Hospitality Operations Management: Product and Service Analysis

This report provides an in-depth analysis of hospitality operations management, focusing on the Hyatt Regency London. It examines the nature of hospitality products and services, evaluates factors influencing demand patterns, and compares customer profiles with their varying expectations. The report also analyzes factors affecting average spending power, explores key stages in product and service development, and assesses merchandising opportunities. Additionally, it evaluates different pricing methods, considers revenue generation and profitability factors, and applies performance measures and appraisal techniques to individual aspects of hospitality operations. The report concludes with an application of business analysis, evaluation, and planning appropriate to hospitality operations, proposing actionable recommendations for the Hyatt Regency London.

Hospitality Operations
Management

Table of Contents
INTRODUCTION...........................................................................................................................3
.TASK 1 ..........................................................................................................................................3
AC1.1: Analyse the nature of hospitality product and service areas......................................3
AC1.2: Evaluate the different influences affecting patterns of demand within hospitality
operations...............................................................................................................................4
AC1.3: Compare customer profiles and their differing expectations and requirements in
respect of hospitality provision..............................................................................................4
AC1.4: Analyse factors affecting average spending power (ASP) in hospitality businesses. 5
AC2.1: Evaluate the key stages in product and service development applied within a
hospitality operation. .............................................................................................................5
AC2.2 Analyse the features which contribute towards the customers’ perception of products
and services............................................................................................................................6
AC2.3 Assess the opportunities and constraints affecting product and/or service development
within a hospitality environment. ..........................................................................................7
AC2.4: Evaluate different merchandising opportunities for hospitality products and services..7
TASK 2 QUESTIONNAIRE...........................................................................................................8
AC3.1 Evaluate different methods of pricing taking into account additional pricing
considerations.........................................................................................................................8
AC3.2: Assess the factors which affect revenue generation and profitability in hospitality
operations. .............................................................................................................................9
TASK 3 ...........................................................................................................................................9
AC4.1 Apply a range of performance measures and appraisal techniques to individual aspects
of hospitality operations, the product and the whole operation..............................................9
AC4.2 Determine the usefulness and limitations of the various quantitative and qualitative
appraisal techniques and their application to hospitality operations....................................10
AC4.3 Apply approaches to business analysis, evaluation and planning appropriate to
hospitality operations, making proposals for action. ...........................................................11
CONCLUSION..............................................................................................................................12
.REFERENCES.............................................................................................................................13

INTRODUCTION
The administration of business practices that convert material & labour into goods and
services is known as operation management. It mainly takes into consideration the process of
planning, organising and supervising of manufacturing and production. In the context of
hospitality, hotel operation management program provides business skills in broad areas such as;
desk management, food & drinks management, etc. The hotel operation manager looks the
overall operations such as; housekeeping, security, food services, sales, recruiting new
employees, etc.
The Hyatt Regency London, is the five start hotel that is situated on Portman Square in
central London, England. Its owner is Churchill Group and currently is operated by Hyatt Hotels
Corporation. The report aims at analysing the nature of hospitality product, evaluating different
patterns affecting demand and comparison of customer profiles with different expectations.
Apart from this, it will cover factors influencing average spending power and the key stages in
the development of a new product. Further, it will evaluate different methods of pricing and
apply range of performance appraisal techniques to individuals.
.TASK 1
AC1.1: Analyse the nature of hospitality product and service areas.
The Hyatt Regency London is located in London, which is operated by the Churchill
Group. It has been determined that, the hotel consists of 400 rooms, its décor, facilities and in-
house outlets references Sir Winston Churchill. Apart from this, its has dining restaurant, bar, 12
functioning rooms on the ground & first floors. Further, it has been observed that hospitality
industry has many features such as perishable, intangible, inseparable, guest satisfaction and so
on.
Intangible services in Hyatt Regency are those which cannot be seen or touched but can
only be felt. For example, services such as room services, housekeeping, accommodation, fitness
room etc.
Perishable services are those which are not permanent and vanishes after customers
receives it (Bahmani-Firouzi and Azizipanah-Abarghooee, 2014).

AC1.2: Evaluate the different influences affecting patterns of demand within hospitality
operations.
 Seasonality:- it has been determined that the hospitality industry is characterised by
seasonality that plays a key role in measuring guest behaviour towards Hyatt Regency. In
other words, tourists are attracted more during festive seasons i.e. December rather than
other seasons and therefore, it affects the demand within the hotel.
 Cultural factors:- it is the culture of various customers which decide their behaviour of
staying in a hotel and acquiring its services. As an important part of service industry
within hospitality, culture play a vital role in increasing demand within hotel operations.
 Increased emphasis on health and well-being:- in this world of healthy eating and healthy
living, guests in hospitality industry are taking charge of their health and Hyatt hotel must
take this point into consideration.
AC1.3: Compare customer profiles and their differing expectations and requirements in respect
of hospitality provision.
It has been observed in past few years that customer satisfaction has become a vital part
of hospitality industry. The only reason Hyatt Regency Hotel can hold its customers is through
their satisfaction which means the higher the level of satisfaction of tourists the higher are the
chances of them to stay loyal for longer time.
Types of customers Spending power Different expectations
Business travellers They are concerned with more
convenient location rather than
price.
They travel for attending
meeting, presentations, etc. For
them Hyatt Regency keeps
occupancy at weekends.
Groups Groups are generally
concerned with entertainment
and they are less price
sensitive.
The sales manager in Hyatt
Regency targets this segment
by placing together a package
of lodging & meals (DeNisi
and Smith, 2014).
Leisure They prefer to spend as much
as they wish.
They prefer safe & secure
hotel and families are attracted

more towards those hotels with
special services for kids. Hyatt
Regency may consider their
requirement.
AC1.4: Analyse factors affecting average spending power (ASP) in hospitality businesses.
In Hyatt, various products and services are provided at different prices that brings out the
average spending power of the customers. Further, the factors that affect the ASP are :
 Income level :- it has been observed that, the average spending power of guests is
affected by the money they earn and in turn affects Hyatt profitability. This states that,
the higher the customer will earn the more they will be able to pay.
 Status :- An individual pays according to its status which affects its ASP and in turn it
influences hotel's revenue. When the hotel will provide more facilities such as gym, and
bar then guests spending will be more (DeNisi and Murphy, 2017).
AC2.1: Evaluate the key stages in product and service development applied within a hospitality
operation.
Stages in the development of product include identification of new idea or product that
needs to be developed, its evaluation, development, advertising through different channels to
make customers aware about the new product creation.
 Generation of idea :- the generation of the idea occurs when the Hyatt Regency hotel
confirms the product requirement. Confirmation is done based on the market research
conducted by the hotel. Customer analysis will be done to know whether more rooms are
required in Hyatt or not. When Hyatt will look at other hotels for analysing their revenue
and cost, this will assist the hotel to evaluate its own idea.
 Screening process :- this process involves the gathering of information according to the
same products available in the market. For example, Hyatt before developing new
product must screen others hotels having similar products.
 Concept development and testing:- concept testing is done after the completion of idea
screening and it varies from test marketing. Under this a small group of individuals is
selected and they are being provided full information regarding the new product.

 Business analysis:- it has been determined that business analyst is a key step in this
process of product development, where the hotel recognises whether their new product is
commercially profitable or not.
 Development of product :- at this stage the final product is developed and its testing
happens (Ichinose, Sato and Oshima, Hitachi Ltd, 2015 ).
 Test marketing :- after the product gets ready, the hotel do its testing before final selling.
 Process of commercialisation :- under this stage Hyatt will promote its new product in
the market.
AC2.2 Analyse the features which contribute towards the customers’ perception of products and
services.
It has been determined that, in hospitality industry the perception of customers is
affected by various factors like; pricing, customer service, design and layout in the hotel.
Moreover, once all of these factors, comes in contact with the guests then this will lead to their
satisfaction, first impression of Hyatt, value for money etc.
The only thing the customer remembers about the hotel is its services and staff working
in the hotel. Apart from this, the price offered by Hyatt must align with the services provided.
Customers always remember the services that they receive during their stay and all workers
whether they work in the front end or back end in Hyatt hotel, this ensure customer satisfaction
at all times.
 Price :- it has been determined that in selecting any product, price plays a very
important role, as both price and customer's requirement should be aligned.
 Service quality :- the level at which guests in the hotel can be accommodated by service
providers include responsiveness & timely service and this quick & effective service is
known as quality service.
 Ambiance :- layout of the hotel is considered as a vital factor to considered by the
Hyatt, as the way in which furniture of the restaurant is organised, their distance and
size all comes under this category.

AC2.3 Assess the opportunities and constraints affecting product and/or service development
within a hospitality environment.
The opportunities and constraints that influence the development of the product or service
in Hyatt are the accessibility of resources such as human, monetary and physical are vital for the
creation of a product.
It has been determined that, for any product to be developed, it is crucial that there are
wider opportunities to boost the awareness of the hotel. The Hyatt hotel must take into
consideration such as organic food that needs to be added to the menu along with allergy
considerations of clients. Apart from this physical location of the hotel also considered as the key
opportunity for hotel (Krampe, Strelow and Kenning, 2018).
AC2.4: Evaluate different merchandising opportunities for hospitality products and services.
Merchandising in hospitality is considered as very important in an organisation as it is a
process of presenting goods for sale. It has been observed that numerous of merchandising
opportunities exist for the Hyatt hotel such as; growing the market share to its clients.
Hotels must makes sure that is maintains a brand loyalty within its guests & should make
continuous efforts to improve it. Hyatt can begin with launching kids gaming zone that can add
revenue out of these activities. Moreover, it can also improve the image & design of its
restaurants, spa and sports club in order to advance its merchandising opportunities.
The amount of business travellers have also increase, due to the current economic
situation and so by offering features such as high internet speed, & conference halls spaces will
help the hotel to raise its profitability. For example digital merchandising that involves activities
utilised to sell a product online. Hyatt can make use of this opportunity to do promotion of its
hotel's products through its own website.

TASK 2 QUESTIONNAIRE
AC3.1 Evaluate different methods of pricing taking into account additional pricing
considerations.
In Hyatt Regency Hotel, there are mainly two methods of pricing taken into
consideration:
Cost oriented pricing: - This pricing method it is a type of technique under which some amount
of required profit margin is added by the Hyatt Regency to its cost of the product to get the
final price. The Hyatt Regency hotel takes this pricing method into consideration because it
consists of simple calculations to add value.
Market oriented pricing: - It is also known as competition based pricing policy in which the hotel
considers the price that the competitors have applied to their product. This method is used in
Hyatt for the reason that it avoids price competition that can harm the hotel.
b) Method not used by Hyatt Regency
Service charge:- This method is not used by this hotel as they do not provide delivery fee charges
for room service or gratuity. This is because they want to serve the best at affordable prices.
Minimum Charge :- Minimum charge fee is applied by various hotels on items in the mini-bar.
But Charlotte does not use this method as it is sometimes annoying for customers (Michelson and
Tully, 2018 ).
Cover charge :- A cover charge refers to an entrance fee that is charge in bars, nightclubs, or
restaurant in the hotel. Hyatt Regency does not this method of pricing because it does not
finds it necessary to charge and it is also not mandatory.

AC3.2: Assess the factors which affect revenue generation and profitability in hospitality
operations.
 Labour Intensity: - as Hyatt Regency is considered to be labour intensive hotel, then any
boost in labour will have a direct impact on the profit of the Hyatt Regency and therefore
this will affect the revenue generation.
 Shelf Life: - It is crucial that the shelf life of the product in the hotel must be high as a
shorter period means faster worsening that will influence revenue.
 Elasticity of Demand: - It affects the profit generation since the demand in winters is less for
rooms therefore, for Hyatt Regency it is an important factor for affecting profitability.
 Portion Control:- it is considered essential for keeping menu items consistent. Hence, non
consistency will influence Hyatt Regency revenue generation.
 Price :- changes in inflation rate, leads to changes in cost of labour, and so it will affect the
pricing strategy of the hotel which in turn affect the revenue.
 Procurement :- procurement in a hotel play a very important role in profitability
performance of the hotel. This relates to the purchasing of goods and services for hotel. This
affects revenue as it involves responsibilities such as contract negotiation, payment terms,
etc.
TASK 3
AC4.1 Apply a range of performance measures and appraisal techniques to individual aspects of
hospitality operations, the product and the whole operation.
Performance management assist hotel to become more thriving and keep ahead of the
competition. It fundamentally included measuring, reporting & managing development in order
to get better performance (Mohammadi, Soleymani and Mozafari, 2014). For example; 360
degree feedback provides people with a large appraisal of their own performance based on the
feedback by the people around them, together with their supervisor or manager, peers, guests at
the hotel. The perception from 360 degree feedback is usually used in workers training &
development. If the Hyatt hotel done well, 360 degree feedback assist to enhance the contact
between staff members and competency in achieving the objectives of the hotel.

 Customer Service:- Excellent customer service is considered as very important aspect in
the hospitality industry. Moreover, It is the first point of interaction, the hotel guest and
the agent of the hotel. It is the first opportunity that the Hyatt Regency uses to impress &
create a permanent great impression.
 Sales performance:- often it happens that managers does not monitor sales effectiveness
when things are going well. Most of the hotels track their sales performance. Therefore,
regular tracking of sales is necessary to maintain accuracy.
 Developing qualitative and quantitative data :- under this various techniques of
qualitative data are applied by Hyatt Regency . It included; weighted checklist method in
which employees gets familiar with the jobs and a big list of descriptive statement is
created to see effectiveness of employees. Moreover, a 360 degree employee evaluation
technique is also applied by using feedback from a worker’s subordinates (Reichardt
and Herrington, Rovi Guides Inc, 2015 ).
 Data analysis and evaluation :- big data is referred to a set of unstructured data from
digital as well as traditional sources inside and outside the Hyatt Regency , and that
represents a source for in progress analysis. The hotel uses this analysis to enhance its
operation, strategies and occupancy rates.
 Quality Management :- quality in Hyatt Regency means constant delivery of quality
products or services according to the expected needs of the guests. Further, delivery
quality services in hotel, is considered as the biggest challenge that hotels are facing in
recent years. Moreover, the survey shows that the hotel always has a room for further
improvement of the services. Other results of the research reveal that the most important
factors for this hotel’s future are guest satisfaction, guest retention and word of mouth
advertising.
AC4.2 Determine the usefulness and limitations of the various quantitative and qualitative
appraisal techniques and their application to hospitality operations.
Quantitative data in the Hyatt is utilised to analyse a large broad group of workers and this
can be assessed through primary & secondary analysis but the constraint is that it cannot be used
to analyse purposeful or qualitative data. Qualitative data is used by the hotel using interviewing,
focus group and questionnaires but the drawback is that it is frequently more costly.

360 degree feedback is an appraisal technique which allows a two way communication
between the employees and the employer. It allows the hotel to gauge the communication level
between its employees and the kind of cooperation they show to other members on the basis of
which it can appraise the employers. Also the process of receiving feedback from anonymous
colleagues may not be a very comfortable form of feedback of appraisal for many. Though 360
degree is very common feedback system which is used in hotels, it not always a good idea to
employ since it is difficult to create confidence within employees on feedback that is done in an
anonymous manner. Constraint of hotel management by the 360 degree technique is performed
to support workforce to perform towards attaining the goal, however, the limitation is that
creating these goals needs time and the staff members in Hyatt Regency mat lose their control
over time to do their actual (Shabanpour-Haghighi and Seifi, 2015).
Usefulness of ranking is that workers in the hotel are positioned based to their performance
levels and Hyatt considered this method of performance measure as an easier to rank the best and
the worst worker. Further, its limitations are; when this method is applied on a large number of
employees, then grading of individuals become a hard for the hotel.
AC4.3 Apply approaches to business analysis, evaluation and planning appropriate to hospitality
operations, making proposals for action.
Business analysis is refers to exercise of allowing change in the Hyatt Regency. It is a kind
of research discipline of finding needs of the business & determining solutions to business
problems. Further, when it comes to discussing about the performance of the Hyatt Regency,
there are few words that are highlighted through this such as; competitive advantage, business
survival, and globalisation. Moreover, all these three features in hotel industry point out in one
direction i.e. raise in the level of competition is faced by all hotels.
A business evaluation refers to an analysis or check of the whole Hyatt Regency and which is
conducted to find out the entire operations of the business before it is sold by the owner. Further,
it may also cover the internal functioning of the business. Moreover, it has been determined that
the planning is done by owners to start a business (Vardakas, Zorba and Verikoukis, 2015).
Business planning in Hyatt Regency is considered vital, as it provides a base for
wherever the owner wants to take its hotel. Further, a business analyst analyses data of hotel and

then display strategies and forecasts which help the Hyatt Regency to keep ahead of their
competition.
CONCLUSION
From the overall report, it has been concluded that operation management takes into
consideration the process of planning, organising and supervising of manufacturing and
production. Apart from this, it states that hotel is located in London, which is operated by the
Churchill Group. Further, it also concluded the different factors that affect patterns of demand
within hotel operations. Further, it evaluated factors affecting average spending power in hotel
business and characteristics that contribute towards customer’s perception to the product or
service . Moreover, it applied a range of performance measures and appraisal techniques to
individual aspects of hospitality operations.