Revenue Management Analysis of Peppers Silo Hotel (Mantra Hotels)

This report provides a comprehensive analysis of the revenue management practices at Peppers Silo Hotel, a part of Mantra Hotels in Launceston, Tasmania. It examines the importance of revenue management systems, current trends in the tourism and hospitality industry, and the impact of direct versus indirect distribution channels, particularly the use of OTAs. The report also delves into market segment mix, seasonal changes, and broader business analysis, including the calculation and interpretation of the Market Penetration Index (MPI) and Revenue Generation Index (RGI). Furthermore, it explores existing market data issues, pricing positions, and a group-level analysis of the hotel, including market segments, new supply of accommodation, and tourist arrivals. The report also covers revenue management strategies and tools applied by the hotel, such as product-related pricing structures and inventory control. The report concludes by highlighting the hotel's performance and providing a detailed overview of its operational and strategic approaches to maximize revenue within the competitive landscape.

Running head: TOURISM AND HOSPITALITY REVENUE MANAGEMENT 1
Revenue management assessment of peppers silo (part of mantra hotels)
Student’s name
Name of the university
Author’s note
1

TOURISM AND HOSPITALITY MANAGEMENT 2
Introduction
In this study, Peppers Silo Hotel which part of Mantra Hotel at Launceston in Tasmania
found in Australia.Mantra hotels, apartments and resorts give premium offers such as
accommodation and good hospitality to their people. The hotels especially the pepper silo has
got natural charm and diverse location emanating from the stirring cities to the getaways of
serene coastal.The strategies of revenue management involve a greater view of opportunities in
order to create the increment of revenue in the fields of hotel and tourism entities. In this case,
the business utilizes various strategies for the purpose of optimizing revenues. However, it is not
obvious that all strategies can be done at the same time but done as a process. Also, the practices
of revenue management relate to inventory, and pricing channels.
Reasons and Purposes of Effective Revenue Management system
Most companies adopt system of revenue management because of different reasons.
These include the following:
To generate more revenue of the company; as revenue management clearly talks about
revenue itself, therefore it is essential for the company to operate in systematic way to increase
on its revenue sources (Anne, 2017). Generation of revenue to the hotel or any other entity is
made easier through effective revenue management system.
To manage and evaluate the company’s demand. It is evident that all small and big hotels
benefit from understanding the past and current demand. This therefore helps the hotels to set the
right prices at right time and right channels of distribution (Wright, 2018).
Revenue management system helps in forecasting demand for consumers towards the
company’s products. The businesses utilize revenue management to estimate forecasts about
customers’ demand in relation to the services given to them in a specified period.
Understanding the booking behavior of the quests or customers. It is observed that the
hoteliers must understand the quests’ booking behaviors (de Haan, 2018). This therefore gives
some room of providing the customers with appropriate services in accordance to their rates.

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. Current trends in Tourism and Hospitality Industry
The industry of tourism has increasingly become vital for the economy of Australia and
the entire world. The industry’s revenue projected the growth on annual basis by 3.5% as
compared to previous five years for the financial year 2018/19 to reach $134.3 billion. In this
case, the revenue is obtained basing on the total expenditure about tourism products or services
by both international or local tourists (Granwal,2019). It is evident that, the tourism on domestic
basis provide over 70% of the industry’s revenue. However, the tourists from abroad indicate the
fastest growing demand for the industry. This is because the industry welcomed the estimated
nine million visitors from abroad in 2017 which implies that there is attractiveness of tourists by
the country due to the services offered. The financial year of 2017 showed that, ‘growth
domestic product’ of the country changed by 6.1% putting it in mind that tourism outweighed the
national rate of its economic growth (Granwal, 2019). Besides, estimated 600 thousand of
individuals are employed both directly or indirectly in the industry. This therefore increases the
revenue of the hotels, government and other entities due to the services offered to the company.

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Figure 1: The Trend of Tourist Arrivals
Source: The Straits Times, 2018
Figure 1 above shows a positive trend of tourism industry in the country. When the
tourists continue visiting the country, there is strong flow of revenue to the hotels, tour guides
among other fields. This implies that several technics and strategies to allocated activities which
generate revenue to hotels and the entire industry in the country (Romain, 2018).
Discussion about “The best way to access customers for all accommodation
properties is to sell room inventory through the property’s own website and avoid OTAs”
It is evident that several hotels basically apply a mix of 1 or three software in
management of their inventories. The major software which enables hotels to run is ‘property
management system’. However, there are several items about property management system that
deals with room inventory and billings (Gupta, 2014). Also, several places such as hotels use
software that are integrated have inbuilt inventory especially for offline and online bookings and
some inventories that is always live.Most significant is that, several hotels do not avail rooms for

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OTAs since they like to yield more revenue from the rooms that are available. However, various
rooms would be sold by using other profitable ways.
Channel managers; that are designed by third parties. The channel managers have got
APIs emanating from OTAS always with one platform to be utilized by the hoteliers. By using
the channel mangers, the hoteliers update OTAs using one compacted window. In addition, there
are few international companies that provide channel managers and some local players in great
travel markets (Gupta, 2014). It is therefore agreed that hotels using OTAs gain a lot of
popularity through provision of inventory updates, promotion updates, price updates among
others. The only challenge to channel manager is that there exist marginal costs to the hotel.
Another profitable channel is OTA extranet. It is evident that OTAs are built on extranet
which provide hoteliers in updating rates and inventory especially on their websites (Toh et al,
2011). The OTA extranet has got various characteristics that are faster than channel managers
since they are provided at a free cost.Market segment mix and seasonal changes.
The important market segment for any hotel is the ‘foundation’ for clearly setting the
strategy of pricing (Talabi, 2015). At Mantra group, these are determined differently basing on
the behaviours of booking and sensitivity of pricing for the hotel customers. This helps the hotel
to ‘uniquely price’ every segment according to the customers who the company deals with (Khan
et al, 2018). Also, the management of Peppers Silo hotel management is able to determine the
amount of sales and efforts required during marketing depending on trends and movements
obtained from analysing the selected segments (D’ Aveni, 2010). However, the main target of
the segment is to work towards the perfect ‘market segmentation mix’ for the hotel (Talabi,
2015). The digital marketing of Mantra group contains initiatives that have been launched earlier
to expose it via online. The intention of these initiatives is to increase and widen the number of
customers through the use of its websites to advertise (D’ Aveni, 2010). Marketing in Mantra
Group includes public relations, tactical, brand and digital means of marketing. The responsible
personnel who ensures improvement in the brands of Mantra Group through national
‘campaigns’ is the ‘Corporate office marketing team’ (Widiati, 2010).

TOURISM AND HOSPITALITY MANAGEMENT 6
In addition, the seasonal changes at Peppers Silo depend on the number of customers
received at the hotel. In seasons where the customer turn-up is high, the prices for
accommodation and the entire services tend to be raised. These seasons are normally public
holidays, summer period and festive seasons (Widiati, 2010). On the other hand, the prices of
services and products at the hotel are usually low in respect to the low turn-up of customers. At
Pepper Silo, the prices therefore change according to the seasons (Khan et al, 2018).
Broader business analysis
Two revenue management metrics will be used to calculate the hotel performance on the market
and these will be the market penetration index and the revenue per available room metrics.
Market penetration index (MPI)
MPI = HOTELOCCUPANCY
MARKET OCCUPANCY
= 79.5
75.3
= 1.0558
The interpretation of such a finding is that pepper silo hotel is relatively performing well in the
Australian hotel and hospitality industry.
The second revenue metric is THE REVENUE GENERATION INDEX (RGI) metric of
RM
According to this to this technique, an index equal to 1 implies that the hotel has an average
performance on in the industry. A value less than 1 show that the hotel is performing below
average and if it is greater than 1 hen the hotel is performing above average
RGI = HOTE L' S RevPAR
market Rev PAR
= 139.38
142
= $ 0.9815

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Since this amount is given in dollars, it is supposed to be changed to AUD. and form the above
exchange rate 1 AUD = $0.69. Therefore, this implies that $ 0.9815 = (0.9815/0.69) = AUD
1.4225. The implication of such an outcome is that the peppers silo hotel has an industry
performance that is over and above average in the Australian hotel and hospitality industry in
terms of revenue generation index and market penetration index.
Existing issues of market and national data
Revenue management metrics would be a good a measure for business and hotel performance in
the industry but, however, these metrics seem to be so narrow in scope. The changing European
market performance still requires more techniques of measure for a better analysis of market
performance.
Pricing positions
The effect of ‘competitive environment’ should not be taken for a joke or underestimated.
The hotel managers or any other entity have to point out key competitors in order to settle or
predict the prices for their services. In this case, the competitors of Mantra Hotel are; Gold Coast
and Ghan (Levy& Powell, 2015). It is believed that the decisions made by Gold cost in terms of
pricing the services given to the visitors, such incidence directly forces Mantra hotel (Pepper silo
hotel) to focus higher to maintain its image of services.
2.1 group level analysis
Property and trip analysis
full capacity rooms or
seats 108 rooms
ownership/ branded or
independent
branded under the mantra group of
hotels
service type luxurious and accommodation service
location Australia
name peppers silo hotel
address 89-91 lindsay st. invermay TAS 7248.
website https://www.mantrahotels.com/

TOURISM AND HOSPITALITY MANAGEMENT 8
peppers-silo-hotel/
Market segments
The Australian hotel industry has started to witness new lifestyle brands and thereby creating
new market segments. Of late, hospitality concepts and brands such as curio, MGallery (Accor),
Indigo (IHG), Aloft& the Autograph collection have joined the market.
New supply accommodation
The sector has also continued to grow as it is characterized by numerous visitors from the global
market. The increasing inflow of tourists and other visitors has created the need for new rooms
of accommodation. It is for such reasons that well over 7,100 new Australian hotel rooms were
added during the years 2018. This supply of new hotel rooms is however attributed t regions
such as Sydney and Brisbane as these regions have around 700 more rooms
Arrivals from Specific Countries
By the years of 2007 and 2009, Australia had very minimal tourist’s inflows from the
international visitors. However as time passed by, this trend in the hotel and hospitality industry
has been changing for the better of the economy. Among such international visitors, New
Zealand and china have been among the top tourist nations to the country (Torc’h, 2014). An
illustration below shows the increasing tourist inflow:

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Fig. 1 international visitors to Australia by country
Source: budget direct, 2019.

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Fig. 2 an illustration of the tourism trend in Australia
The above graphical representation is a reflection of the changing trend in the tourism changes.
4. RM strategies and tools applied by the hotel
There are several basic tools and or strategies that can be applied by a revenue manager in a hotel
industry. Among these includes understanding the market, close working with other
departments, segmentation and price optimization, forecasting and so many others (Revfine,
2019).
a). Product related pricing structure
The most pronounced strategies in the of product pricing include the forecasting pricing
strategies. These forecasts are solely dependent upon the nature of available demand on the
market. Among other strategies that are used include the rate parity, price per segment strategies
discount codes and so many others.

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b). Inventory control
Inventory control is a significant aspect in the hotel and hospitality industry and there are
suggestions that specify that about $100 million dollars of hotel inventory is lost in theft on a
yearly basis. It involves the use of vendor accountability reports that are used to keep track of all
inventories.
c). Distribution channel strategies
The company can decide to use the direct or indirect depending on the type of market or type of
service offered. The silo hotel however uses both the direct and indirect distribution channels
especially through the company website where customer can access services such as booking a
room. The direct channels on the other hand involve direct customer interactions where
customers are offered services physically.
i). global distribution systems
The hotel operates on a 24-hr basis implying that esteemed customers thereby enabling them to
get required services that they desire. From the company website, it is projected that the hotel
offers a 24 hour reception to its clients (Wang, 2011). Additionally, the use of indirect measures
such as company websites can also be a resourceful revenue management strategy. This is due
to the fact a customer can access of book a desired room at any time of convenience.
ii). Website (promotions)
The website is as well utilizes as a market in tool for the company in such a way that all the
available services that are offered are posted on the company web page. It is such an online
engine that is used as a booking engine especially for customers who are internationally based
(Revfine, 2019).
iii). Third party channel management
The third party channel manager is employed for an efficient management of the entire company
inventory within a single central point. This system of channel management centralizes all the

TOURISM AND HOSPITALITY MANAGEMENT 12
activities and at the same time reduces the risks that would arise out of booking beyond capacity
(Pham, 2018).
d). non –room related services and packages
With the increasingly changing customer behavior, the traditional hotel room services are
becoming more inadequate to towards revenue, management in the hotel and hospitality industry
(Acconnews, 2016). Hotel guests and customer are starting to look at aspects such as food and
beverages, events and so on. To this effect the pepper silo hotel has a variety of events it is
currently being involved in such as the weekly harvest market, fetsivale annual, ten days on the
island and so many other kinds of events.
Conclusion and Recommendations
In summary, it is evident that the industry of tourism is seen as a vital practice in different
countries of the world. When the number of tourists continue visiting the economy, the counties’
revenues as well as the hotels’ revenues increase. Therefore, it is upon the country or the hotels
to prepare very well their revenue management systems in order to suit their targets. It has been
evidenced that Peppers Silo Hotel has acquired a positive trend of revenue out of its operations
and practices that attract the tourists.In this case, the business utilizes various strategies for the
purpose of optimizing revenues. In addition, it is not obvious that all strategies can be done at the
same time but done as a process.
Therefore, it is recommended that Peppers Silo Hotel should maintain its ways of revenue
management in order to increase the number of clients and revenue. Furthermore, hotels should
adopt forecasting tools in order to estimate different customers’ needs and demand for their
products and services.

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