Hotel Room Revenue Management Strategy and Performance Analysis

This report provides a detailed analysis of the revenue management strategy for a new Le Meridien hotel. It begins with an introduction to revenue management and then delves into the business climate of the chosen location, highlighting factors such as political, economic, and technological considerations. The report justifies the hotel chain and category, emphasizing the importance of providing good quality services to attract customers. It identifies the intended market segment, detailing segmentation, targeting, and positioning strategies. The report also explores the hotel's proposed room pricing policy, discussing penetration and competitive pricing strategies. Finally, it examines the hotel's proposed distribution channel strategy, including social media marketing and website information. The conclusion summarizes the key findings, and references are provided for further reading.

Hotel’s room revenue management
strategy and key performance summary

Table of Contents
INTRODUCTION...........................................................................................................................3
PART – A........................................................................................................................................3
1.Description of business climate of location..............................................................................3
2. Justification of hotel ‘ chain’ and ‘ category’..........................................................................3
3. Intended market segment.........................................................................................................4
4. Hotel’s proposed rooms pricing policy....................................................................................4
5. Hotel’s proposed distribution channels strategy......................................................................5
CONCLUSION................................................................................................................................5
REFRENCES...................................................................................................................................6

INTRODUCTION
Revenue management strategy can be defined as tactics which is applied to increase revenue
of company (Alrawadieh, Alrawadieh and Cetin, 2021). Le Meridien is hospitality industry and it
is international brand with a European perspective. In report, market segment, hotel’s proposed
pricing policy and distribution channel is described.
PART – A
1.Description of business climate of location
Le Meridien is a well known hotel in United States and there are many growth
opportunities available for organization which will help in earning more revenue. Now,
managers want to expand their business by opening a new branch. They have to face many
problems while opening a new hotel such as, they have to make rules and regulations according
to country and policies should be made which is beneficial for employees as well as
organization. They have to pay tax on income that is earned and they also have to face many
external factors in environment. It includes, political factors, economic factors, technological
factors and many others (Berselli and et.al., 2018). Political factors such as, restrictions on
export, tariff barriers, tax policy, trade barriers and it is managed or controlled by government.
They have to take permission for opening new hotel and make strategies according to need of
customers. Technology is changing rapidly in UK because organizations are using different tools
for promotion so they have to compete with all situation and try to gain competitive advantage.
2. Justification of hotel ‘ chain’ and ‘ category’
Le Meridien is an upper- scale hotel which provides good quality food to its customers and
also provide good services so that they can attract more customers and generate more revenue.
Opening hotel at London street, which is crowded area so it will become easy to attract
customers. Managers are making good marketing strategies to attract more people and this will
increase profit of the organization and help in building good reputation in market. The interior
of hotel is good and it is according to need of customers, they focus people of all age group.
Before opening hotel, managers ahs conducted market survey in which they ask people about
their choices and what type of hotel they want such as interior, food items, price they can pay if
good quality products are provided. It can be justified, because competition is increasing day by
day so it is important to provide good services to customers. After identifying all the things
they make plan to open hotel (Dennis, Cheong and Sun, 2017).

3. Intended market segment
Targeting - Targeting means to identify a particular group of persons or market area which
company want to target. Before opening a hotel, managers conduct market research in which
they determine needs of consumers, identify taste and preference of people and price they
can pay. They want to determine that what type of services customers want and also identify
what type of interior people will like. When a particular group is identified it help in making
plans for attracting people. Le Meridien focuses on people of all age group and make
advertisement to attract them. Company will target customers having high income so that
more revenue can be generated (Dolasinski, Roberts and Zheng, 2019).
Segmentation – Segmentation means to divide customers on the basis of geographic
location, income level, choices, and many other areas. It is important to segment because it
becomes easier for company to focus on individual group and satisfy them by providing good
services. Le Meridien company will divide groups on the basis of geographic such as, area
wise segmentation will be done.
Positioning – It means to develop good image in market by providing unique services and
treating customers with respect and dignity. Different marketing tools can be taken for
promotion of hotel. Le Meridien company will give advertisement in newspaper for
promotion. It is important to build good relation with customers as it will lead to increase in
sales and profit (Schwartz, Altin and Singal, 2017).
4. Hotel’s proposed rooms pricing policy
It is essential to decide pricing strategy that will be used by company because it helps in
determining, whether to focus on high income level people or middle level. Le Meridien
company will apply penetration pricing strategy to attract customers. Penetration pricing
strategy means that initially prices are kept low as compared to other hotels so that more
people can be attracted and after sometime, prices are increase to earn profit. It is technique
that is used by managers to attract more people and they provide good services. In starting
prices must be kept low as compare to other hotels because to enter into new market it is the
best way that can be used and this helps in gaining competitive advantage (Vives, Jacob, M
and Payeras, 2018).
Competitive pricing strategy can also be applied by managers of Le Meridien, this strategy
means that prices are decided according to competitors prices. It is a way of increasing

competition in the market and to attract customers. This pricing strategy is used by
companies making unique products and they are having the ability to enter into a new
market. Generally, to enter in new market and to attract customers, penetration pricing
strategy is being used by organizations.
5. Hotel’s proposed distribution channels strategy
Distribution channel is a medium by which information can reach to target audience so that
sales can be increased and more revenue can be generated. Nowadays, there are many ways by
which an organization can promote its products (Webb and Schwartz, 2017). Le Meridien can
use different techniques to attract customers and increase revenue.
 Advertisement on social media : Le Meridien can give advertisement on social
networking sites because people are more active on social sites such as, Instagram,
Facebook, twitter and many other. Companies can give advertisement by making short
videos and uploading it on Instagram so that people can know about new hotel. This is
one of the best strategy to attract customers.
 Information on website : Le Meridien can update all the relevant information on
website of hotel, so people can get details from there. It is easy for consumers to identify
best hotels with help of internet, they can gather information about hotels and can do
comparison. Details include, contact number, address, ratings, reviews of people, food
variety with prices which is available, home delivery services is provided or not (Zheng
and Forgacs, 2017). All this information helps organization in attracting people and it
will lead to increase in sales and profit.
CONCLUSION
From the above discussion it can be concluded that, Le Meridien is an upper scale hotel
whose aim is to earn more profit by attracting customers. Hotel chain and category, target
market, pricing strategy and distribution channels such as, social media marketing, own website
had been discussed.

REFRENCES
Books and Journals
Alrawadieh, Z., Alrawadieh, Z. and Cetin, G., 2021. Digital transformation and revenue
management: Evidence from the hotel industry. Tourism Economics. 27(2). pp.328-345.
Berselli, C., and et.al., 2018. Distribution channel strategy in restaurants in Balneário Camboriú,
Brazil. Estudios y Perspectivas en Turismo. 27(3). pp.609-627.
Dennis, Z. Y., Cheong, T. and Sun, D., 2017. Impact of supply chain power and drop-shipping
on a manufacturer’s optimal distribution channel strategy. European Journal of
Operational Research. 259(2). pp.554-563.
Dolasinski, M. J., Roberts, C. and Zheng, T., 2019. Measuring hotel channel mix: A Dea-BSC
model. Journal of Hospitality & Tourism Research. 43(2). pp.188-209.
Schwartz, Z., Altin, M. and Singal, M., 2017. Performance measures for strategic revenue
management: RevPAR versus GOPPAR. Journal of Revenue and Pricing
Management. 16(4). pp.357-375.
Vives, A., Jacob, M. and Payeras, M., 2018. Revenue management and price optimization
techniques in the hotel sector: A critical literature review. Tourism economics. 24(6).
pp.720-752.
Webb, T. and Schwartz, Z., 2017. Revenue management analysis with competitive sets:
Vulnerability and a challenge to strategic co-opetition among hotels. Tourism
Economics. 23(6). pp.1206-1219.
Zheng, C. and Forgacs, G., 2017. The emerging trend of hotel total revenue
management. Journal of Revenue and Pricing Management. 16(3). pp.238-245.