Comprehensive Report: Hospitality Operations and Product Development

This report provides a comprehensive analysis of hospitality operations, encompassing various key aspects. It begins by exploring the operational and economic characteristics of the hospitality industry, including its diverse service areas like lodging, food & beverage, and tourism, emphasizing the impact of globalization and technological advancements. The report then delves into product development within hospitality environments, evaluating the stages of product and service development, the factors influencing customer perception, and the opportunities and constraints affecting product and service innovation. Furthermore, it examines different merchandising opportunities and pricing methods, assessing the factors that affect revenue generation and profitability. Finally, the report explores performance measures, appraisal techniques, and approaches to business analysis relevant to hospitality operations, providing a holistic view of the industry's dynamics and strategic considerations.

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Assignment
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Student Number
Professor’s Name
Submission Date

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Table of Contents
LO1 Understand the operational and economic characteristics of hospitality operations....................3
Analyze the nature of different hospitality product and service areas..................................................4
Evaluate the different influences affecting patterns of demand within hospitality operations.............5
1.3 Compare customer profiles and their differing expectations and requirements in respect of
hospitality Provision............................................................................................................................6
Analyze factors affecting average spending power in hospitality businesses.......................................6
LO2 Understand product development within hospitality environments.............................................7
2.1 evaluate the key stages in product and service development applied within a hospitality operation
.............................................................................................................................................................7
Meeting Customer Expectations..........................................................................................................8
Common Expectations to Consider......................................................................................................8
Customer Expectations:-.........................................................................................................................8
Customer Loyalty:-..................................................................................................................................8
2.2 Analyze the features which contribute towards the customers’ perception of products and
services................................................................................................................................................9
2.3 Assess the opportunities and constraints affecting product and service development within a
hospitality environment.......................................................................................................................9
2.4 Evaluate different merchandising opportunities for hospitality products and services.................10
3.1 Methods of pricing taking into account additional pricing considerations...........................................10
3.2 assess the factors which affect revenue generation and profitability in hospitality operations.............11
Factors affecting revenue generation:................................................................................................11
4.1 performance measures and appraisal techniques..................................................................................13
4.2 Effectiveness of different quantitative andqualitative appraisal techniques.........................................14
4.3 apply approaches to business analysis, evaluation andplanning appropriate to hospitality operations.15
References:................................................................................................................................................18

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LO1 Understand the operational and economic characteristics of hospitality operations
Analyze the nature of different hospitality product and service areas
In the globalised market hospitality industry is known for major employer. It incorporates
many services such as food & tourism. Hence it can be said as this industry is more
fluctuating as compare to other types of industries. This type of industry consists of two
major areas such as lodging as well as entertainment. As per the demand of the customer
services such as travelling which includes air tickets booking can be rendered. As a
developing trend in the industry information technologies involvement is necessary. In case
of food & beverage which in engaged in preparing meals, different orders from customers,
meals etc. This sector is growing as when people travel for their business needs or for some
other reasons they always need to eat or drink outside, hence the need arises. These are two
types of food & beverage called as commercial & non- commercial foodservices.
Commercial operators are quick service providers such as catering. Following are the types
of commercial restaurants:-
Full-Service commercial:- This includes Quick-Service commercial, Family Restaurants,
Ethnic Restaurants, Catering as well as Drinking.

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Non-Commercial:-This include smallest share of market. This sector includes hospitals,
educational institutes, and corporate staff.
Profitability:- Profitability includes many factors such as type of business such as cost
control, human resource management, sales & marketing etc.
Locality:-Locality of the business is most essential in order to attract the most of the
customers towards the hotel.
Evaluate the different influences affecting patterns of demand within hospitality operations
As per today’s demand hospitality industry is playing an important role in the global market. It
includes both food & tourism. Hence as compare to other industries this industry is more
fluctuating. Following are main factor which affects demand:-
1. Management skills of Hospitality Firm:- If the firm is following all the business ethics
then it can retain all its customers as well as can recruit more in order to remain in profit.
2. Employees in the firm :- A hospitality firm have to see that their staff is are trained well
in order to serve better .If the staff remain changing all the time then the customer will
not get that satisfaction & then they will move to other tourist & travellers.
3. Conflicts in the Management: - As per the developments in the science & technology
hospitality services should also improve their standards as per the market demand. This
should be followed in such a way that the existing work should not get hampered.

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4. Location of the hospitality Firm: - In order to grab most of the customer’s owners &
investors should take care for selecting the proper location. If the location is not
accessible easily then the customer will go to parks or some other places which they can
access easily.
5. Facilities available: - If a hotel is having a swimming pool facility then this will attract
more tourist or we can say customer than the hotel which does not have pool facility.
Also a hospitality firm having pub & club facility will be in ore demand as far as a
customer is concern.
1.3 Compare customer profiles and their differing expectations and requirements in
respect of hospitality Provision
In a society there are different kinds of customers with different needs & expectations for the
services rendered. Customer satisfaction depends upon the structure & function of the hospitality
services. Mouth to mouth publicity plays a vital role for hospitality as for example if Mr. A goes
to some good hotel & he likes the ambience as well as the food, then he will surely refer the
same to his friends & family. Selection of a clean accommodation will always be first criteria for
a customer to choose his location. Food hygiene should be maintained in hotels in order to
provide healthy food to its customers. Room services should be provided to its customers with
quality so that they get the comfort level for staying there & having proper utilization of money
spent for the hotels.

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Analyze factors affecting average spending power in hospitality businesses
Average spending power is a compromise or a decision between restaurants &
customers. Spending power can be affected by some factors such as status, income source of
customer also economic situations. Marketing research has to be done in order to meet the
needs of the customers. It is to be done to be more clients oriented. In order to attract more
customers’ advertisement is done which is non-personal but a leading weapon in the market
for more publicity. Advertising objectives will depend upon the customer behavior profits as
well as influence of the market conditions. Below are the pricing methods which also have an
effect on hospitality business:-
Cost:-Cost +Fixed Profit=Selling Price. It involves determination of fixed as well as variable
costs.
Market:-In order to gain a position in the competitive market prices level comparison should
be made in such a way that maximum customer shall be attracted. Proper trainings should be
given to staff of hotels in order to maintain decorum in the hotel. Also while dealing with the
customer proper standard should be maintain in order to satisfy the needs of customer.
LO2 Understand product development within hospitality environments
2.1 evaluate the key stages in product and service development applied within a hospitality
operation

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Customer Expectations + Service Performance = Customer Satisfaction
Customer expectations can be met by providing quality to customer with the help of
ability. Good service can be rendered to customers but if they say they are not satisfied then
reputation suffers a lot because of the poor services rendered. Hotels which are more concern
about the quality services to their customers are known as good customer service centres. The
most essential part of process is customer satisfaction.
Meeting Customer Expectations
In order to meet customer expectation the best process is to ask direct questions to
customer for their satisfaction about the process involved in care taken. Providing
incentives to staff in order to make them happy for the extra work done in case of rush or
in the peak season for hotels like New Year or some occasions.
Common Expectations to Consider
Following are the main expectations customer have:-
• Efficient and accurate services.
• Friendly, helping service staff to provide information and utmost care.
• Perfect & quick responses to their requirements.
• A trained staff that will always give perfect guidance to customers for their demand.
• A clean facility & hygienic atmosphere.
Customer Expectations:-

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In old day’s customer were satisfied even though they are said thank you or please but now a
day’s many hotels are providing lavish services to their customers hence customers compare the
standard of the hotels & then they prefer the best one to be visited.
Customer Loyalty:-
Loyal customers are always happy customers. It is important for a hospitality provider to provide
good service to customer in order to increase the business as well as the reputation in the market.
2.2 Analyze the features which contribute towards the customers’ perception of products
and services
Dietary Services:-
1) Food services:-Food services provided to customer should be healthy as well as
good. Customer will demand for the variety of food if they have given the option.
2) Cafeteria Services: - The food there is of different types & variety. It can be
packed or can be eaten at the cafeteria. Both these facilities are provided in order
to serve the people better & for their convenience.
3) Vending Service:-Cold drinks & Snacks are available for the relaxation of the
people in order to overcome the stress also the ambience in the hotels is made
soothing in order to attract more number of customers.
2.3 Assess the opportunities and constraints affecting product and service development
within a hospitality environment

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Hospitality industry is known as major employer in the industry. It can include services of food
& tourism as well. Product development can be identified for improvement as well as for
customer satisfaction. Location of the hotel & adequate entrepreneurship has to be considered as
the opportunity for product quality & service development.
2.4 Evaluate different merchandising opportunities for hospitality products and services
In order to make a publicity of hotels one can distribute pamphlet .Also can issue table calendars
to various institutes in order to get noticed at every location. Some discounts coupons can be
distributed in order to grab the customers & college students towards the hotel & provide them
quality service for getting the satisfied remarks from them. On websites running notes can be
added for the valuable services & ample of space for rooms for relaxation their snaps can be
added on the portals so that customers can view the hotels online & can register for booking if
needed. Free coupons on some old customers for their anniversaries or birthdays should be
distributed in order to provide good benefit to the customers who can be happier to have the
same on their special day. One can distribute t-shirts, caps or sweat shirts naming the hotel
address & snaps in order to get noticed.
3.1 Methods of pricing taking into account additional pricing considerations

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Hospitality industry is ever competitive industry and hotels and management need to adopt and
change market strategies continuously to stay competitive in the market. To sustain in
competitive market hospitality business should understand and adopt different pricing methods
and its relevant factors (Boella& Goss-Turner, 2013). The pricing strategies consider charges
acquired on room services, food beverages, and luxurious services and so on.
Cost-oriented pricing method can be used by hotels to increase their profits with existing
services. This strategy adds desired mark-up to actual cost of product and services to get selling
price. Estimated price of product and services is acquired by covering cost of production and
preparation of services.It is evaluated that the current price will maintain profit margin for hotel
and also earn targeted rate of return. This strategy is easy for calculation and implementation and
needs less market information.
In market-oriented pricing, hotel needs to evaluate the cost of product and services in its targeted
market, i.e. competitors offering etc. According to the services provided by competitors, prices
acquired on services, our hotel should decide increase or decrease its prices of same product and
services (Doyle, 1994). The hotel can also decide the similar price for services as competitors but
should ensure to provide better value. Slight higher prices than market can also be preferred
along with increased and additional feature which can provide competitive advantage to hotel.
In market-oriented pricing method hotel should take extra care and engage in other tactics to
attract more customers because only price in not enough in this case. Hotel can provide

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additional services and can acquire charges on it like service charge, cover charge, minimum
charge. The charges applied on the services should be kept according to market.
3.2 assess the factors which affect revenue generation and profitability in hospitality
operations
Factors affecting revenue generation:
Sales Mix: The products and services that are linked with each other are integrated to set comparative
low prices than the prices of individual products (Girard & Girard, 2015). This factor helps in promotional
strategies and help hotel to raise its customer base and sales. But, it is noted that the revenue generated
through selling group of product could be less than the total amount of individual product sale. Hence,
this has an impact on total revenue sale.
Customer turnover: It is important to retain customers through products and services provided by
hotel. If customers are not pleased with hotel services they would not come again which directly affect
sales and revenue generation of hotel.
Average spending power (ASP): It is totally rely on customers will and need. It is their decision
to take service and would want to spend extra or not. With the decrease of average spending
power of guest revenues also decreases.
Factors affecting profitability:

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Labor intensity:Large amount of human resource is required to produce goods and services in
hospitality industry. Hotel services are very much people oriented. Hence, large amount is
invested into the human resource which would lower the profitability.
Product or services life: In hotel, extra efforts have to be provided on managing the resources in
rooms and hotel area (Pirie, 2009). Costs of luxurious items is more and length of time it remain
usable also important. If the products damages or wasted it will impact the profitability
drastically.
Elasticity of demand: Demand and supply are most important factor of any business. Hospitality
business it has instant results if demand and needs of guests are not fulfilled and guests are not
satisfied then they would not come again in hotel (Nieves,Quintana& Osorio, 2014). If customer
base decreases, it decreases the sales of hotel and profitability goes down.
4.1 performance measures and appraisal techniques
The methods used to assess performance of employees and provide appraisal in hospitality
industry is given below:
Performance appraisal review technique is used to manage the hotel staff. This technique is
used to assess performance of the staff. The hotel management recognize and reward staff on the
basis of their performance and working. How staff worked to enhance value of their hotel and
efforts taken to please the guests are also measured. For instant, the human resource manager
hasto rate hotel staff on the basis of their performance while providing services. This acquires