Report on Room Revenue Management Strategies: Birmingham Central Hotel

This report analyzes the room revenue management practices of the Birmingham Central Hotel, a four-star global chain hotel. It assesses the hotel's performance based on provided data, highlighting areas of good practice and suggesting strategies for improvement. The report examines the hotel's room availability, occupancy rates, average room ratios, and revenue figures across multiple periods, identifying deviations from budgeted figures. It also delves into the organizational and financial issues impacting hospitality room management, such as changing customer expectations, workforce skill gaps, and the need for technological advancements and renovations. Furthermore, the report identifies modern developments in the industry that enhance efficiency and profitability, including online booking services, staff training, and the use of social media marketing. The report concludes with recommendations for the hotel to improve its revenue management strategies and overall financial performance in the competitive hospitality market.

Room Revenue Management

Table of Contents
INTRODUCTION ..........................................................................................................................1
PART A...........................................................................................................................................1
On the basis of the given information highlighting the areas of good practice and strategies for
the further improvement..............................................................................................................1
PART B............................................................................................................................................2
iii. Analysis of the organizational and financial issue which arises in the hospitality room
management ...............................................................................................................................2
iv. Identification of the modern developments in the industry which aid in the efficiency and
profitability in the hospitality room management.......................................................................3
CONCLUSION................................................................................................................................4
REFERENCES................................................................................................................................5
APPENDIX......................................................................................................................................6

INTRODUCTION
Revenue management can be defined as a application or analytics through which
organization predicts the behavior of the consumer. One of the main objectives of room revenue
management is to sell the room at very cost effective rates if organization expects the lower
demand for the guests’ room. The present report is based upon the Birmingham Central Hotel
which is the global chain of the four star hotel. This project report will develop understating
about the yield management games which helps organization in framing competent strategies for
improvement. It will also state the organizational and financial issues faced by an organization
while managing the rooms in hospitality. It also shed light on the modern developments in the
industry which aid in the productivity and profitability of the hospitality room management.
PART A
On the basis of the given information highlighting the areas of good practice and strategies for
the further improvement
As per the given table it has been assessed that in the period 9 and 10 budgeted
availability of the room met the actual figures. This aspect clearly states that the Birmingham
Central Hotel have attained success by in making available the room for the guest as per the
estimation of the hotel. On other hand, in period 10 hotels fail to make available the room as per
the budgeted figures. Hotel has estimated that they make available the 2800 rooms for the guest
but the actual room which they really make available is 2660. On the basis of this aspect the
deviation which will occur in the availability of the room is 140. Thus, organization needs to
make efforts to make available the large number of rooms to the guest because it closely impacts
the profitability of an organization.
In addition to this, rooms which are actually sold by the Birmingham Central Hotel to
their guest are lower than the budgeted figures in all the periods such as 9, 10 and 11. It clearly
states the occupancy aspects of the hotel room. Thus, hotel needs to undertaker promotional
campaign and strategies in order to aid in the sales and profit margin of an organization. By
making promotional strategies and policies hotel is able to attract the more customers and
thereby build distinct image in the mind of the guests (Cheng and Wong, 2015).
Further, average room ratio is used in the hospitality industry in order to measure the
financial performance. In the period 9 actual room ratios is higher than the budgeted ratio which
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represents that financial performance of hotel is sound. Where as in the period 10 and 11 average
room ratio is lower than the budgeted figures which is not positive sign for the organization. In
the period 10 the deviation which occurs in the room ratio of hotel is 2.6. Where as in period 11
the deviation is very high which is 17.73. It states that hotel fails to make optimum utilization of
the available resources. Thus, hotel requires framing the cost effective strategies which helps
them in meeting their predetermined goals and objectives.
In the period 9 by comparing the actual figures to the budgeted figures manager of the
Birmingham Central Hotel have identified that 2966 deviation is occurred in the revenue. On
other hand; deviation which occurred in the sales revenue during the period of 10 and 11 is
higher than the budgeted amount. It represents that company fails to take effective plan in
relation to the room management. Thus, hotel requires undertaking the marketing tactics which
helps them in fulfilling their goals and objectives. Through this, the Birmingham Central Hotel is
able to build and sustain competitive advantage in the strategic business arena.
Along with it, salaries and wages as well as casual expenses are continuously increases.
In order to improve or maximize the profit hotel needs to exert control over their expenses. On
other hand; operating expenses of an organization is also increasingly continuously with the high
percentage as compared to the budget amount. Thus, company also needs to control their
operating expenses in order to maximize their profit. In addition to this, cost of the services
which are delivered by the Birmingham Central Hotel is increasing which closely impacts the
gross margin of them. Further, net profitability aspect of the hotel is lower than the planned
performance. Thus, hotel needs to undertake effective measures by making proper investigation
of the reason due to which deviations are occurred in the performance (Šerić, Gil-Saura and
Ruiz-Molina, 2014). It enables hotel in getting the desired output or success and there by helps
build and sustain competitive advantage over others.
PART B
iii. Analysis of the organizational and financial issue which arises in the hospitality room
management
There are several issues which closely impacts the hospitality room management as well
as productivity and profitability of the organization. In the present era, customer needs, wants
and expectations are changes very vastly. It is one of the major aspect which closely affects the
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organizational strategies and policies made by the Birmingham Central Hotel. In order to build
and sustain competitive advantage organization requires making efforts to understand the
consumer behavior towards the room services offered by them (Sukru Cetinkaya, Ergul and
Uysal, 2014).
In addition to this, lack of skilled and efficient workforce also imposes difficulty in front
of the organization in offering the quality room services. Along with it, company who operates in
the hospitality needs to make renovation in the room and structure of the hotel top attract the
large number of customers (Koupriouchina, van der Rest and Schwartz, 2014). This aspect also
imposes high financial cost in front of organization. Further, technological changes also create
difficulty in front of the organization. All these organizational issues are the main factor which
creates difficulty in the hospitality room management.
Along with the organizational issue, financial issues also act as a barrier in the smooth
functioning of business operations and functions. Preparation of the appropriate budget is one of
the main factor upon which the organizational success is highly depends. If finance manager fails
to make suitable budget then it negatively impacts the sales revenue of an organization. Besides
this, for the room innovation organization needs to make huge investment which also imposes
financial cost in front of the organization (Challenges facing hospitality today, 2015). In addition
to this, company also needs to undertake research ion order to know the room services and other
changes which they wants (Morse and Smith, 2015). This aspect also creates financial issues in
front of the organization. Thus, organization requires to frame the competent strategies and
policies which helps them in coping up with the issues which arises in the effective room
management in the hospitality industry.
iv. Identification of the modern developments in the industry which aid in the efficiency and
profitability in the hospitality room management
In the world of technological advancement one can survive only when they offer unique
products and services to their customers. By offering the online booking services which also
provides information about the room no., floor no as well as the picture of the room. Through
this, organization can easily provide the appropriate information to their customers and there by
evolve satisfaction among them (Qin, 2014). In addition this, by conducting the periodical
training session organization become able to offer the satisfactorily services to their customers.
Through this, organization is able to maximize the productivity and profitability of them as
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compared to their rivals. Along with it, by evolving the system of booking in relation to the
breakfast, lunch and dinner. It provides more convenience to the customer and attracts them to
make repeat experience of the hotel.
In addition to this, by offering complementary products and services company can
increase their their customer base. For instance: Hotel or organization can offer complementary
juice or welcome drink which develops special felling among them. Besides this, by offering the
chocolates as a complementary food organization can attract the child to stay longer in the hotel.
Further, social media marketing and other technological ways of advertisement have replaced the
tradition form of marketing. In the p[resent scenario people spends lots of time on the social
networking sites. Thus, by placing advertisement about the hotel, room and other services
organization can easily develop the awareness among the customers. It provides more assistance
to an organization in enchaining the efficiency and profitability in the hospitality room
management (Arenoe, van der Rest and Kattuman, 2015). It also enables the organization to
optimize the availability of the product and price in order to maximize the growth of the revenue.
CONCLUSION
From this project report it has been concluded that cost of the product and services which
are offered by the Birmingham Central Hotel exceeds the budgeted figures. Whereas revenue of
an organization is lower than the budgeted amount6. Thus, hotel needs to frame effectual policies
which help them in achieving success in the dynamic business arena. In addition to this, hotel
needs to be taken into consideration all the organizational and financial issues before making
business decisions. It can be concluded that hospitality industry needs to be updated with the
technological advancement which aid in the efficiency and gross margin of an organization.
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REFERENCES
Books and Journals
Arenoe, B., van der Rest, J.P.I. and Kattuman, P., 2015. Game theoretic pricing models in hotel
revenue management: An equilibrium choice-based conjoint analysis approach. Tourism
Management. 51. pp.96-102.
Cheng, S. and Wong, A., 2015. Professionalism: A contemporary interpretation in hospitality
industry context. International Journal of Hospitality Management. 50. pp.122-133.
Koupriouchina, L., van der Rest, J.P. and Schwartz, Z., 2014. On revenue management and the
use of occupancy forecasting error measures. International Journal of Hospitality
Management, 41, pp.104-114.
Morse, S.C. and Smith, E.M., 2015. Hotel Revenue Management Strategies during Fall Foliage
Travel Season. J Hotel Bus Manage. 4(111). pp.2169-0286.
Qin, C., 2014. October. Room Allocation for Hotel Revenue Management Considering
Consumer Choice Behavior. In Management of e-Commerce and e-Government
(ICMeCG), 2014 International Conference. IEEE.
Šerić, M., Gil-Saura, I. and Ruiz-Molina, M.E., 2014. How can integrated marketing
communications and advanced technology influence the creation of customer-based
brand equity? Evidence from the hospitality industry. International Journal of Hospitality
Management. 39. pp.144-156.
Sukru Cetinkaya, A., Ergul, M. and Uysal, M., 2014. Quality of relationship on information
technology outsourcing for organizational success in hospitality industry. Journal of
Hospitality and Tourism Technology. 5(3). pp.229-244.
Online
Challenges facing hospitality today. 2015. pdf. Available through:
<http://www.avaya.com/usa/documents/top-_4_challenges_facing_hospitality.pdf>.
[Accessed on 16th December 2015].
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APPENDIX
Period 9 Period 10 Period 11
Budget % Actual % Budget % Actual Budget % Actual (2 weeks) %
Room
available 2800 2800 2800 2660 2800
1400+ 700+700
=2800
Room sold 2155 2084 2210 1968 2115
1165+ 390+371
=1926
Room
occupancy's 77.00% 78.00% 75.50%
77%+56%+53% =
62% (average)
Average room
ratio e 98.4 99.85 100.2 97.6 101.1
98.85+ 86.34+
64.92=83.37
(average)
Rooms
revenue 212052 100 209086 221442 100 192077 213827 100
110675+ 33673+
24086 =168434 100
payroll rooms
division 54058 25.50% 49750 56913 26.00% 41860 54117 25.00%
salaries and
wages 5740 10253 35816
1

casual 3186 5113 12952
overtime 54058 58676 56913 57226 54117 5559
total payroll 54327
operating
expenses
uniform and
dry cleaning 982 1492 982 1356 0.50% 1524
laundary 8379 9983 8901 10174 8579 4.00% 8592
cleaning
supplies 1196 2284 1979 0.90% 2579 1816 2956
Paper supplies 750 0.40% 650 750 0.30% 232 750 985
guest supplies 1995 0.90% 2052 1195 2232 1995 2341
small
equipment 250 332 250 289 250 245
Total
operating
expenses 14352 6.80% 16793 14857 16847 14372 6.70% 16643
Rooms
commission 2569 1.20% 2856 2020 2451 2761
1011+ 834+2109
=3954
2