Comprehensive Analysis of Thomas Cook's Revenue Management Strategies

This report provides a comprehensive analysis of Thomas Cook's business operations, focusing on revenue management, human resources, and legal considerations. The report begins by defining revenue management and its application within the tourism industry, specifically examining Thomas Cook's strategies, including market segmentation, pricing, and inventory control. It explores the impact of differentiated pricing strategies and the use of financial statements for performance evaluation. The report then delves into the human resource life cycle, analyzing its stages and importance in strategic talent management, with a focus on performance management. Finally, it examines the legal issues affecting the travel and tourism industry, including company, employment, and contract law, and their impact on business decision-making. The report concludes with a synthesis of the findings and recommendations for Thomas Cook's continued success.

TRAVEL AND TOURISM
BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1: SCENARIO 1 (LO 1 & 4)................................................................................................1
Concept of revenue management...........................................................................................1
Application of revenue management tools in Thomas cook..................................................2
Impact of differentiated pricing strategies on revenue management......................................2
Principles of revenue management and its application on tourism and recreation sector......3
Different types of financial statements and reporting mechanisms for Thomas Cook..........3
Importance and value of budgets for controlling business performance and identifying
variances.................................................................................................................................4
Interpretation of financial statements and reports with making evaluation of business
performance based on same....................................................................................................4
PART 2: SCENARIO 2 (LO 2).......................................................................................................6
Human resource life cycle and reviewing of different stages of the HR life cycle................6
Performance management plan for the human resource executive........................................6
Importance of the HR life cycle in relation to strategic talent management and overcoming
issues of staff retention...........................................................................................................8
PART 3: SCENARIO 3 (LO 3).......................................................................................................9
The way legal issues affect travel and tourism industry and specific legislation that
organisations have to adhere with..........................................................................................9
Analysing the way in which company, employment and contract law has potential impact on
business decision-making.....................................................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Tourism is the set of activities of people travelling to and staying in places outside their
usual environment for leisure, business or other purposes. A lot of companies are engaged in
doing business related to it. Present study will lay emphasis on Thomas Cook Group which is a
British global travel company that has been listed on the London Stock exchange. Firm is
engaged in operating in five main divisions that include UK, Central Europe, Germany, West
Europe and Northern Europe. Report highlights the key principles of revenue management for
travel and tourism industry. It will also lay emphasis on managing budget and maintaining
statistical and financial records.
PART 1: SCENARIO 1 (LO 1 & 4)
Concept of revenue management
“REVENUE MANAGEMENT” is the crucial responsibility of the organizations/ firm/
industries to manage the revenue wisely and smartly. Revenue generated in any sector of the
market must be properly managed for fulfilling further requirements of the business. For the
service sectors like Travel and Tourism Industries, the process of revenue generation, utilization
and management all has to be conducted properly. The Travel and Tourism Industries focuses
upon its pricing strategy, market segmenting and many other related policies to control and
monitor its revenue system.
As far as the revenue management of travel and tourism industries are concerned, the
management of THOMAS COOK must be considered. Thomas Cook, a renowned service
provider in the sector of travel and tourism generates ample of revenue every year. It has
advanced Revenue Management Software to control, evaluate and monitor the profits and market
shares of the company(Swarbrooke and Horner, 2012). It consists of a huge network of
management team for researches, analysis and forecasting. For its revenue management, the
company conduct audits at a regular time intervals. Also, the involvement of the company in the
capital acquisitions hike its profit rates and revenues. It believes in delivering the services and
managing the revenues by adopting new criteria of revenue management, making connections,
innovations, enhancing the portal.
It is continuously utilizing various efficiency and productivity enhancement tools for
continuous revenue generation and management. It provides the best possible platform to the
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workforce for better performance and efficiency. EXPLORE is the inventory management tool
used by it for proper management of cash flows and revenue generation. It also has well defined
statistical segmented platform for the analysis of the provided services. Hence, adapting the
advanced network of technologies, software and strategies, Thomas Cook has an efficient team
for its revenue management that directly influencing its growth in the global market.
Rationale for using revenue management
Revenue management can support Thomas Cook group in maximising profit. It can
support firm in controlling inventory, by this technique company can also increase or gain
market share.
Principles of revenue management
Market segmentation: Company must be engaged in segmenting market according to
traits like similar interests, needs or locations. For enhancing the sectors like tourism and
recreation centre segmentation can be done by Thomas Cook group on the basis of demography.
As these services are mostly availed by young adults or middle aged people firm needs to focus
on that. Leisure customers tend to book earlier and are flexible about when they fly and are
willing to sit in coach seats to save more money for their destination, whereas business
customers tend to book closer to departure and are typically less price sensitive
Historical demand and booking patterns: For enhancing the sector like tourism and
recreation centre Thomas can engage in forecasting the booking patterns of guest and make
availability of services accordingly. This will help them in effectively managing the revenue.
Pricing and inventory management: Thomas Cook can engage in setting pricing
strategy accordingly which creates value for the consumer. This will help them in attracting
consumers. Revenue management is highly concern with managing inventory, they can lower
price of services related with tourism and recreation to attract consumers.
Application of revenue management tools in Thomas cook
In Thomas Cook, the revenue of the firm can be effectively increased with the help of the
new and upgraded version of technologies that smooths all the aspects of revenue generation,
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smart application of suitable strategies must be applied. Profit in any travel and tourism
Industries can be maximized by:
 Inventory control: Thomas Cook by revenue management can control inventory by
putting the best price on services.
 Customer segmentation: Firm can segment market between price sensitive leisure
customer and price insensitive business consumers.
 Customers priority: By managing revenue, Thomas Cook can also set consumers priority
by analysing their needs and demands
Impact of differentiated pricing strategies on revenue management
Thomas Cook Group can engaged in making use of differentiated pricing strategies for
managing revenue in sectors like adventure tourism and recreation. Differential pricing is
basically selling the same product or services at different prices to varied consumers. This
strategy has a huge impact on managing of revenue. Differential pricing for enhancing sector like
travel and recreation centre can lay impact like it can support Thomas Cook in maximising
profitability (Buhalis and Foerste, 2015). This strategy can assist form in matching supply with
demand. They can set prices according to the preference of consumer that can attract more of
them.
Application of revenue management on tourism and recreation sector
Revenue management has certain principles. This can support Thomas Cook in segmenting
the market. They can do it on the basis of price sensitive and price insensitive consumer.
Also, firm can involve in controlling inventory by allocating the best price to the product.
Revenue management through different channels can support them in increasing profit.
Different types of financial statements and reporting mechanisms for Thomas Cook
There are three types of reporting mechanism and financial statements which are needed
to be addressed by every travel and tourism firm. This includes the following:
Financial reporting: In this type of report, it basically consists of cash flow, income
statement and balance sheet. This needs to be prepared by Thomas Cook group. Cash flow
statement will help company in acknowledging the sources through which cash is coming in the
travel and tourism industry and cash leaving the firm (Xiang, Magnini and Fesenmaier, 2015). It
can assist organization in knowing about the sectors which are more profitable to them.
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Operational reporting: This report will provide Thomas Cook with the data related to
the operational efficiency related to current position of company. Effective operational reporting
will support company in evaluating and managing the current and financial outcomes. The
operational report of travel and tourism industry can include real-time information, granular
reporting and flexible ease of use (Cook, Hsu and Marqua, 2014). This report can also help firm
in grabbing opportunities so that losses can be cut down short.
Business intelligence reporting: This type of report will support Thomas Cook in
managing and analysing data related to consumers or travellers effectively or efficiently. It
consists of metrics and measurement, intuitive transparency and management dashboards.
Business intelligence will make use graphics in order to make consumers aware about the recent
trends in travel and tourism sector.
Different type of financial statement
Income statement: Income statement will support firm in revealing about companies capacities
to generate more profit and revenue (Types of financial statement, 2017).
Cash flow statement: Cash flow statement will help company in acknowledging the sources
through which cash is coming in the travel and tourism industry and cash leaving the firm.
Balance sheet: Balance sheet can make Thomas Cook know about available cash, prices and
bills coming in the near future.
Importance and value of budgets for controlling business performance and identifying variances
Preparing budget is one of the most important task that needs to be undertaken by
Thomas Cook group. Budgeting can assist company in identifying about the variances which
means the difference in the amount of two figures. It can help in analysing the capital which is
currently available to travel and tourism industry (Sönmez, 2018). Firm can engage in making
use of master budget as it combines all the elements like sales, operating expenses, assets and
income stream. By this company can easily identify the variances. Industry can prepare financial
budget for managing their income and expenses so it is most important.They can prepare cash
flow budget, so that firm has an idea of inflow and outflow of cash. The main reason of
occurring of variances is change in condition of business and expectations which are unmet.
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Budget can support Thomas Cook in setting up the priorities for the business, this will help them
in focusing on most important and relevant issues.
Interpretation of financial statements and reports with making evaluation of business
performance based on same
It is a group cash flow statement for Thomas Cook group for the year ended 30
September 2017. It can be interpreted from the statement that the performance of company from
the last financial year has been improved in this year. Like in this year firm has a cash balance of
pound 1399 which was 1234 last year. Also, company has generated more cash in the year 2017
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Illustration 1: Financial statement of Thomas Cook
(Source: Annual report of Thomas Cook, 2017)

in comparison to year 2016. They generated cash of pound 533 which in last year they have only
made cash of 395. The financial statement of travel and tourism sector have been made on the
basis of historical cost. The Group made good financial progress in financial year 2017, reporting
higher revenues, higher underlying EBIT and lower net debt, compared to last year. Group
revenue increased by 15% (£1,197 million) on a headline basis.
Evaluation of this financial report has shown a tremendous increase in the cash flow
position of the company which denotes that revenue is more and company is making profit. Also
it means consumer is satisfied.
PART 2: SCENARIO 2 (LO 2)
Human resource life cycle and reviewing of different stages of the HR life cycle
Human resource life cycle is basically a concept that supports in managing human
resources and describes the stages where employee spent a specific time with a particular
company. It also explains the role of human resource department plays at each stage. This model
will support Thomas Cook group in reviewing the different stages which has been applied to the
role of human resource executive. Different stages human resource life cycle are:
Recruiting and On-boarding: It is a process of hiring people. Recruitment for the role of
human resource executive is been done by Thomas Cook by creating the job ads and choosing
the individual whose resume looks promising to them. After hiring the employee, firm is
engaged in on-boarding which means setting the worker in system. Effective recruitment is most
important so that firm can develop efficient talent.
Orientation and career planning: Thomas Cook is involved in providing huge growth
opportunities to the human resource executive they are hiring which is important to retain
strategic talent. They also provide them training improving efficiency (Cook, Hsu and Marqua,
2014).
Career development: Company is engaged in providing career development
opportunities to the human resource executive they are hiring. Thomas Cook is involved in
providing professional growth and training to make employees more responsible.
Termination or transition: If the human resource executive in the firm performs
extremely well, they can leave the company after retirement. It is purely based on the
performance of human resource executive.
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Performance management plan for the human resource executive
This step can include the following:
Assessing: Thomas Cook can engage in assessing the performance of human resource
executive. This assessment will help them in knowing about skills of employee. It will help them
in managing performance and retaining an individual in firm.
Monitoring: Keen monitoring for managing performance of the human resource
executive can be done by Thomas Cook. It can be done by observing the performance of
employee. Face to face interaction can also help firm in monitoring.
Evaluating: Performance of human resource executive can be evaluated by making use
of advancing technology like balance score card (Performance management plan, 2015).
Reducing gap: By evaluating and monitoring Thomas Cook can know about the gap in
performance. They can improve performance of human resource executive by providing them
proper training. This will help in retaining employee.
For managing performance, the individual will focus on continuous participation in
activities which can help in improving performance. This can help Thomas Cook in enhancing
their operational efficiency.
Importance of the HR life cycle in relation to strategic talent management and overcoming issues
of staff retention
Human resource life cycle is one of the most important aspect for the travel and tourism
industry like Thomas Cook. This life cycle includes various stages that can help organization in
retaining strategic talent and attracting new individuals towards them. It includes steps like
recruitment, education, career development, planning, motivation and evaluation. In order to
retain employees company must engaged in providing them with effective training and
knowledge. This will assist workers in shaping their careers and also it can create employee
loyalty for them. It will support them in enhancing the operational efficiency of firm. Also, for
retaining employees and removing negative behaviour from the organization Thomas Cook can
involve in motivating workers with rewards, verbal motivation and appraising them. This can
support firm in retaining employees.
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Also, it will attract more workers during the time of crisis and changing time. For
retaining and managing strategic talent, supervisor or manager can engage in measuring
employee’s performance.
Recommendation for improving human resource processes
Managers and supervisors can motivate employees to match the organizational goal and
objectives with them. This can support Thomas Cook group in reducing the negative behaviour.
Also, it will enhance the positive culture in the organization. Because of this firm will be able to
attract more number of workers towards them. Human resource life cycle also includes stage
where training is given to employees. This will help in improving the efficiency of workers. By
this, Thomas Cook can enhance their productivity. It will assist them in increasing profitability.
PART 3: SCENARIO 3 (LO 3)
The way legal issues affect travel and tourism industry and specific legislation that organisations
have to adhere with
There are various legal issues that can affect the working of travel and tourism industry
like Thomas Cook. Company needs to lay impact on the various factors like they must be
engaged in adhering to every laws and rules given by the government so that firm can established
their brand name. Industry must be engaged in providing safe and healthy working condition to
the employees so that no legal abolition is created in the name of firm. If Thomas Cook is not
involved in following the public federation laws than it can create legal issue for the firm which
can hamper their growth aspects.
Specific legislation that Thomas Cook needs to lay emphasis on
Thomas Cook needs to lay focus on health and safety at workplace, 1974. In this act
company will lay emphasis on providing safe and secure work condition to the employees
working under them. Firm will make sure that workers are not working in the hazardous work
place condition. If industry is been engaged in addressing to this legislation than they will attract
more employees towards them. It will also help them in retaining workers which will enhance
the efficiency of organisation. Thomas Cook needs to also lay emphasis on Employment
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Protection (Consolidation) Act 1978, in order to provide protection and benefit to all the workers
working in their workplace.
Firm will lay keen focus on that they all have been protected with utmost care and also
given with benefits like medical insurance and many other things. This will support them in
creating employment loyalty in the Thomas Cook group. Addressing these legislations can
develop a good image of firm in the market. These legislations can also lay emphasis on the
decision making process of the industry. Firm can engage in making policies, rules and
regulations according to these legislations
Analysing the way in which company, employment and contract law has potential impact on
business decision-making
Employment protection Act, 1978 and contract law has huge impact on the decision-
making of travel and tourism industry and organisations operating in it like Thomas Cook.
Employment law lays keen emphasis on that every employee who is working in the firm needs to
be given protection. Like for example company can engage in providing them with safe working
conditions. They can also give them protection by providing them with benefits like medical
insurance or any other type of amenities. All these factors can enhance the decision-making
process of the firm. Thomas Cook must also make sure under these act that workers are working
in a safe and secure working conditions. Firm needs to follow all the legal and ethical practices
so that they can attract more new workers towards them.
Thomas Cook can prepare their rules, regulations and policies by laying emphasis on
laws like Employment protection and contract act. Organisation must make sure like for example
no discrimination is done in the firm on the basis of caste, colour, religion or any other form
(Moutinho, 2011). All legal and ethical practices needs to be followed by the company. This will
support them in increasing their efficiency. Thomas Cook is also emphasised by laws like
Contract act. Like for example: before putting any allegation on the employee or the third party,
firm needs to come in contract with them. This will support them in removing the chaos that can
exist in the environment. Also, the contract law can assist in making the decision of organisation
better. It will provide protection to the workers working on travel and tourism sector
Specific legislations and ethical regulations impact on decision making.
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Thomas Cook also needs to pay focus on Human Rights Act 1998 which provides that no
employee or consumer should be deprived of the basic human rights. They must be given
freedom of speech and treated with equality in the work place. Also, ethical regulations like no
discrimination should be done by board of management of firm with the employees or
consumers. This will also lay impact on their decision-making process. Like for example no
discrimination in the work place can help firm in attracting more consumers.
CONCLUSION
From the above study, it has been summarised that Thomas Cook has applied the concept
of differential pricing for enhancing travel and tourism recreation. It has helped them in
maximising the profit. They have also laid emphasis on various laws such as employment and
contract law which has enhanced their decision-making process. Also, by addressing to laws,
they have been able to provide safety and security to workers working with the firm. This has
helped them in attracting and retaining efficient employees. This has also supported them in
creating employee’s loyalty.
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REFERENCES
Books and Journals
Baker, D.M.A., 2014. The effects of terrorism on the travel and tourism industry. International
Journal of Religious Tourism and Pilgrimage. 2(1).p.9.
Buhalis, D. and Foerste, M., 2015. SoCoMo marketing for travel and tourism: Empowering co-
creation of value. Journal of destination marketing & management. 4(3). pp.151-161.
Cook, R.A., Hsu, C.H. and Marqua, J.J., 2014. Tourism: the business of hospitality and travel.
Boston, MA: Pearson.
Gretzel, U. and et.al., 2015. Smart tourism: foundations and developments. Electronic Markets.
25(3). pp.179-188.
Horner, S. and Swarbrooke, J., 2016. Consumer behaviour in tourism. Routledge.
John, S. and Susan, H., 2015. Business travel and tourism.
Moutinho, L. ed., 2011. Strategic management in tourism. Cabi.
Schegg, R. and Stangl, B., 2017, January. Information and Communication Technologies in
Tourism 2017. In Proceedings of the International Conference in Rome, Italy.
Sönmez, S.F., 2018. Tourism, terrorism, and political instability. Annals of Tourism Research.
25(2).pp.416-456.
Standing, C., Tang-Taye, J.P. and Boyer, M., 2014. The impact of the Internet in travel and
tourism: A research review 2001–2010. Journal of Travel & Tourism Marketing. 31(1).
pp.82-113.
Swarbrooke, J. and Horner, S., 2012. Business travel and tourism. Routledge.
Xiang, Z., Magnini, V.P. and Fesenmaier, D.R., 2015. Information technology and consumer
behavior in travel and tourism: Insights from travel planning using the internet. Journal
of Retailing and Consumer Services. 22. pp.244-249.
Online
Annual report of Thomas Cook. 2017. [Online] Available through:
<http://www.annualreports.com/Company/thomas-cook-group-plc>
Types of financial statement. 2017. [Online] Available through:
<https://www.accountingtools.com/articles/types-of-financial-statements.html>
Performance management plan. 2015. [Online] Available through:
<https://www.shrm.org/resourcesandtools/tools-and-samples/how-to-guides/pages/
performanceimprovementplan.aspx>
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