Hospitality Operations Management Report: Starwood Hotels Analysis

This report provides a comprehensive analysis of hospitality operations management, using Starwood Hotels as a case study. It delves into the nature of hospitality products and services, examining factors influencing demand patterns, customer profiles, and spending power. The report explores key stages in product and service development, highlighting features that shape customer perception and identifying opportunities and constraints within the hospitality environment. Furthermore, it analyzes different pricing methods, revenue generation, and profitability factors. The report also assesses performance appraisal techniques, both qualitative and quantitative, applied by Starwood, concluding with an examination of business analysis, evaluation, and planning approaches suitable for hospitality operations. The report covers topics such as customer service, revenue, and profit.

Hospitality Operations
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
1.1 Nature of different hospitality product and service areas.................................................3
1.2 Different influences affecting patterns of demand within hospitality operation ............4
1.3 Compare customer profiles and their different expectation and requirements ................4
1.4 Analyse factors affecting average spending power in hospitality businesses .................5
TASK 2............................................................................................................................................5
2.1 Key stages in product and service development applied within a hospitality operation 5
2.2 Features which contribute towards customers perception of product and service ..........6
2.3 Opportunities and constraint affecting product and service development within a
hospitality environment .........................................................................................................6
2.4 Different merchandising opportunities for hospitality products and services .................7
TASK 3............................................................................................................................................7
3.1 Different methods of pricing in hospitality sector ...........................................................7
3.2 Factors which might affect revenue generation and profitability.....................................8
3.3 Appropriate structure and approach.................................................................................9
TASK 4............................................................................................................................................9
4.1 Application of different appraisals techniques to new product and service of Starwood 9
4.2 Effectiveness of all qualitative and quantitative appraisals techniques used by Starwood10
4.3 Approaches to business analysis, evaluation and planning appropriate to hospitality
operations.............................................................................................................................11
CONCLUSION .............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
Hospitality operation management is a field which relate with managing, controlling and
coordinating the functions and operations of hotel sections related to room division department
namely reception, rooms, laundry services, quality customer service, safety procedure of hotels
and so on. (Borges and Gustavo, 2015). In regard of this project, Starwood Hotels has been
considered which is a subsidiary of Marriott Hotel, US and it is established in the year of 1995. It
is headquartered at US, and deals into hotels, resorts serving across the globe. In this study, it
involves nature of various hospitality product and service, different influences that impact
demand patterns, comparison of customer profile with its expectation and requirements.
Moreover, evaluating the factors affecting over spending power, stages of product and service
development, opportunities that affect company's growth and development for attaining
improved proficiency ratio. Moreover this report covers performance appraisal techniques and
effectiveness of qualitative and quantitative appraisal techniques.
1.1 Nature of different hospitality product and service areas
Hospitality division is concern with those field which encompasses restaurants, hotels,
casinos, parks, amusements, events and many more with an aim of acquiring high level of
customer satisfaction by rendering best quality of product or service. (Espellita and Maravilla Jr,
2019). Therefore, based on various criteria, the nature of Starwood Hotels product and services
are as follows:
Perishable: Due to this nature, Starwood minimise the wastage of products within its
product line that aid them to improve overall performance. Therefore, Starwood's manager take
an attempt to keep their food in a safe and hygienic place that lead them to maintain positive
perception in customers mind set.
Service Areas: However, in relation to Starwood it main type of service areas are room
division for customers, food and beverage services conference hall for meetings, discussion and
banqueting system which enable consumer to organise or conduct big feast or party in a better
manner (Etemad-Sajadi, 2018). Thus, Starwood's superior makes an effort to adopt all innovative
and impressive facilities which help them to attract large number of population towards their
brand

Therefore, proper management of product and service enable Starwood to achieve high
rate of growth in its new decision plan i.e. enlarging its product or service in a various countries
1.2 Different influences affecting patterns of demand within hospitality operation
There are various factors through which consumer demand varies and it is discussed
below:
Seasonality: However, in regard of Starwood, its major proportion of customers are
ramblers, climbers, middle class income group, adults, youngsters and so on. However, these sort
of guest usually arrives during the warm season in order to satisfy their need in an efficacious
manner. That is why, Starwood's demand increases at rapid rate in warm season in compare to
other seasons for which they render best and high quality of commodity and services in order to
retain existing consumers for longer period of time (Kizildag, 2015).
Healthy living: However, Starwood takes an initiative in maintaining its working
environment healthy and hygienic so that targeted population can acquire positive response about
company. Moreover, Starwood render safe and clean sanitation facility which help them to
acquire amended level of sales growth and productivity ratio.
Economic factors: Hence, in context of Starwood, during the period of fluctuation in
country economy, it superior makes an effort to reduce the price of its product and services so
that they can capture the wide range of population towards their brand in a impressive style.
With the help of such actions, firm can cope up with current and upcoming competition or threat
in an improved manner without nay obstacle.
Henceforth, these factors has direct impact over Starwood productivity as well as
customer's demand. Therefore, proper analyses of industry and taking corrective course of action
help Starwood to attain sustainable growth and profitability ratio among competitors.
1.3 Compare customer profiles and their different expectation and requirements
Based on different expectation and requirements, Starwood develop customer profile
which is explained below:
Type of hospitality business: Starwood is known for accommodation services or lodging
facilities. Therefore, customers prefer Starwood for gaining best accommodation facility and
services that benefit company to enlarge its productivity ratio(Legget and et.al., 2014).

Pricing consideration: Starwood major section of customers are families and couples
who are mainly concern with service rather price which benefit organisation in improving its
productivity ratio. Therefore, Starwood impose its product and service price relatively high that
leads them to boost sales growth and high guest satisfaction ratio.
Meal experiences: Starwood always makes an effort to maintain its high standard in
variety of meals and also follows best hygienic process for food preparation. Therefore,
enterprise can place the brand in a competitive position in a stipulated period of time (Okumus,
Koseoglu and Ma, 2018).
1.4 Analyse factors affecting average spending power in hospitality businesses
Hence, in relation to Starwood, there are various factors which varies its average
spending power:
Size of income: If income level of people are high, it increases Starwood productivity
and vice versa (Perez and Medallon, 2015). Therefore, Starwood always updated with all sort of
market trend and its modification for enlarging its market share and size in a productive style.
Social or cultural influences: Starwood makes an effort to bring affordable alteration in
product price during festival season or in any special occasion as customer are eager to spend
more than other festival or occasion. Therefore, Starwood can enrich its productivity ratio within
competing industry (Robinson and et.al., 2016).
Economic situation: Therefore, if nations economic condition is high then customers
average spending power will be high and vice versa. Thus, establishment takes an effort to
implement best decisions for gaining its competitive advantage among competitors.
Henceforth, these factors directly impact over Starwood's average spending power for
which company should determine marketplace challenge and also grab all possible opportunities
which lead them to enhance its sales performance.
TASK 2
2.1 Key stages in product and service development applied within a hospitality operation
Product development is the term which states that creation or introduction of new or
different product which offers the benefit of innovation and productivity to targeted customers
in a desired time frame. Hence, Starwood follows some stages for new product development
phase which is explained below:

Idea evaluation: However, Starwood makes an attempt to examine the market trends
and new opportunities which help them to acquire aggressive position in competing industry.
Market research: In this, company determine and analyse the market competition as it
drives them to make corrective course of action for placing the brand in a better place
(Rosenbaum and Wong, 2015).
Market segmentation: Under this, Starwood take steps to attract more customer that
enhance company's profit margin ratio in impressive and productive style.
Advertising and awareness: Starwood adopts all advanced and latest promotional
techniques which lead them to capture the attention of wide range of individuals and also
empower them to create awarenesses regarding product.
Thus, the stages of product and development help Starwood to gain competitive
advantage and also to increase the level of customer satisfaction within a desired time duration .
2.2 Features which contribute towards customers perception of product and service
For surviving among competitors for longer period of time, an organisation must ensure
that it maintain its quality of product so that they can invite huge proportion of population
towards their brand without any difficulty. In relation to Starwood, it takes an initiative to
determines the market demand as well as customer taste and preference which enable them to
implement best strategic decision in favour of enlarging the proficiency ratio. Moreover, If
Starwood makes some special arrangements for disable people that assist firm to improve its
brand image and also can attain high level of profitability. Therefore, implementing best tactics
and techniques enable Starwood to capture the market in innovative style and also can enlarge
their market division in a improved manner (Yilmaz, 2014).
2.3 Opportunities and constraint affecting product and service development within a hospitality
environment
Opportunity
 The foremost opportunity which Starwood can implies within its business operation is
that they can make use of various international market entry strategy like acquisition,
joint venture, partnership and many more. Due to such implications, Starwood can place
its brand in a better position and also can improve brand image within competitors in a
prescribed time limit.
Constraints

 Its main constraints due to which Starwood proficiency rate is lower compare to its
competitors is that establishment has limited accommodation facilities comparison to
other rivalries. The another phase is that it has intense level of competition or oppositions
form various brands that directly influence over its productivity and brand value.
Therefore, Starwood must make use of all innovative and advanced techniques which
lead them to enhance its volume of sales (Ryan, 2015).
2.4 Different merchandising opportunities for hospitality products and services
As the present world is moving towards globalisation, which in result benefit them with
various advantages like enormous opportunities to grow, market expansion, employment
opportunities and etc. Hence, due to this people have to travel from place to another for both
business and recreation purpose that enable hospitality firms to enrich its productivity ratio
among present market. Some of the possibilities for Starwood are as follows:
 In many cases, travellers seeks for high and best quality of services more than price
which enhance purchasing power in a amended mode. Therefore, establishment have
the chance to generate more value with premium cost. Along with this, stable
economy benefit hospitality business in adopting merchandising advantage in a
given time frame in an innovative style (Schuckert, Liu and Law, 2015).
TASK 3
3.1 Different methods of pricing in hospitality sector
In business environment there are different methods of pricing which is used by business
organisation to set the prices of their products and services. In context to Starwood Hotel
management are different types of pricing methods which are as defined:
Cost based pricing method – This involves two type of cost such as:
 Cost Plus pricing – This means when organisation set the prices of product of
total cost and percentage of profit. This can help Starwood to get high profits by
charging more from customers (Schuckert, Liu and Law, 2015).
 Marginal cost pricing – This is also known as break even pricing in which
selling price of products is fixed by covering fully variable and marginal cost.
This also can be used by Starwood Hotel for their products and services.
Competition Oriented pricing – This also involves two types of pricing such as:

 Sealed bid pricing – This method is more popular which is mostly used by
contractor and tenders.
 Going rate pricing – Price is charged in tune with price in industry as a whole
where organisational maintain the prices of their products and services.
Demand oriented pricing -
 Price discrimination – This means charging different prices to customers for
same products and services. This is also known as differential pricing which are
discriminated on the basis of customers needs, geographical area, income group
and nature of product etc. Starwood which is luxury Hotel can use this method by
setting the prices as they wants which can help to increase productivity (Ryan,
2015). .
 Perceived value pricing – This means prices are fixes on the basis of perception
of buyer of the value of product that helps to set right prices of right products.
3.2 Factors which might affect revenue generation and profitability
In business environment there are several factors which affects revenue ho hospitality
organisation that consider average spending power, employee turnover, needs and wants of
customers etc. These all are affected Starwood industry in an effective manner.
Revenue development and
profitability in regards with
Intercontinental hotel groups
Elements consideration Observations
Labour intensity Incremental in labour cost
which can affects negatively
Starwood Hotel operation and
revenues.
Capital is uses less than labour
cost which creates expenses
for organisation.
Shelf life  Increases in number of
customer which affects
positively Starwood as
generation in revenues.
 Increase in brand name
By making designed plan and
strategy Starwood can survive
easily in the business
environment for long period.

as well as customer
satisfaction level.
Elasticity of demand  Increase in demand of
food event and hotel
services which can
effects in good ways
and increase
productivity.
 Lot of requirement of
the product or services.
 Pricing demand.
In the context of IHG changes
in the demand of customers is
low rather then the price of
product or services.
It has observed that the
Starwrood changes in
customer's demand which is
low than changes in prices of
products and services.
Standardization  Changes in lifestyle of
people
 Selection of menu
 High profile customers
 Sanitary issues that can
affects Starwood Hotel.
The management of Starwood
focuses on changing lifestyle,
high profile of customer and
sanitary issues which helps to
gain the competitive
advantages.
3.3 Appropriate structure and approach
There are different types of structure and approach which can be used by Starwood hotel
to evaluate the suitability of pricing that helps to to get competitive advantages. Qualitative and
Quantitative approaches are using by business organisation which states this pricing strategy is
suitable or not. Starwood can use both approaches which can helps to know which is suitable
pricing strategy and how it can affects positively business organisation. The main aim of
business is to develop the new technology and maintain high productivity by setting effective
pricing strategy (Yilmaz, 2014).

TASK 4
4.1 Application of different appraisals techniques to new product and service of Starwood
Hospitality industry has very dynamic nature, preferences and tastes of people changes
regularly and to meet their requirements Starwood also have to innovate and be creative
(Kizildag, 2015). They have to introduce new products and services frequently for satisfying
guests, retaining them and attracting new customers. Several techniques are also used by in
companies to measure the performance which are as follows:
 Sales numbers- The most effective method for analysing the performance of new
products or services is studying revenue units. Starwood hotel managers will evaluate and
compare the sales number with earlier data for gaining knowledge about the increase took
place to analysing the performance of company.
 Increase in profits- Another measure for analysing the performance which is undertaken
by Starwood is evaluation of percentage increase in earnings. This data will then be
compared with forecasted profits for knowing if performance and profitability criteria are
met.
 Customer share- Next, very effective technique used for checking the efficiency and
performance level of new products and services is by analysing the increase in customer
before and after the development and introduction of fresh goods and services. By
gathering this information the change in preferences of consumers can be seen (Espellita
and Maravilla Jr, 2019).
 Satisfaction of consumers- Also, management of Starwood can make use of feedbacks
and other tools for gaining knowledge about the experiences of guests who visited their
hotel and acquired their services and products. Using this technique will help and assist
organisation to make any improvements if required in their developed goods and
services.
4.2 Effectiveness of all qualitative and quantitative appraisals techniques used by Starwood
Starwood hotel's management and leaders used several appraisals techniques for
determining the performance of their new products and services they have developed. These
techniques can be divided into qualitative and quantitative measures which are effective and
efficient for the organisation (Borges and Gustavo, 2015). These techniques enables them to

understand the market and their reactions about the goods and services rendered by them to their
potential customers. Also, it enables them to know all the weak points in their operations and
improve them accordingly. So that all needs of consumers are satisfied and they leave the hotel
happy and motivated for visiting and choosing the Starwood before others.
4.3 Approaches to business analysis, evaluation and planning appropriate to hospitality
operations
Hospitality business and industry is service oriented and make use of different
approaches for analysing, evaluating and planning of operations. Starwood hotel will also
perform such activities for making its operations effective and appropriate according to the needs
of their potential customers (Etemad-Sajadi, 2018). Starwood management will conduct market
research for understanding the needs of customers and studying targeted market. Then they will
evaluate the marketplace in which they are having their operations so that effective products can
be developed and which are fulfilling the needs of people and proves profitable for the
organisation. At the end potential plans will be developed to executing all the ideas and turning
them into finished goods for serving them to end users and making them satisfied.
CONCLUSION
It has been summarised from the discussed report that the concept of operation
management plays a critical role within hospitality sector as it enable them to gain competitive
advantage in a prescribed time duration. Additionally, there are several factors which impact
customers purchasing power so that company's makes an effort to analyse industrial trends in
order to making appropriate action. Moreover, grabbing all available opportunity help
organisation to place the product in a competitive position and also can improve brand value
among competitors. There are different types of pricing methods such as Cost based pricing
method, Competition Oriented pricing and Demand oriented pricing which can be used by hotel
industry and increase their productivity. Moreover, there are different performance measures and
appraisal techniques which is used to introduce new products and services and maintain the
profitability.

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