Hospitality Operations and Revenue Management Module Report

This report delves into the operational and revenue management aspects of the hospitality industry, with a specific focus on the Marriott hotel chain. It begins by explaining the financial contributions of room revenue-generating areas like room sales, laundry, entertainment, and space rentals to the overall business unit. The report then demonstrates the application of pricing principles to room products, evaluating their potential benefits, and explores methods to optimize profitability within a fixed capacity inventory, acknowledging the impact of technological advancements. Furthermore, it examines how industry codes of conduct, legislation, and best practices influence accommodation procedures and identifies how customer expectations from diverse markets are met through effective quality management processes and design. The analysis covers various factors influencing pricing such as accurate forecasting, customer understanding, and inventory demand, while also discussing strategies like overbooking and loyalty schemes to boost profitability. The report provides a comprehensive overview of the key elements in hospitality operations and revenue management.

Hospitality Operations and Revenue
Management
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Abstract
In the hospitality industry, there are several ways to earn a profit, and the number of
services is provided by the hotel, tours, and travel and event companies. They have a
large business unit by giving room facilities and maximizing their prices. Therefore, the
report has significantly shown concepts of room' revenue under which services like
laundry, entertainment and wi-fi facilities, and others are available. Also, the industry
has been affected by many laws, legislation of equality and fair treatment, equal pays to
staff, and customer rights.
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Table of Contents
Abstract..............................................................................................................................2
Introduction........................................................................................................................3
1. Explain the financial unit that the room's revenue-producing areas make to the
business unit......................................................................................................................4
2. Demonstrate and apply principles of pricing to the room's product and evaluate the
potential benefit..................................................................................................................6
3. State and evaluate methods used to optimize profitability as applied to a fixed
capacity inventory, recognizing dynamic growth in related technological developments. 8
4. Explain how industry codes of conduct, legislation, and best practice directly affect
accommodation procedures............................................................................................10
5. Identify the expectation of customers from diverse markets and explain how providers
of accommodation meet their needs through effective use of quality management
processes and design......................................................................................................12
References.......................................................................................................................15
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Introduction
The hospitality industry is one the largest industry in the business environment
that makes revenue and large operations. In the hotel and travel and tourism sectors,
several sources are entitled to make revenue. Every hotel unit has emerged with
revenue operations. In this industry, one major investment leads to results in high
revenue operations into the future. Hotels are mainly earned by food, beverage, and
accommodations services.
People are ready to pay a high amount to get a comfortable experience in living and
having the best food.
Therefore, these hospitality sectors have their main aim to generate many profits by
making an equal contribution in each unit and keep a check on diversified functions that
a hotel performs. To understand more clearly about these operations, Marriott hotel is
undertaken to know about how the hotel makes their profitability grow by working on
customers demand and evaluation of different tools and principles(Buhalis, and Leung,
2018).
The hotel is an international group headquarters in the United States established in the
year 1957. The hotel covers a worldwide area to serve their hospitality services across
the globe. The total number of hotels is over 7000 with 1.38 million rooms in 134
countries. This report is going to evaluate their pricing principles and major sources of
their revenue generation.
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1. Explain the financial unit that the room's revenue-producing areas make to the
business unit.
In the hospitality industry, the investment is of one time which gives higher sources and
proof of creditability in making revenue. In this business unit, the major departments and
units are food, beverages, accommodations, casino, bars, and many more. Hotels
charge prices for each service they provide at their accommodation wherever clients
invest their time.
A hotel is known for the best and strict pricing policy where customers could not
bargain to make their price as these are set by finance departments. The major
advantage that a hotel consist is of standard services and no less or due schemes
(Filimonau, and Delysia, 2019). Mainly, Marriott hotels target high-class people who
afford standard services at their standard prices. But every advantage has some
limitation, as far as the hotel are their price maker but they have to be influenced by
various policies and legal legislation. So that, they cover its cost through various ways
and effective sources without lowering down their image into the market. These sources
of room division are defined below:
Room sales: sales are the most integrated part of a business unit that needs to
maintain and increase with the period. In the hospitality industry, sales are generated
by providing a high classroom facility on which they charge a high amount and people
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are ready to pay because of their conformable amenities within rooms. Hotel Marriott
has 1.38 million rooms across all over the world in all locations where they have their
hotels. It provides high-class facilities in one single room by classifying it into different
sections such as classic, deluxe, premium, and suite. These rooms differ in size,
facilities, bathrooms facilities, and either attraction. As people want highly attractive
decor, large size, bathtubs, a sound system they go for the suite or deluxe rooms. It is
the biggest source of revenue generation.
Laundry: Hotels make their sales in various ways, in which laundry is one of
them. Every large hospitality organization provides this service to give a convenient
facility and home living experience. Hotel Marriott enables laundry facilities into rooms
itself where one calls for laundry services, staff will provide washable clothes in very
little time (Gibson, and Parkman, 2018). These services are fast and reasonable as the
hotel charges $50 for normal clothes and a quite extra charge for heavy clothing. It is
also the best source to earn extra cost as many tourists prefer to take advantage of this
service who stays for a long time.
Entertainments and leisure tickets: The hotel provided another attractive
facility into their premises. The best role hospitality industry plays are entertainment
sources which tourist is attracted towards them. Every hotel finds its unique ways of
entertainment sources some are launching live shows, concerts, VCR cinemas,
casinos, and bars. This entertainment keeps the customers attracted and happy with
some innovative gestures. Hotel Marriott consists of these facilities as a source of
further revenue through providing nightclubs, rooftop performances, and leisure for
outside tourists to explore the city with travel facilities.
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Space rentals: Many hotels look to expand their operations into different parts
of the world but lack in the practical implementation of their goals due to high land cost
measure strong financial funding(Gursoy, and Chi, 2020). So that, Marriott hotel has
global serving with strong profit tenure that helps them in investing into resorts for the
luxurious lifestyle on a rental purpose in which families stays by paying initial rent and
enjoy inbuilt bars, clubs, the casino also, cliffs and bays.
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2. Demonstrate and apply principles of pricing to the room’s product and evaluate
the potential benefit.
Doing business irrespective of the industry it belongs to is influenced by pricing factors.
People and society are only based upon the decision of price in the organization.
Effective and reasonable price welcome a large number of people whereas, ineffective
or less valuable prices leads to a lack in attracting customers towards them. In hotel
groups, there is high competition due to the same services, but they make regular
changes and schemes to give competition to rivals.
Pricing must be set after analyzing the cost services would take and charge a minimum
percentage of profits that will be feasible for both customers and organizations Hotel
Marriott is well known as a luxury service provider(Gursoy, 2018). For that purpose,
prices are high but worth taking due to immense and standardized rooms, food and
entertainment resorts, and spa. Various factors influence pricing as they get change as
per market requirements. These factors are necessary to understand which are
described below:
Accurate forecasting: forecasting of price and expense is an essential task to
perform for hotel groups. It consists of a prior analysis of cost and ad expenses that
could be incurred during the period of making sales and operations. Hotel Marriott gets
influence their pricing system positively as they maintain proper records of cost and
uncertain expenses that could incur in fulfilling specific demands of customers. Through
accurate forecasting, Hotel Marriott designs their prices based on facilities like room
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dining, laundry and identify results of sales growth and customers perceptions. Prices
are set according to market competition.
Customer understanding: the prices must be in the manner that is encouraged
and attracted by many customers. As it gets affected by customer response. High prices
lead to a response in less arrival of customers whereas, moderate and affordable
standards of prices are likely to gain customers attention.
Hotel Marriott charges their prices as per room facility and customers will power. For
middle-class customers, they provide rooms under the normal range by giving them
discounts on pre-bookings or online coupons. The price set by hotels varies from
customer to customer. Some get discounts on their first booking whereas, old
customers entitled to room facilities such as late checkout and early check-in, discount
on food and drinks, etc.
Inventory demand: Demand for inventory also affects the pricing policy of many
hotels. If demand gets high into peak season or in a sudden environment, It affects the
whole financial system of the hotel. The situation of chaos and complexity will get rises.
Hotel managers need to order in bulk materials to fulfill customer's demand on a prompt
basis which can cause more than their standard cost.
Through this profit gets minimize and comes in a situation of breakeven point in which
the hotel gain no profit and no loss. Therefore, hotels Marriott prepare their inventory on
a bulk basis whether it is in the food department or room amenities like refreshments, or
another requirement of basic needs(Kuo, Chen, and Tseng, 2017).
Concerning the above factors, it has an immense influence on the pricing culture
of Marriott hotel groups who have luxurious services across the world. Prices are set to
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be magnificent and dynamic which gets change as part of the market requirement. To
accomplish the price demands of customers, advanced forecasting and sufficient
inventory stock are a must to retain effectively.
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3. State and evaluate methods used to optimize profitability as applied to a fixed
capacity inventory, recognizing dynamic growth in related technological
developments.
Hotel’s profitability is less dynamic as they have fixed cost and people does not bargain
with their set prices. No buyer could influence hotel managers to lowers down their
prices except by giving feedbacks and recommendations. But hotel groups do not
influence by the bargaining of customers rather they get affected by many other factors
that impact uncertainty on hotel booking, operations, and inventory.
Customer does not make prompt decisions to take their service, they often change their
mind which gives rise to the loss for hotels(Leung, 2019). For example, one client
books a room for one night and cancels at the end moment that creates a loss of
opportunity cost as the room could not provide to another customer. However, Hotel
Marriott needs to take innovative solutions to boost profitability into a hotel. There is the
various
factor that creates an impact on profits margins which must be lower down or come to
an end. The points that need to consider are mentioned below:
Overbooking: it is the situation in which hotels get booking more than a usual
time through which they need to make their operations effective. Many numbers of
customer arrival could create the situation of losses as staff requires more to fulfill each
customer requirement. A large number of customers require more attention in providing
services, maintain their records and fulfill their special demands. Through this,
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overbookings certainly affect profitability but sometimes it works as a savior into Hotel
Marriott as they hold the rooms which are not yet taken to be aware with losses.
Loyalty schemes: Hotels have diversified service range and attractive interior,
designing, and accommodations facilities. As the competition is immensely rising into
the market, people easily switch their demand from one hotel to another. Hotels have
their main source to grow their customer base positively. They must provide customers
with discounted options for long-term retention.
Hotel Marriott launches their loyalty schemes cards in which benefits are provided
based on the amount of purchase(Losekoot and Theresa, 2018). These schemes are in
the form of future discount coupons for next arrival, early check-in and late checkout,
regular discounts, and confirm bookings. These facilities attract more customers and
keep their demand constant for Marriott.
Outstanding services: hotels are well known for the attractive and innovative
services they provide in long run and keep making innovations as per market and
customers’ demand. Therefore, these innovations result in outstanding services.
Customers mainly require good food and a good stay wherever they go, hotel Marriott
could increase their chances of making a high profit through delivering varieties of food
items with delicious taste so that no customers will prefer to go out and have their meal.
Also, Marriott provides rooftop caftans, clubs and entertainments are all at a satisfactory
level.
Distribution channel management: Channels of distribution are also the major
factor on which companies’ profits are dependent. An effective channel comes up with a
large number of people interaction which will result in huge sales. These distribution
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