Principles of Revenue Management in Travel and Tourism Industry

Travel and Tourism
Business Toolkit

Table of Contents
INTRODUCTION......................................................................................................................................3
LO 1............................................................................................................................................................3
P1 Principles of revenue management for the travel and tourism industry...................................3
P2 How a specific sector of the travel and tourism industry applies revenue management
tools to maximize profit........................................................................................................................4
LO 2............................................................................................................................................................5
P3 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 Performance Management Plan...................................................................................................6
LO 3............................................................................................................................................................6
P5 Legislation that organizations in the travel and tourism industry have to adhere to..............6
P6 Use specific examples, illustrate that how company, employment and contract law has
potential impact on business decision making in the travel and tourism sector...........................7
LO 4............................................................................................................................................................8
P7 Different types of financial statements and reporting mechanism............................................8
P8 Importance and value of budgets for controlling business performance.................................8
CONCLUSION..........................................................................................................................................9
REFERENCES........................................................................................................................................10

INTRODUCTION
Travel and Tourism is among the fastest growing industries across the world that
contribute to the economy of a country significantly. The industry comprises of many sectors like
transportation, travel, accommodation, food and Beverage etc. Large numbers of people travel
to different places every year and contribute to the GDP of that country (Ali, Ryu and Hussain,
2016). Organization chosen for this report is TUI Group, which is an international UK based tour
and travel company headquartered in London, United Kingdom. The company was founded in
the year 1965 and owns different travel agencies, hotels, airlines, cruise ships etc. The report
examines the key principles of revenue management and how does a specific sector apply
revenue management tools in order to increase profits. Different stages of the HR lifecycle are
also discussed relating to a job role in the company.
LO 1
P1 Principles of revenue management for the travel and tourism industry
Revenue Management can be defined as the application of analytics that forecast the
behavior of the customers and utilize products and other available resources to their maximum
capacity. The various principles of revenue management in context to TUI Group are explained
below-
 Market Segmentation – This is one of the principles of revenue management that helps
organizations in getting a clear picture about the diversity of people who visit a
destination. Therefore, market segmentation is an important principle of revenue
management as it helps the organization in identifying potential customers and their
distinct willingness to pay.
 Overbooking – When the total number of rooms booked for a particular period of time
exceeds the number of rooms available altogether for sale during the same period of
time is defined as overbooking (Banerjee and Chua, 2016). Overbooking is one of the
most commonly used principles as it can help an organization in increasing its
profitability for the long-run. Also, the risk associated with the strategy is less. If TUI will
implement this principle based on statistics of the past, its chances of miscalculations
will decrease. Also, the company can maximize its expected revenue by opting for this
principle.
 Pricing and Inventory Management – Pricing can be done by adopting various
strategies like corporate pricing, dynamic pricing etc. Effective inventory management