget in context of controlling business performance. 10
CONCLUSION .............................................................................................................................10
REFERENCES .............................................................................................................................12

INTRODUCTION
Revenue management especially in travel and tourism sector is considered to be as very
crucial concept. As it allows hotel owners to anticipate demands as well as optimize the
availability of products or services. It supports management in predicting the consumer demand.
Revenue management assist an enterprise in accomplishing of the best financial results. An
effective revenue management also aids an enterprise in lowering the costs and help them in
increasing the profitability. Revenue management can be defined as the application of discipline
for predicting the consumer behavior at micro level. The success and growth of an organization
is completely based on the revenue earned by firm. Implementation of revenue management
strategy enables a hotel to improve occupancy.
The report have focus on identifying the principles of revenue management in hospitality
sector in Context of British airways. It is the second largest airline In UK in terms of fleet size,
passenger carried. Study will have emphasizes on the different tools used by British airways in
order to maximize profit.
TASK 1
P1. Rationale as well as principles of revenue management in travel and tourism sector
Revenue management can be defined as the application of disciplined analytic that assist
management in analyzing the behavior of consumers at market level. In context of British
airways, the main objective of revenue management by firm is to sell right goods to right
customers. There are different for reasons for revenue management by British Airways. One of
the biggest reason is that British airways is facing the issues in managing the demand therefore
An organization concentrates on revenue management for managing demand. Other rationale for
revenue management is that British airways intends to develop the understanding about the
customer behavior (Riasi, Schwartz and Chen, 2019.). In addition to this, one of the major
reason is that an organization is facing the difficulty in running the business efficiently, by using
the revenue management by British Airways can easily manage all the function in efficient
manner.
The different principles which can be applied by British Airways are :
Pricing : As per this principle of revenue management, British airway is required to re-defined
their pricing strategy and firm needs to develop discipline pricing strategy. The main objective
of pricing strategy is to anticipate the valuer created for consumers. As per this principle of

revenue management, British Airways can adopt the competitive pricing strategy. This principle
states that it is the pricing strategy which helps in determining the way an organization actually
captures the value. In addition to this, flexible pricing strategy can be adopted by an enterprise in
order to provide quick response to the changing market situation. Flexible pricing strategy will
help an enterprise in maintaining the profitability.
Inventory: In context of controlling of inventory, revenue management have focus on analyzing
one of the best way to allocate capacity. In context of British Airways, an organization can
increase demands for their products or services by offering discounts. The discounting pricing
strategy will help British airways in gaining the market share which will ultimately assist firm in
increasing revenue.
Marketing : Price promotional techniques can enables British Airways to sell high volume of
products or services temporarily by lowering the price. It is the revenue management method
which supports an organization in measuring the customer responsiveness to the marketing
activities performed by British Airway (Altin, Koseoglu, Yu and Riasi, 2018). As per this
principle, it is required by British Airways to concentrate on bringing improvement in marketing
activity. As concentration on marketing tactics will assist an enterprise in attracting more number
of customers. Revenue management has proven to be useful as well as beneficial ion context of
balancing promotional roll offs variables in order to maximize revenue while reducing churns.
Channels : as per this principle, it is very much important for British airways to understands that
scarifies is important in context of increase sales .
As application of all these principles will help British Airways in increasing profitability.
P2. Investigating the way British airways applies revenue management tools for earning higher
profit
British Airways utilities PROS O&D system for revenue management. This system
provides a real-time network revenue management and pricing solution which has assisted
British airways in increasing capacity across networks. PROS O&D system also provides pricing
solution to British Airway. It provides organization an ease in allocation of customers. In
addition to this, British has form partnership with one of the leading company That is PROS.
The PROS O&D has provided British Airway with internet Browser based revenue management
technology which has assisted management in planning related to mid-term allocation pricing the

products and services etc. In addition to this, product differentiation is the other tool for
hindering competition. There are various tools which can be used by British Airways which
includes Revenue analyzer software, ratter shopper, property management system etc. As these
systems will assist manager in making an organization more efficient and will support them in
development of revenue management strategies (Ayvaz-Cavdaroglu, Gauri and Webster, 2019).
TASK 2
P3. Different stages of HR life cycle applies to specific travel and tourism JOB.
Below mentioned are the different stages of Human Resource cycle applied to British
Airways in the job role of a marketing manager: Recruiting and On-boarding: In its stage of human Resource life-cycle recruiting and
on-boarding allows the human resource department to recruit an educated and skilled
marketing manager. This helps the overall marketing department to ensure that the right
manager is taking charge of the marketing department and right practices are being
followed. Along with it, it helps the organisation to develop new talent in order to
achieve growth and advantage. Career Development: Career development allows the human resource department of the
British Airways to stay engaged with its employees. The opportunities offered by the
organisation allows the employee to be a part of the organisation for a long time period
and manage its operations well. Also, it helps the British Airways to retain its marketing
manager for a long time period and develop its talent.
 Termination or Transition: This is one another stage of Human Resource life-cycle. The
termination and transition allows the organisation's human resource department to
manage British Airways marketing efficiency well. In case when the marketing manager
of the organisation is not appropriate, the human resource department terminates the
employees and acquires new development (Vives, Jacob and Payeras, 2018.). It helps the
department to bring new talent to the organisation and retain employees.
P4. Performance management plan

Below mentioned is the performance management plan for the Job role of Marketing
manager along with applying techniques to resolve negative behaviour and to overcome issues
of staff retention:
Target
Area
Performa
nce
concern
Expected
standard
of
performan
ce
Agreed
improvem
ent
actions
Support Review
Date
Review
Notes
Date to
achieve
expected
standard
Communi
cation
skills
In order to
improve
the
performan
ce of the
organizati
on's
marketing
manager.
The
communic
ation of
the
marketing
manager
has been
seen
lacking
better
fluency.
Better
communic
The
performan
ce of the
marketing
managers
communic
ation
should be
appropriat
e because
lacking
better
communic
ation can
make it
difficult
for the
organizati
on to
achieve
growth
and
In order to
improve
the
communic
ation of
the
marketing
manager
the
organizati
ons human
resource
departmen
t will be
providing
him with
appropriat
e set of
tools such
and books
and
coaching
The
support
which will
be
provided
from the
organizati
on in order
to improve
the
communic
ation skills
includes
better
technolog
y, training
and
coaching
etc. It will
help the
marketing
manager
23rd May
2019
It is
important
to provide
right
approache
s that
these
managers'
communic
ation can
be
improved
and
appreciate
d. Along
with it, the
coach
should be
as per the
set skills
that
organisati
27th June

ation skills
can
resolve
negative
behaviour
and
improve
the
performan
ce of the
marketing
manager
within the
organizati
onal
environme
nt.
advantage.
The
communic
ation of
marketing
manager
should be
appropriat
e as per
the set
organizati
onal
standards
of British
Airways.
to develop
the
communic
ation. The
other
actions
which will
be taken
includes
improving
provision
of proper
guidance
to the
marketing
manager.
to learn
these set
of skills
easily.
on needs
and the set
standards.
TASK 3
P 5 Laws applicable to travel and tourism industry
The different laws which are required to be followed by British airways in order to run
business smoothly includes:
Civil aviation health and safety regulation : As per this legislation, it is required by employees
in British airways to make sure that all the crew members employed are provided with
satisfactory health and safety protection, Civil aviation health and safety regulation also states
that aircraft operator is required to take an effective measure for managing the risks to other
people. This legislation has direct effect on the company policies. It also has significant effect
on the working environment of firm.
Civil aviation working time regulation act 2004 : This is the norm which is applicable to
mobile workers in aviation companies. According to the Civil aviation working time regulation

act it is the duty and responsibility of employer in British airways to provide rest breaks to
workers. This is the provision which also includes the provision related to information of
working pattern. It is the law which have \great effect on the working timing of companies in
aviation industry.
Equal opportunity act : As per this norm, it is the duty as well as responsibility of employer in
British airways to ensure that all employees as well as customers are treated equally. They need
to ensure that all workers in an organization are provided with an opportunity to perform task
and there is no discrimination in terms of gender, caste, religion, nationality etc.
General data protection act : According to this legislation, it is very much important for British
airways to maintain the confidentiality of information provided by workers or customers. If in
case an organization fails to comply with this norm then an organization might have to face
legal obligation.
General aviation regulations : This legislation in UK covers wide range of unscheduled air
activities such as training establishments as well as flying clubs.
P6. Illustrating the way employment and contract law has effect on the business decision of
travel and tourism sector
The amendments in the legislation have direct as well as significant effect on the business
of airline industry.
Company law : It is the legislation which governs the different airlines companies formed under
companies act. This legislation governs the way companies are established and managed. The
main objective of Company law in UK is to identify, interpret as well as apply the principles
related to the determination of realized losses as well as profits (Vives, Jacob and Payeras,
2018.). It is required by manager in British airways is required to consider company law while
running the business. Amendments in company law have significant effect on the business plan
of British airways./
Employment law: All the employees of British Airways are entitled to the contract of
employment which forms the basis of employment relationship. Employment law comes under
Employment Rights Act 1996. So British Airways has to follow this Act and have to govern their
activities according to this Act. For example British Airways has to provide equal salary to the
employees, to provide flexible working hours and arrangement like parental leave. British
Airways does not have to discriminate between the employees and has to be just towards all the

employees within the organisation. So these are the laws which have an impact on the decisions
of British Airways. There are certain amendments which have taken place in the UK
employment law like leaving a job an employee has to provide minimum period of notice
likewise employer has to provide a minimum period of notice to employee before firing him or
her from the job. This amendment will have an impact on the decisions of British Airways
related to their employees.
Contract Law : : It is the norm which governs the contractual regulation between different
parties. This law have significant impact on the decisions of British Airways as company keeps
on entering different contracts on regular basis. This law effects the business decisions as the
company when it enters to any contract have to focus on different laws of the contract like
validity, agreement, values must be exchanges, breach of contract and end of the contract. There
are various elements of the contract which the organisation have to follow in order to make the
contract valid in the eye of the law and have to frame a business decision depending up on
various elements. For example; if British Airways enters in to the contract with other and
contract is breached and other part is at fault, company should know the legal procedures when
other party is at fault and what decision it should take accordingly.
TASK 4
P7. Different types of financial statements and reporting mechanism of British airways
The various types of financial statement which arr prepared by manager in British
Airways are :
Income statement: It is one of the most crucial financial statement. This financial document
shows the financial performance of British airways. It revels the total income earned by an
enterprise during particular accounting period. The income statement start with sales from which
the expenditures which incurred during the specific financial year are deducted in order to
compute net loss or profit. This financial statement is used by management in British airways.
Balance sheet: This financial statement indicates the financial performance of firm during the
specific accounting period. Information present in the balance sheet is categorize into small
sections these are assets, equity and liabilities. It is the financial statements which is used by the
top level management or business owner for analyzing the liquidity or amount of debt. Balance

sheet is utilized by top level management in British airways for making important financial
decision (Prebensen, Chen and Uysal,2018.).
Statement of Cash flows: It represents the net inflow as well as outflow of cash during specific
financial year. In cash flow statement also different activities are categorized into different sub
section such as investing activities, financing as well as operating activities. It is the financial
document which is generally utilized by outside parties.
Statements of changes in equity : This financial statement reveals the changes in equity during
particular financial year. The changes involve issuance of shares, profit or losses and dividend
issue during particular accounting year.
In context of British Airways, management in an enterprise prepares annual report as well
as accounts utilizing the clarity financial statement reporting mechanism. Final reporting team in
British Airways invest four to five weeks for developing the template of financial statement
report (Camilleri, 2018.). Master file is created by finance manager for each report and one
highly skilled employee is assigned with responsibility to collect the financial information from
the specific department and at the end of accounting year all the reports are consolidated in one
file .
P8. Significance as well as value of budget in context of controlling business performance.
Budget can be defined as estimated incomes well as expenditures for specific period. It
can also be referred to as financial plan made by manager in an organization for specific period.
Budgeting is the procedure which helps manager in determining whether firm will have
sufficient amount of funds for meeting the business requirement in the future. In context of
British airways, budgeting technique has been used by management in an organization for
managing the cash flows. British airways has been successful in accomplishment of its
operational as well as financial plan due to an effective budgeting procedure. Budgeting
formalizes the coordination of different activities between different functional units. In addition
to this, budgeting provides the assignment of decision making responsibilities. Budgeting has
helped British airways in improving financial performance. It has provided management an ease
in analyzing the variances. In Context of British airways, budgeting has encourages all fields in
an organization and assisted firm in becoming more efficient. Budgeting is techniques which
helps management in proper allocation of funds. It is the budgeting techniques supports

management in determining the sources from where the funds can be arranged for fulfilling the
needs of business.
The budgeting technique has great value as it helps in identifying the long term goals.
The other reason for use of budgeting technique by manager is British airways is to save money
for dealing with uncertain situations in business. It encourages an enterprise to review its
spending habit. The other reason for which management in British airways has used budgeting
technique is that it assist manager in making sure that sufficient funds are available. Budgeting
techniques has been used by management in British airways for assessing organizational
performance (Tsai and Chen, 2019). It provides management an ease in analyzing the way
financial resources are going to be allocated towards realization of the companies quantifiable
goals for the year. Budgeting also assist management in prioritizing spending. It supports
management in addressing those business activities which are supporting an enterprise in earning
high profit and identifying those tasks which are adding cost to business.
CONCLUSION
It has been concluded from the report that revenue management is very much helpful for
firms in order to maintain profitability. The other fact which has been found during is the study
is that budgeting is the best technique for managing or improving the financial performance of
company. It has been concluded from the assignment that the amendments in contract as well as
company law has significant effect on the business of airline companies. The other fact which
has been concluded from the project is that revenue management is highly valuable as it helps
organization in accomplishment of desired financial objectives.
The different principles of revenue management has been highlighted in the report which
can be utilized by an organization, as this will help firm in earning high revenue. The other
suggestion given to an enterprise is that they should follow all legislation in the nation, as this
will assist them in maintaining the business sustainability.

REFERENCES
Books and Journals:
Prebensen, N.K., Chen, J.S. and Uysal, M. eds., 2018. Creating experience value in tourism.
Cabi.
Riasi, A., Schwartz, Z. and Chen, C.C., 2019. A paradigm shift in revenue management? The
new landscape of hotel cancellation policies. Journal of Revenue and Pricing
Management, pp.1-7.
Altin, M., Koseoglu, M.A., Yu, X. and Riasi, A., 2018. Performance measurement and
management research in the hospitality and tourism industry. International Journal of
Contemporary Hospitality Management, 30(2), pp.1172-1189.
Ayvaz-Cavdaroglu, N., Gauri, D.K. and Webster, S., 2019. Empirical evidence of revenue
management in the cruise line industry. Journal of Travel Research, 58(1), pp.104-120.
Vives, A., Jacob, M. and Payeras, M., 2018. Revenue management and price optimization
techniques in the hotel sector: A critical literature review. Tourism Economics, 24(6),
pp.720-752.
Camilleri, M.A., 2018. Pricing and revenue management. In Travel Marketing, Tourism
Economics and the Airline Product(pp. 155-163). Springer, Cham.
Tsai, T.H. and Chen, C.M., 2019. Mixed logit analysis of trade-off effects between international
airline fares and fences: a revenue management perspective. Current Issues in
Tourism, 22(3), pp.265-275.