Travel and Tourism: Revenue Management in Thomas Cook's Business

This report provides a comprehensive analysis of Thomas Cook's business operations, focusing on revenue management principles, financial statements, and human resource practices. The report delves into the concept of revenue management, its rationales, and principles, exploring market segmentation, demand forecasting, and information systems. It examines the application of revenue management tools such as competitor analysis, dynamic pricing, and price optimization within Thomas Cook. Furthermore, the report assesses the impact of various pricing strategies, including premium pricing, economy pricing, market penetration, and price skimming, on revenue management. The analysis extends to a critical evaluation of revenue management principles and a review of Thomas Cook's financial statements, including income statements, balance sheets, and statements of cash flow. The report also explores the importance of budgeting, financial reporting techniques, and the human resource life cycle, including performance management and talent improvement strategies. Finally, the report examines the relevant legislation and ethical principles affecting Thomas Cook's business decisions, including employment, company, and contract law.

TRAVEL AND TOURISM BUSINESS TOOLKIT

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Concept of Revenue Management and their rational and principles......................................1
Application of revenue management tools in Thomas Cook.................................................2
Impact of pricing strategies on revenue management of Thomas Cook................................2
Critically analysis of principles of revenue management.......................................................3
Types of financial statements.................................................................................................3
Thomas cook financial statements..........................................................................................3
The importance and value of making budgets .......................................................................4
Financial statements and report of Thomas cook...................................................................5
Business performance on bases of financial statements.........................................................9
PART 2............................................................................................................................................9
Stages Human resource life cycle...........................................................................................9
Performance management plan............................................................................................10
Importance of HR life cycle.................................................................................................10
Judgment and recommendations for improving effective talent..........................................11
PART 3..........................................................................................................................................11
Legislation that Thomas cook have to adhere to ................................................................11
Impact of employment law, company law and contract law on business decision making. 12
Implications of regulations...................................................................................................13
Impact of regulation, ethical principles and legislation........................................................13
REFERENCES..............................................................................................................................15

INTRODUCTION
Travel and tourism is the most progressive and largest service industry in UK. Tourism is
a business that impact on every other organizations in the country. Travel and tourism business is
the best way to increase profit and growth of other companies and make them better in way to
achieve their objectives as well. In this business will include many practices and activities of
touring, especially for pleasure. The industry or business of offering information, transportation,
accommodations and other facilities to people (Vellas, 2016). The present report based on
Thomas Cook which is operating in travel and tourism sector of UK. It is one of the biggest
tourism industry across the world that run its business successfully and give a range of good
services to its tourists. This report will explain the concept of revenue management its principles
and rational in tourism and travel industry. It also explains the legislation and ethics in this
sector.
PART 1
Concept of Revenue Management and their rational and principles
Revenue management helps to identify customers demand to optimize inventory and cost
availability in way to increase revenue growth. It is the concept of stimulating needs in low
period during avoiding pricing cannibalism.
Rationale of Revenue Management-
Revenue management is important process within the travel and tourism industries
because it allows organization to anticipate optimize and demand availability or valuation for
gaining the best possible financial outcome. According to this industry can identify their
customers need and wants that maximize their profit margin more than the other organizations.
Through this process tourism industry can decently implement revenue management to gain the
coveted results which help them to manage entire operation system.
Principles of Revenue Management- Market segmentation: market segmentation is an effective way that is based on extensive
decimal research centering in huge numbers of person and grouping all of them together
settled upon common characteristics such as behavioral patterns, demographics and
cognition ratings. It is the best way to get information about customers and other people
in Country.
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 Demand forecast and displacement analysis: It is the second stage of revenue
management principles, that help industry to calculate the values of the group compared
to transient while generate by contrast. . It is very useful in tourism sector to predict the
most probable stage of needs that is liable to occur in light of circumstances.
 Information systems: Information system help travel and tourism industry through
collect, process, distribute data and other details of the tourists and also the trend of
current marketplace.
Application of revenue management tools in Thomas Cook
 Competitor analysis: Competitors analysis will help Thomas cook to identify its
business rival in the world. Thus, to know about the competitors' industry can implement
their strategies and make new plans to get its business more profitable and successful in
marketplace. Through identify rivals they can execute more planning that help them to
generate more profit.
 Dynamic pricing: According to this process Thomas Cook offer its customers a dynamic
costs facility that can increased their profit more than now. They need to make flexible
pricing structure that it can be changed according to the current and future market
environment. Thus, all these changes may be maximize their profit margin more over the
other tourism and travel industries in UK.
 Forecasting: Forecasting process helps to predict customers’ needs and demand that they
had expected to Thomas Cook. This is the effective way to generate more profit and
maximize the growth of travel and tourism business. Forecasting is the best process that
increase profitability and productivity of industry and also helps to supply products and
services to people according to their wants or requirement.
 Price optimization: Price optimization is the process of setting prices for products and
services and other facilities of Thomas Cook. It will be helpful to know the respond of
customers about the different prices through various channels. Thus, for this they can
increase their profit and generate more as compared to other industries.
Impact of pricing strategies on revenue management of Thomas Cook
 Pricing at a premium: Pricing strategies is used by the Thomas cook for price their
goods and services. Pricing at a premium impact on revenue management of tour
operator. According to this process, industry set their service and products cost much
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higher than its competitors to raise more profit. Premium pricing is effective in current
goods' life cycle and abstract for tour operator that sell different products. They offer high
cost facilities to customers that need to perceive goods as being value the higher cost tag.
Tour operator need to serve services to customers according to their need and
requirement that increase its business profitability.
 Economy pricing: economy pricing will increase revenue profit of tour operators. Under
this process they can set their prices for products and services in different stages. They
offer goods to customers according to their demands under the cost affordability. They
set the prices for every level of people that generate more profit in Thomas Cook.
 Pricing for market penetration: Penetration strategy purpose to attract customer by
offering low cost on products and services. Many companies used this method to grab the
attention away from its competitors. Tour operate apply this strategy to attract more
people towards their business and raise profit margin by selling goods to consumers. It
also helps industry to stand out from the gang and run their business in effective way.
Thus, after a long process of penetration tour operator can often raise their prices to give
better reflect of its position in marketplace.
 Price skimming: Price skimming is designed to help tour operator for maximize sales on
new goods and services, cost skimming include setting prices in high during the prefatory
phase. It is the beneficial way that allow tour operator to increase their profit on daily
adopters ahead dropping rates to attract more cost sensitive customers.
Critically analysis of principles of revenue management
As per Wang, X.L (2015), if Thomas Cook applied the principles of revenue management
in their travel and tourism business so that they can generate more profit. Through this process
they offer services to people according to their preferences that help to build strong relationship
among them. Thomas Cook will serve their services in proper way by following all the principles
of revenue. On the other side if they cannot complete the demands of people then it will result in
decrease its business profitability and growth. It will also impact on their services and products
supply process which directly affect its profit margin. They have to face many problems in
business by not applying the activity of revenue management principles. This will be minimize
their profitability and lower down its market position against its competitors. Both negative and
positive impact will straightly affect the business growth and success process. Positive reaction
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build good image in market area and negative decreased the brand image or position much lower
than other industries.
Types of financial statements
Thomas cook financial statements
Four types of financial statements-
1. Income statement: This statement reveal the financial performance of industries for the
whole reporting time period. It started with sales and after the subtracts out all disbursal
incurred during period to succeed at net profit or loss.
2. Balance sheet: This report reflect the financial position of organization as of the report
date. The details are aggregate into basic classification of liabilities, resources, and
equity. It is the key document that is included in issuance of financial statements.
3. Statement of cash flows: This report show the cash outflows and inflows experienced by
company during the reporting time period. It is broken down into three stages which are
investing activities, operating activities and financial activities. It is the most common
problem for outside parties and also be very difficult to manage.
4. Statement of changes in equity: It documents all modification in equity during the
coverage period. It includes the purchase or issuance of shares, profits and losses,
dividends of organization.
Reporting techniques
1. Inventory report: It is a summary of products that Thomas Cook serves to people. It gives
a comprehensive report of the supply of different items and stock industry. Firm used this
techniques to make collection of supply goods and service to customers. This will help
them to get the best resource data that help to identify its potential capability. This report
is written in proper way that clears all the outside and inside profit and supply of goods. It
is written in simple method that will be able to understand easily.
2. Job cost report: This report define the overall loss and profits statements of Thomas Cook
business. This system assigning manufacturing price to individual good or batches of
goods. It is very helpful technique which Thomas Cook is used to know about the all
generating profit margin in their business and also for getting the loss details and reasons.
It is basically used when goods manufactured are easily different form each other.
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3. Budget report: It is an internal report used by Thomas Cook management to evaluate the
estimated budget project with the present performance account. Every management level
decided their budget and make report according to it. Then give this report to the industry
management who decide and give final judgement about this reports.
The importance and value of making budgets
Budget is the process of making plans to spend money. It is very important and valuable
in business because of this Thomas cook can control its business performance like spending
money in making goods. Through making budget they get many opportunities for succeeding in
marketplace.
Budgets making is very important process that has to follow by the Thomas Cook
industry to manage their travel and tourism business. It helps to create a selling or spending plan
for money, it will ensure industry that they have enough profit for the other things that they need
to do. It will always help firm to keep out of conflicts and also support in making business more
successful against to its market competitors. According to this process Thomas cook concentrate
on reducing costs, cash flow and other activities that increased or decreased profit margin.
Through making budget they can identify its capability of supplying services and goods to
customers and create some other plans which needed to improve the business position much
better than the other industries.
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Financial statements and report of Thomas cook
Figure 1: Income statement
[Source: Thomas Cook Group PLC TCG, 2018]
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Illustration 1: Cash flow
[Source: Thomas Cook Group PLC TCG, 2018]
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Illustration 2: Balance sheet
[Source: Thomas Cook Group PLC TCG, 2018]
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Illustration 3: Balance sheet
[Source: Thomas Cook Group PLC TCG, 2018]
Thomas Cook business revenue get increased in present years that reached at £9,584.
Their cost revenue also raise in better way and across at the level of £8,941. But on the other side
firm total assets decreased much lower than the past years and the total is £6,569. The revenue
of Thomas Cook is increased day by day at giving their good services and products to customers.
They generate their profit margin by achieving objectives and goals of their travel and tourism
industry (Wahlen, Baginski and Bradshaw, 2014). Thus, by operating management
unsuccessfully they get decreased earning profit or share more than present situations. Through
good work performance Thomas Cook generate more and more success or growth.
Business performance on bases of financial statements
Thomas cook business performance gets improve by serving good quality services to
customers. They can generate more profit in their business by supplying their goods and facilities
to people effectively. Its staff performance getting much higher that impact on its business
growth and cost effectiveness. Their revenue and total assets going higher which developed their
business success more and more. According to this they can be able to beat their competitive in
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marketplace. So, for that they need to make some more new or different plans and strategies
which help firm to improve their business more or developed position in higher way against to
the other organizations.
PART 2
Stages Human resource life cycle
Human resource life cycle is revolved around the employee's and Thomas cook industry
and its management structure. This concept defines the various stages of worker's time within
industry and role of HR department which play at every level. Job role of Human resource
manager is very important organization.
 Recruitment: Business growth is based on effective employees. HR management
recruit right people in Thomas Cook industry that help them in making their business
much better. The recruitment process is very helpful for raising work performance
and maximize the profit margin.
 Education: HRM should know about their role and responsibility in Thomas cook
industry. They have the knowledge of all policies and rules that made by the
government which help them in making any decision of business growth and success.
 Motivation: Motivation is the best way which increased work performance of people
in workplace. Through motivation HRM increased the interest of worker's toward
their work that developed more opportunities of business success.
 Evaluation: Human resource evaluate employee work performance in work areas. It
analyzes employee's need and requirement at workplace that impact on their work
performance.
 Celebration: It is the best opportunity to regenerate staff members and employees for
their good work. Celebration increased their interest in task which has been given
them in daily basic routine. It is the way to reflect appreciation to them for their hard
work performances. It will develop their worker's talent more than now.
Performance management plan
 Planning: HR of Thomas Cook make new plans and strategies that increased performance
of their employee's. They need to build good communication and collaboration
environment that raise the work performance of people in effective way. Planning is the
best way for managing their role duties in travel and tourism sector.
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 Monitoring: Human resource has to focus on people working activity that help them to
know about their performances. Monitoring is the effective way to get all the information
of employee's and other staff members. They also used various techniques that resolved
the issues and spread the positive environment around the workplace. Variable gags are
the best method to monitor people work performance in Thomas Cook.
 Developing: HR also need to develop their skills through training and development
session. According to this they can improve their performance much better than now.
Thus, for this it can be used different techniques and methods that help to improve their
knowledge and remove negative behavior. Development help to resolve issues of HR and
other staff members.
 Rating: According to good work performance they get the highest rating for their hard
work. HR of Thomas Cook will also give rating to its employee's as well.
 Rewarding: Through good performance of HR they also got reward that increase its
interest in their work. Thus, all the stages will improve their management and whole
structure of business. Skilled and Knowledgeable HR help their staff members by
resolving their issues and make them comfortable in workplace.
Importance of HR life cycle
HR life cycle is very important for managing and controlling the overall business
activities of Thomas Cook. They make plans for securing future and current competitor
environment impact on organization. They also help its employee's by solving their problems
and managing their work that will be increased their interest. Through this process they can solve
the problem of staff retention industry.
Strategic talent create the higher performing workforce that help in the process of HR life
cycle. According to this activity HR focused on employee's performance function and evaluate
the weakness that make barriers in their effective work performances. Through identify conflict
and issues of people they can resolve this faster that helps in retaining employees within
organization for longer time.
Judgement and recommendations for improving effective talent
Thomas Cook tell HR about all the rules and regulation of their business that will be
helpful to improve their talent much better and also help to make their plans according to their
life cycle or role of duty. They have to know about all the policies of employment that help to
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give their services according to it. All knowledge of industry policy give people better services
and facilities like health and safety facility.
Training and development session is the best recommendation to Human resource to
improve their process and documents. Through this process they can improve their talents or
their employees as well as. Improvement help HR in the process of making plans for business
growth and success. They need to have all the knowledge of policies made by the government
and need to follow during playing their job role.
PART 3
Legal issues affecting travel and tourism sector
The legal issues affect the business of travel and tourism such as its various operations
etc. Thomas cook have to follow various laws and regulation such as consumer protection laws,
employment laws etc. Legal issues may arise if the organization is not following the laws and
legislation which hampers the brand image of the firm that will reduce its customer’s base and
profitability. The organization can face legal issues if the firm is not following employment
laws and consumer protection laws and misleading its customers which will be a crime and the
organization have to face the consequences for the same. For example, If Thomas cook is facing
legal issue relating to providing false information to the customers about their services which
will have a negative impact on its brand and will reduce its customer’s loyalty.
Legislation that Thomas cook have to adhere to
There are various laws and regulation which travel and tourism have to adhere to in order
to perform its various activities (Milligan, J. and et.al., 2017). The laws relating to consumer
protection, environmental laws, trade discrimination act etc.
Consumer protection Law : It is the legislation that provide framework for the
misleading and false statements. The false and misleading statements can be made in relation to
information regarding the tour packages etc. Thomas cook have to provide accurate information
to customers about the tour packages and must not mislead them by charging higher prices for
the packages (Howells and Weatherill, 2017). If there are any misleading or false statements
provided to the consumer than the organisation have to pay the penalty or punishment for the
same.
Trade discrimination act : This act provide rules and regulation for protecting customers
and people who have suffered from misleading description. Thomas cook must provide true
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information without discrimination. If the consumer provided with the information which is
against the law, then the organisation will be punished for such discrimination.
Environmental laws : The travel and tourism organisation have to follow the legislation
regarding the environment to reduce various environmental problems which affect the economy
and the health of public. The environmental laws are regarding pollution, waste disposal at the
destination place by the tourist etc. which make the destination place unattractive and can cause
serious health diseases. Thomas cook ensure that proper awareness is maintained regarding the
environmental laws to reduce various problems relating to environment.
Impact of employment law, company law and contract law on business decision making
Employment law: Thomas cook have to follow various employment laws that includes
equality law, discrimination law etc. According to equality law the organisation have to provide
equal treatment to its employees and provide fair wages to workers to provide them
encouragement and motivation to workers to work with the organisation (Milligan and et.al.,
2017). This law have its Potential impact on the business decision of Thomas cook because if the
organisation does not follow these laws which will demotivate their employees as the
organisation will treat the employees unequally. Discrimination act in the employment law
provide guidelines to treat the employees without any discrimination on the basis of age, gender,
religion etc. for example providing wages unequally will increase the employee turnover which
will affect the decision making.
Company law : this law provide rules and regulation for the company and if company
does not follow the framework provided by the company law can affect the decision making of
the organization. This law provide information about the disclosure of information in the
financial statement and various other information which can affect the decision making of
Thomas cook if the information is not disclosed properly. For example, company is not
following the standards provided under company law will decrease its brand image and the
investors will be reduced which will impact on decision making of the firm.
Contract law : This includes the agreement made between both the parties which make
the contract enforceable. The law includes contract for package holidays etc (Peel, 2015). This
contract is formed between the customer and the company in which customer state its demands
and the tour operator make sure that the demands of the customer are met. After the demands of
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the customer are met is the responsibility of the tour operator to provide the services. For
example, contract for package holiday will have its impact on decision making.
Implications of regulations
Consumer protection Law, Trade discrimination act, Employment law all legislation will
impact on decision making of Travel and tourism industry. They have to follow all these laws to
run their business smoothly and much better than its competitor. Industry need to give their
rights to people and other staff members as decided to government laws and rules. It affects the
whole process of their business structure that need to be work on it.
Regulation and legislation both impact on travel and tourism sector in positive or
negative way. Some roles and policies does not adjust in their working styles that might be
impact on firm productivity and also make barriers in the process of supply goods and services to
customers.
On the other side legislation and regulations make business process in manageable way.
Through legislation they offer facilities to employees and customers according to their rights or
legally that meet with their needs and requirements. Regulations make barriers in business
function and activity that they give to achieve its objectives and goals.
Impact of regulation, ethical principles and legislation
Travel and tourism industry get impact by government regulation, ethical principles and
legislation. They need to focus on each and every stage of all the laws that is made for human
rights. They have to perform their business activities according to it and give employees proper
job satisfaction. Thus, for following all the stage they need to modify its structure and rules
regarding to legislation. Regulation has affect their business rules and policies at higher level.
Political factors or local authority influence on the process of decision making and make
it critical for manger or other departments of organization. Formal and informal rules and
policies of government affect the business growth and profit margin.
Regulations are stages that governed by the government that has to be followed by
Thomas Cook like paying taxes on transporting activity. That impact on decision making
function thus, for that firm need to modify their business transport structure accordant to
regulations. It is much costly process because it need to be recreate properly as per related with
the rules. On the other side it might be positive in way regarding to the regulations Thomas cook
operate its businesses set lined by the government.
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Legislation and ethical principles both impact on decision making activity inside the
organization. It might be positive because ethical principles guides to perform work which is
beneficial to business and firm growth. By following there Stages Company or manager can take
their decision according to the responsibilities of their jobs. Laws and legislation manage
business activities and operate operations effectively. Through this firm and manager both take
their decision accordant to legislation such as employee's legislation.
CONCLUSION
It has been concluded that travel and tourism business will affect the whole country and
other organizations businesses in positive way. It also defines that legislation and regulation
impact on decision making of tourism industry that will changed their whole process of work
performance in each and every sector. In this report will explain the effect of employment law,
company law and contract law on business decision making process that influence entire work
performances of employees.
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Howells, G. and Weatherill, S., 2017. Consumer protection law. Routledge.
Milligan, J. and et.al., 2017. Looking Toward the Future: Different Avenues for Attacking
Employment Discrimination.
Oladapo, V., 2014. The impact of talent management on retention. Journal of business studies
quarterly. 5(3). p.19.
Peel, E., 2015. Treitel on the Law of Contract (Vol. 414). London: Sweet & maxwell.
Vellas, F., 2016. The international marketing of travel and tourism: A strategic approach.
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Wahlen, J., Baginski, S. and Bradshaw, M., 2014. Financial reporting, financial statement
analysis and valuation. Nelson Education.
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