Principles of Revenue Management in Travel and Tourism Industry

This document discusses the principles and tools of revenue management in the travel and tourism industry. It explores market segmentation, forecasting of demand, supply forecasting, and control on overbooking. It also covers the different stages of the HR life cycle and the importance of talent retention. Additionally, it highlights specific legislations in the industry and the impact of company employment and contract law on decision making. The document provides insights into financial statements and budgeting for controlling business performance.

TRAVEL & TOURISM
BUSINESS TOOLKIT

Contents
INTRODUCTION...........................................................................................................................3
LO 1.................................................................................................................................................3
P 1 Rationale and principles of the revenue management for the travel and tourism industry...3
P 2 Investigate how a specific sector of travel and tourism industry applies tools of revenue
management to generate and maximize profit.............................................................................4
LO 2.................................................................................................................................................5
P 3 Different stages of HR life cycle and the importance of retaining and developing the talent
in travel and tourism industry......................................................................................................5
P 4 Performance management plan to resolve the behavior that is negative so that issues can
be overcome and staff can be retained.........................................................................................6
LO 3.................................................................................................................................................7
P 5 Specific legislations in travel and tourism industry..............................................................7
P 6 Company employment and contract law has a potential impact on taking decision for the
business........................................................................................................................................9
LO 4.................................................................................................................................................9
P 7 different types of financial statements and reporting mechanism for the companies that are
operating in the tourism industry.................................................................................................9
P 8 Importance and value of budget for controlling the performance of business and
identifying variances..................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
A travel agency is a private retailer or public service that provides travel and tourism-related
services to the general public on behalf of accommodation or travel suppliers. UK ranked fifth
for tourism competitiveness globally. The UK has the fifth most competitive tourism market in
the world, helped by its healthy business environment, strong air travel infrastructure and
cultural attractions. TUI is an Anglo-German multinational travel and tourism company
headquartered in Hannover, Germany. It is the largest leisure, travel and Tourism Company in
the world, and it owns travel agencies, hotels, airlines, cruise ships and retail stores. This report
contains issues such as principles of revenue management. Tools of revenue management and
their application so that profits of the company can be maximized. Life cycle of HR and
retaining and development of employees. Performance management plan with the strategies to
overcome the issues of employee turnover and increase the power of retention. Legislations that
is applicable in the industry of travel and tourism. Company and contract law that impact on
decision making. Different types of financial statements and their ways of reporting mechanism.
Importance and value of budget for controlling the performance of business and identifying
variances (Baumgartner and Bansal, 2019).
LO 1
P 1 Rationale and principles of the revenue management for the travel and tourism industry
There are many methods in which hotels such as TUI manages their revenue.
Market segmentation-
There are two types in which hotel classify their consumers that is qualified and non
qualified. Segmentation of consumers is based on the attribute that is important to guarantee so
that rates can be assessed on the basis of targeted audience and maximum revenue can be
obtained from them (Bolin and et.al., 2018).
Forecasting of demand-
This aspect has a different level of impact on the revenue of the hotel. If the forecast is
done highly wrong then it will lead to controls on inventory on conservative basis. On the other

hand if there is less error in the forecasting then the control on inventory will be aggressive.
Other than this companies such as TUI needs to predict the level of occupancy of rooms in the
near future. It is considered as one of the most difficult predictions. This is done so that rate of
rooms can be controlled. If they want to control it by the time a guest want to spend in the hotel
then they will needs to judge it on the basis of their arrival that is if they walk in and book or it is
pre booked also it is judged on the basis of occasion such as holiday season, festive season.
Supply forecasting-
It is necessary that hotels such as TUI forecasts and predict the duration of stay of guest
so that they can make the room available for other people and mark it open for reservation. This
aspect of forecasting of supply can assess the control of revenue management (Jarratt and et.al.,
2019).
Control on overbooking-
This aspect is concerned is selling more rooms which is more than the rate they can
handle the accommodation. In order to be achieving success of this aspect it can only be possible
if there are a lot of cancellations being made. This aspect has the cope to maximize the revenue
and lower the risk of refused service.
P 2 Investigate how a specific sector of travel and tourism industry applies tools of revenue
management to generate and maximize profit
Marketing with pricing and customer acquisition strategy-
Due to different behavior of booking and sensitivities regarding price on platforms that
operate online. Revenue managers must undertake the activities of marketing in order to enhance
their reach to consumers so that they can maintain the balance between factor of price and
promotion. Revenue management can undertake the strategies of marketing so that their plans of
promotion motivate consumers across the right mix of channels.
Collaboration with sales and marketing-
TUI needs to undertake the holistic approach as it will help them to combine the methods
and strategies that can be used both online and traditionally all of these are concerned with the

management of revenue. In order to remain with competition it is necessary that they undertake
the issues of sales and marketing in the meetings of revenue. This strategy of integration will
help them to increase their revenue (Nguyen, 2017).
Invest in advertising-
It is necessary that TUI motivates people to make booking online so that they can acquire
and maintain their business from online platforms. This is because through social media targeting
customers becomes easy and any offers or deals released by the company can be shown of easily
on their website. This way they will be able to increase their revenue.
Integrate the solutions of technology
It is necessary to ensure that the system of revenue management is combined with the
strategies of managers so that they can assess the rates and manage them automatically. This way
they will be able to take out an accurate understanding of their supply chain and take out
decisions in an optimized manner. This way the management of TUI can focus on other and
different areas which help them to increase the revenue of the business.
LO 2
P 3 Different stages of HR life cycle and the importance of retaining and developing the talent in
travel and tourism industry
Different stages of HR life cycle
Recruitment-
If TUI wants to increase their scale of operations then it is necessary that they look for
those candidates who matches the criteria for the job. They need to plan strategically, assess the
positions so that they can attract the right talent which is suitable for the position of marketing
manager. Develop an protocol of selection which involves different rounds of interview so that
they can be selected after assessing every outcome (Ireland, 2017).
Education-

It is necessary that TUI enables the program of education right from the moment they are
hired so that they are clear with their role in the company the marketing manager can meet their
expectations for them.
Motivation-
It is necessary that the management of TUI bond with the employees and the upcoming
marketing manager so that they can retain them for a long period of time. They need to
appreciate their work and contribution so that they achieve the results and stay motivated.
Evaluation-
It is necessary for the managers of the company to evaluate the performance of
employees so that they can make the necessary changes in the pattern of their working.
Celebration-
This stage is concerned with boosting the employees so that they look for new
opportunities regarding work. Benefits needs to be offered by the company so that they can
celebrate their successful performance. It is necessary to allow them a sense of ownership so that
they feel motivated.
It is important to retain and develop the existing talent because it is cheaper than finding
out new talents for the company and make them learn the patterns of working which are enabled
by the company.
Performance management plan
Objectives for
development
Priority Activities to be
undertaken
Time Criteria for
success
Skills for
management of
time
High Time
management
work
2-3 months This issue will be
turned from
negative to
positive when the
work is
completed on
time.
Skills of
communication
High Vocabulary,
debate and
grammar classes
3-4 months This will achieve
success when
employees are

able to present
themselves and
their work in
front of a large
audience with
confidence.
With the help of this they will be able to overcome the issues that is affecting the working of the
company and improve the level of employee retention.
P 4 Performance management plan to resolve the behavior that is negative so that issues can be
overcome and staff can be retained
Performance management is considered as the process where companies such as TUI align their
employees and their resources to objectives that are strategic so that they can keep the priorities
in order as this will help the company to meet both short and long term goals.
Plan-
This aspect is concerned with taking out the priorities and work on the basis of
expectations of employees. It will assess the processes and helps to show the direction once the
guest has checked in to the hotel. It is necessary that at the time of setting priorities and
employees of the must understand its importance. It is necessary to put extra efforts so that they
can reach their goals.
Monitor-
It is necessary that management of TUI needs to communicate with people in order to
assess their focus of work and setting up the priorities. This aspect is considered as effective
measure because of its reduced complexity. More check ins without monitoring will not be
turned out as efficient (Figueroa-Domecq and et.al., 2020).
Review-
Usually review is done on the assessment of things that have been done. Although in
order to use it effectively they need to focus on the purpose that helps them to take ahead in
future. It helps the employees to grab the opportunity of working on new things and enhance
their performance. It is necessary to be specific about the experiences and qualities of employees

so that they can go ahead on the basis of their priorities. The modern trends in reviewing works
with new models of performance management. they focus more on setting of goal instead of
focusing on evaluation. The focus that is put on the employees has will help them to work
towards the goals so that opportunities can be provided and they take effective use of the assets
of the company.
By planning and monitoring their performance and the less amount of complexity in this
aspect employees are easily retained for a long period of time. There are some benefits which
comes under this aspect such as workforce that is highly motivated and can help companies such
as TUI to increase their revenue.
LO 3
P 5 Specific legislations in travel and tourism industry.
The industry of tourism and travel and their legal formalities are linked with each other.
There are different and various parties in the sector of tourism such as clients, contractors,
suppliers etc. for example if TUI fails in meeting the expectations of the consumers and it gets
linked with the legal aspects because of the illegal action and the wrong practices they have
implemented. For this sector there are some specific that needs to be followed by Travelodge.
Tourism Act 1969-
This act is concerned with the focusing on organizations of tourism. Also this act
highlights the level of coordination that is specified by the authority of British Tourism.
Transport Act 1980 & 1985-
This act is concerned with undertaking the duties of transport for buses which are
national and for private. Apart from this they also take the routes which are followed.
Package travel and Tour regulations, 1992-
This aspect is concerned with the controlling of responsibilities and providing the
facilities available from tour operators to their customers (Yan and Subramanian, 2018).

There is a motive and reason behind the necessity of legal aspects and that is to promote
the procedures that are standard so that they can regularize the industry of tourism. Also due to
this aspect all the rights are described and the parties concerned to it. The laws which are made
for tourism can be affected by the commission of health and safety, association of international
air transport, Civil aviation and strategic rail authority (Wiltshier, Griffiths and Clarke, 2019).
Surface Law-
This act is protected by the International Carriage of passenger by Road Act 1979. This is
beneficial for the passengers as it protects their rights. The cases which are related with damages
that are physical or mental disorder can be assessed by this law.
Air law-
If the passengers gets injured then he or she has the right to make a claim against the
company for compensation. It covers all areas such as traffic, landing of passengers and cargo so
that they can specify their category.
P 6 Company employment and contract law has a potential impact on taking decision for the
business
Employment law complies with the level of non discrimination and non exploitation of
the employees, labors etc. other than this minimum wages for them, hours of work, conditions
which fulfills the requirement of health and safety (Victorovna and Ivanovich, 2019). On the
other hand Contract Law is concerned with the legal entities that is concerned with the
partnership so that contracts are executed on these basis. This will help the services and keep a
check on documentation. There are different ways in which they can affect the decision making
of the business. These laws puts pressure on every business entity. The reason behind this is law
is involved in every aspect of purchasing, selling or rendering the service. This law helps to
assess what types of products or services are being offered by the company. There are terms and
conditions in every aspect which affects the decision making authority of the company as it is
necessary that decisions are taken under the guidance of these laws. Basically they helps to
assess the functions of the business. This affects business for each transaction they make a
contract is required. Other than this all the details must be present in the contract such as price

and terms and conditions. This aspect covers the beginning point to the ending point of
transaction.
LO 4
P 7 different types of financial statements and reporting mechanism for the companies that are
operating in the tourism industry
There is a motive behind assessing the financial statements of the company as it helps to
take decision in a easier way. Also this helps the investors of the company to get information and
be assured about their investments. There are many forms of financial statement and its reporting
such as
Cash flow statement-
This is done because of the reason at the time of settling of bill or debt only cash is used.
The statement helps TUI to know the sources from which they are getting the money and the
source where they are spending their money.
Income statement-
This is also known as Profit & Loss statement. This report help TUI to assess that
whether or not they are able to generate profits. In order to get accurate report every transactions
from the cash flow statement is needed so that they can come to an area and notice the vital
subjects which is profitable for the company.
Balance sheet-
Most of the companies ignore this on monthly basis instead they visit on a quarterly or
yearly basis. The reason behind this is the missing of results that are based on operational
activities. It helps the company to assess the gap between the cash that is ready and the bills they
need to clear (Queckenstedt and et.al., 2017).
Operational reporting-

This type of report has a different motive and that is to help the management of TUI to
current efficiency that is operational. In order for the report to be effective it is necessary that
outcomes which are on the basis of current situation and future possibilities are assessed. It is
necessary that this report have information such as
Real time information-
Management must match their work on the basis of time. for instance they need to open
yesterday’s topic today morning and the afternoon topic on the next morning (Morrison, 2018).
Granular Reporting-
It is concerned with the falling of real time information. Issues such as flights, hotels
tours and activities are assessed and what products are offered by the company is highlighted.
Flexible ease of use-
If the individual requires different view of data then they must not analyze or trigger the
aspect of information technology. It can be easily customized without any assistance.
P 8 Importance and value of budget for controlling the performance of business and identifying
variances.
Budgeting is the base of achieving success for the company as it helps with both the
aspects of the company that is planning and controlling of operations that are related with
finances. If authority do not have control over these aspects then they won’t be able to achieve
their objectives. It is important because it helps to project the revenue of TUI on the basis of their
expenses and limits those which are not included under the plan. It makes sure that money of
TUI is allocated in the right areas so that management has enough funds to carry out strategic
objectives. It is necessary to communicate the budget to everyone in the company so that
priorities can be taken out. If employees are invited in the process of creating the budget then
they will feel important as company will share their vision with them. Engaging the employees in
these aspects will help them to form it in a better way and they can compare the budget with the
actual resources they have this also involves the positive and negative factor of the business.

Variance analysis is done when the actual results start coming. This way management of
TUI helps to compare the budget with the actual results they have achieved. At this stage
company identifies the variances from the budget. It is the duty of the management of TUI to go
in depth so that all of the information related to this aspect can be taken out. This will help the
company to gain control over business. For instance budget of sales is 100,000 and the actual
return on sales were 90,000 then rest 10,000 is variance. They are clearly visible with time and
helps to interpret the reasons which creates differences among them (Prokopenko and et.al.,
2020).
CONCLUSION
From the above studies it has been concluded that TUI needs to increase their level of retention
and train and develop the skills of employees so that they can match with the current pace and
conditions of the market. It is necessary that they analyze their financial statement on monthly
basis so that miscellaneous expenses can be reduced and other necessary changes can be made. It
will also help the company to take decision to invest in those areas which is most viable. It is
necessary for the management of TUI to look after the aspects of revenue management and focus
on the areas from where they can get most returns in order to obtain more share in the market
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