Travel and Tourism Toolkit

This document provides a comprehensive overview of revenue and yield management in the travel and tourism industry. It covers the definition and principles of revenue management, tools for effective management, and the impact of pricing strategies. It also explores the relationship between regulation, legislation, and standards in decision-making, as well as the importance of financial statements and budgeting for British Airways and Iberia. The document is a valuable resource for anyone interested in understanding and optimizing revenue management in the airline industry.

Travel and Tourism
Toolkit

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
PART 1............................................................................................................................................1
Define revenue and yield management-......................................................................................1
Tools of revenue management-...................................................................................................3
Impact of various pricing strategy on the revenue management-...............................................3
Critical analysis of principle of the revenue management-.........................................................3
PART 3............................................................................................................................................4
Relationship among regulation, legislation and standard -.........................................................4
Company, contract and employment law that has impact on decision-making of business-......4
Implication of legislation, regulation and standard on decision-making-...................................5
Impact of regulation, legislation and ethical principle-..............................................................5
PART 4............................................................................................................................................5
Type of financial statement -.......................................................................................................5
Importance and value of budget-.................................................................................................6
Financial statements of British airways and Iberia.....................................................................6
Evaluation of business performance-..........................................................................................8
CONCLUSION..............................................................................................................................10
REFRENCES.................................................................................................................................11

INTRODUCTION
Travel and tourism toolkit is helpful for a company who are hugely contributing into the
travel industry. Through this tool they can effectively attract wide range of consumers to their
company and enhance their profits further.
British Airways is top airway company. They had their networks worldwide. It had its
headquarter in London. The above report ends with the definition of revenue and yield
management along with various principles and rationale of revenue management in travel
industry. Various tools that can be used by revenue management. Impact of the differentiated
pricing strategy that could be utilized by airline industry. Report further carried forward with the
employees law and contract law which has huge impact on the decision-making of company.
This report will examination of the potential implementation of the regulation and employees
and ethical principal on the companies decision-making. It will also provide rarefaction on the
rules and regulation of the company and their impact on their decision-making. In the last part of
this report will analyze the product investment strategy of the British Airways.
MAIN BODY
PART 1
Define revenue and yield management-
Revenue:
Revenue is income which a business gains from the general business activities, by selling
product and services to the consumers. It is also known as turnover or sales. Companies can
receive revenue from the interest, royalty or other fees. There are several ways for calculating
revenue, that fully depends on accounting method employs.
Yield Management:
It is the variable strategy of pricing which is based on influencing and anticipating
behaviour of consumer. The major goal of this is to maximize revenue from time-limited, fixed
resources that are room reservations in hotel, seats in airlines or advertising the inventory. Yield
management is based on selling to right consumer, at right time for the appropriate pricing. Data
driven approach is used for ensuring pricing is to be adjusted for maximizing the results in
business (Pimentel, Aizezikali and Baker, 2019). The yield management has narrow focus and
1

is generally concerned with selling price or sales volume through which the best possible yield of
revenue could be gained.
Significance and principle of revenue management for tourism and travel industry-
Revenue management is more useful in the travel industry. It can be described below-
Importance:
Revenue management in tourism render ability for making most out of the perishable
inventory of rooms for the hotel, accessing them for maximizing amount of money for
generating business (Pavlova, 2017). There is fixed cost in travel industry they need to analyze
the actual costing which are being met while providing services to the guests or travellers. This is
helpful in further innovation in both development of new product and services and the pricing.
Revenue management allows tourism sector to drive down their cost more efficiently. This is
also helpful in achieving competitive intelligence and the market awareness.
Principle:
There are five principles of revenue management. These can be described below-
 Value- The value includes perceived value that could be collected by survey and
feedbacks. Perceived and advertised value discrepancy must kept minimum at every time
through which guest don't get disappointed.
 Distribution Channels- Distribution channel is also known as marketing channel.
Through several distribution channel a British airline can opt various marketing
opportunities.
 Direct Booking- Direct booking let the tourist to book the airlines directly without any
mediators. This strategy is helpful in attracting tourist directly to the official website or
social media sites.
 Hotel Software, Insights and Data- The revenue manager of British Airways must
make their decision on the basis of recent and accurate data. The airline's software system
will also helpful for tool for manager to manage overall functioning and management.
 Experience that starts with websites- The British Airways must render a blogging
section on the website and sharing content on their social media profiles which is helpful
for company.
 Demand forecasting- It is most essential principle of revenue management. The manager
must project cost, need and revenue of British Airways (Board and Skrzypacz, 2016).
2

The booking trend could be identified and further that information could be forwarded to
marketing department.
Tools of revenue management-
There are several tools which could be further utilized by British Airways for further
success and growth. Some essential tools are described below-
 Capital Utilization: The airline capital utilization is measured with the help of local
factors and indicating percentage of the total capacity which is used by the airlines. The
airline capacity utilization is calculated by dividing revenue passenger miles with the
available seat mile.
 Discount allocation: Allocation of discount means selling airline ticket at low pricing
then rack rate. It is so much better to sale airline seats at discount offers to their
consumers.
 Duration control: The duration control is very much necessary for airlines industry. The
selling of the tickets are being done on the basis of duration so that it can be effectively
managed and controlled.
Impact of various pricing strategy on the revenue management-
The airline industry must follow the differentiated pricing in their business. A customer
could book their airline seats and this could be views by them as single commodity, further
desire is for purchasing seats at the lower price (Kimes, 2017). They had different product as per
the classes which are first class, business and economy class for offering value added and
catering product across brand utilizing the micro-segmentation of market price and place fences.
For example- purchasing of advance ticket, fares for tour operators and frequent redemption in
flyer rates etc., Thus this lets them to offer different pricing of each product and allows consumer
from different class to book their tickets and enjoying flights. This enhances sale of the airline
industry and allows them to book tickets in more quantity. It is very helpful for company to
enhance their sale and each & every class of individual to have tickets in the British Airways.
Critical analysis of principle of the revenue management-
The values in revenue management are helpful for British Airways is helpful for them to
update their products as per the feedback of consumer and modifying their product accordingly.
Whereas sometime feedback and values are not to be appropriate that must be applied to their
product. With the help of various distribution channel they can have several marketing
3

opportunities and effectively perform in the marketplace. They can also have more number of
suppliers available in marketplace (Kimes, 2016). Direct booking is most useful and utilize by
consumer mostly nowadays where tickets can be booked directly and thus it can also reduce sale
of ticket due to insecurity of payment to the consumers. Appropriate data and insights are to be
utilized by company and if it is not utilized then the overall operation will be affected. Website
of British Airways is to be well-established, and they need to have updated it time to time if not
then this could have negative impact on consumers. Demand forecasting is to be done by British
Airways as they can optimize the cost, revenue and profit and if it is not optimized then they will
not analyze the overall costing and profit further.
PART 3
Talent Acquisition
Relationship among regulation, legislation and standard -
Regulation is management of complex system as per set trend and rules. It is controlling of the
procedure or activity, which is generally through rules. Whereas legislation is law that is
promulgated by government body or legislature or procedure of developing it. Before an item of
legislation to become a law it is also known as bill or legislation. And it is remained under
consideration for distinguishing it from another business. Standard contains technical
specification or another précised criteria which is designed for utilizing consistent guideline,
rule or definition. The airline industry can itself build internal and external standard for their
company.
Equality Act 2020- This legislation allows employees and employers to follow fair treatment
and promoting equal environment of working to the employees. This can include that no
discrimination is to be done by British Airways to their employees and equal pay is to render to
them there is no gender discrimination among employees.
Human Right Act 1998- It is the fundamental right and freedom which everyone in UK is
entitled with. Under this act there are various articles all of which had various rights in it. This
is commonly known as 'the convention rights' The airline industry must follow this law into the
company so that they can have equal treatment to their consumer.
Company, contract and employment law that has impact on decision-making of business-
Company law allows the airline industry to legally follow the business process and renders
smooth flow of business activities into their companies. This is helpful for aviation companies
4

to take appropriate decisions into the business operation as per the company laws. The contract
law allow airline industry to have a specific contract with the company and having the
appropriate contract with the other companies so that they can legally have a contract and
render services to the consumer effectively (Guillet, 2020). Employment law allows airline
industry to render the efficient workforce and implementing a good working environment to the
employees legalized with law and thus further they can take appropriate decision-making in
business.
Implication of legislation, regulation and standard on decision-making-
This all has impacted the decision-making of the airline industry to some extent as the company
had to adhere to various legislation and set standard while rendering service to the customer and
if they are not following such they can face any legal issues further. It allows the airline
industry to work on the set standard so that they can render great quality service to the
customers. The company had to take decision as per the several regulation and standard further
there decision-making will be done accordingly and thus further render services and business
operation as per the requirement of such.
Impact of regulation, legislation and ethical principle-
The legislation, regulation and ethical principle had a positive impact on the decision-making of
the airline industry and this allows companies to render the effective services to their consumer
along with considering ethical principles into the business operations (rotcorne and et.al.,
2018). It renders an efficient flow of business operation without any barriers into business and
having a great opportunity of growth for a company.
PART 4
Type of financial statement -
There are various type of financial statement that can be used by British Airways for analyzing
their accounting statement, profit and loss further. Some are explained below-
Balance Sheet-
It is the overall review of the organization in which equation of basic accounting has been
performed. The gross asset of organization has been shown on the left side of balance sheet
whereas shareholder equity and liability has been stated on the right side of the sheet. The British
Airways balance sheet shows picture of their liability, assets and shareholder equity at given
5

period of time (Ferreira, Simchi-Levi and Wang, 2018). This statement do not show any
outflow and inflow of the overall information of the organization and further explaining whether
the company having profit or loss.
Income Statement-
Income statement state that what revenue company has gained in the following time. This
statement state that cost ad expenses which are beard by airline industry and how much a
revenue is being earned by company further. The bottom of this statement show that what is the
net earning and loss of company. Through this statement they can analyze the earning per share
of company. They can also analyze that what amount is being bared by company's shareholder
and what amount is to be allocated to them. It is very essential for British Airways to prepare this
statement.
Importance and value of budget-
Controlling and value of budget is so much essential for an Airline industry to follow.
The airline industry must control the budget so that they can gain huge revenue and profit
further.
 If budget is well communicated it helps each one to understand the priorities of business
further and thus the objective of British Airways can be achieved significantly.
 The procedure of budgeting render opportunities for involving staff, and thus vision of
British Airways could be easily shared to everyone and hence the employees can
effectively work for the betterment of company.
 Controlling and implementing budget allows the planners to allocate the money for such
resources that can support to the objective of the airline industry. This is hugely helpful in
gaining overall aim of the company.
 The potential investor can easily attract through specific budget controlling.
 The sales goal can be effectively set by the Airline industry through budgeting.
Financial statements of British airways and Iberia
Profitability ratio
This ratio is generally used by companies to analyses ability of business to generate
profit. Profitability ratio is generally used by business to measure the revenue segment (Abrate
and Viglia, 2016). Whereas net profit ratio describes the direct and indirect cost of the firm and
after that positive return of investment that firm receive.
6

Iberia British Airways
Profitability ratio
Gross profit ratio
(Gross profit/Sales*100)
Gross profit 3230 1652
Sales 24406 13021
GP ratio =3230/24406*100= 13.23% =1652/13021*100=14.99%
Net profit ratio
(Net profit/ sales)*100
Net profit 2481 2091
Sales 24406 13021
NP ratio =2480/24406*100= 10.16% =2091/13021*100=16.05%
From the above data it is found that Iberia GP ratio is 13.23% and Gross profit ratio of
BA is 14.99% that reflects that British Airways is generating more profit as its investment
strategies is good and it is able to manage its expenses in significant manner. Net profit ratio of
Iberia is 10.16% and BA ratio is 16.05% that also reflects that British Airways is performing
well in market and its profitability is higher than Iberia.
Liquidity ratio
This is another kind of ratio which is used to evaluate capacity of company to repay its
liabilities. If firm is able to repay it's all debts on time, then it is considered as good position. If
firm has great liquidity position in market then it can gain benefit of raise credibility in the
market (Feldman and Topaloglu, 2017). Whereas it firms is not able to repay of debts on time
then it will affect financial liabilities of business unit to great extent. Current ratio describes that
financial strength of business unit, it must be in the form of 2:1. Quick ratio is also known as
acid ratio that ensures to eliminate such items which are not in the format of cash, it must be 1:1.
Iberia British Airways
Current ratio
(Current assets/
current liabilities)
Current assets 10093 2502
Current liabilities 11050 5838
Current ratio =10093/11050=0.91% =2502/5838=0.42%
Quick ratio
(cash+ cash
equivalent short
term investment
+cash
7

receivable’s/current
liabilities
Cash+ cash
equivalent
3837 1327
Short term
investments
1597 1175
Cash receivables 2437 901
Current liabilities 11050 5838
Quick ratio =(3837+1597+2437)/
11050=0.71%
=(1327+1175+901)/5838=0.58%
From the above table it is found that Iberia’s current ratio is 0.91% and BA current ratio
is 0.42% and Quick ratio of Iberia is 0.71% and BA has 0.58% ratio of quick. From the above
details it can be said that position of Iberia is good as it is able to manage its debts in significant
manner. BA needs to work on its creditability so that it can generate more profit in the market
and can raise its credibility.
Efficiency ratio
This is another kind of ratio that reflects the capacity of company to manage routine
affairs. This ratio reflects the ability of business unit to manage or utilize assets of company and
manage all the liabilities (Cetin, Demirciftci and Bilgihan, 2016). Account receivables ratio
explains that quickness of business unit to gather customer’s bills that shows the efficiency of
credit policy of business unit. This ratio clearly describes that how much level of investment
must be maintained by organization to manage sales level.
Iberia British Airways
Account receivable
turnover ratio
Revenue/ average account
receivable
average account receivable =(1695+1526)/2=1610.5 =(922+784)/2=853
revenue 24406 13021
Account receivable turnover
ration
=24406/1610.5=15.154 =13021/853=15.26%
`From the above table it is found that Iberia’s account receivable turnover ratio is 15.15% and
BA ratio is 15.26% there is not much difference between both that reflects that both companies
have great credit policy and able to manage sales level effectively.
Evaluation of business performance-
The business performance of the British Airways and Iberia are performing well and
having an appropriate credit policy. This is helpful for a company to render an effective product
8

and service to their consumer and competing with their rivals in market effectively. The effective
budget of organization helps them to render an effective resourcing through implementation of
various plans and strategies. This objective and target of the British Airways and Iberia could be
meet effectively. These both companies are performing well in the airline industry and further
gaining huge revenue & profit further. The companies are cling well and extraordinary as
compare to the other companies in this industry.
CONCLUSION
From the above study it can be concluded that revenue management and yield
management is helpful for company to gain their overall objective further an sustaining in
marketplace for long term. This is helpful or company to have an control their business operation
in such a way that they can effectively compete with their rivals in market and further they can
huge get huge profit as well. the company can easily have smooth flow of business activities
through effective budgeting and financial planning. The company can sustain in market for long
term and manage their profit and losses further and gain huge success further.
9

REFRENCES
Books and Journals
Abrate, G. and Viglia, G., 2016. Strategic and tactical price decisions in hotel revenue
management. Tourism Management. 55. pp.123-132.
Board, S. and Skrzypacz, A., 2016. Revenue management with forward-looking buyers. Journal
of Political Economy. 124(4). pp.1046-1087.
Brotcorne, L and et.al., 2018, January. A Revenue Management Approach for Attended Home
Delivery.
Cetin, G., Demirciftci, T. and Bilgihan, A., 2016. Meeting revenue management challenges:
Knowledge, skills and abilities. International Journal of Hospitality Management. 57.
pp.132-142.
Feldman, J.B. and Topaloglu, H., 2017. Revenue management under the markov chain choice
model. Operations Research. 65(5). pp.1322-1342.
Ferreira, K.J., Simchi-Levi, D. and Wang, H., 2018. Online network revenue management using
thompson sampling. Operations research. 66(6). pp.1586-1602.
Guillet, B.D., 2020. An evolutionary analysis of revenue management research in hospitality and
tourism. International Journal of Contemporary Hospitality Management.
Kimes, S.E., 2016. The evolution of hotel revenue management. Journal of Revenue and Pricing
Management. 15(3-4). pp.247-251.
Kimes, S.E., 2017. The future of hotel revenue management.
Pavlova, K., 2017. Revenue management system for the hospitality industry–essence and
elements. Economics and computer science, (1), pp.42-71.
Pimentel, V., Aizezikali, A. and Baker, T., 2019. Hotel revenue management: Benefits of
simultaneous overbooking and allocation problem formulation in price
optimization. Computers & Industrial Engineering. 137. p.106073.
10