Thomas Cook Group: A Travel and Tourism Business Toolkit

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THE TRAVEL AND TOURISM BUSINESS TOOLKIT
Thomas Cook Group

Table of Contents
INTRODUCTION........................................................................................................................3
ABOUT ‘THOMAS COOK’.......................................................................................................... 4
PART 1:..................................................................................................................................... 5
LO1....................................................................................................................................... 5
REVENUE MANAGEMENT.....................................................................................................5
RATIONALE OF REVENUE MANAGEMENT............................................................................5
PRINCIPLES OF REVENUE MANAGEMENT............................................................................5
HOW REVENUE MANAGEMENT TOOLS CAN BE APPLIED IN THOMAS COOK.......................6
INFLUENCE OF DIFFERENTIATED PRICING STRATEGIES ON REVENUE MANAGEMENT IN
HOTEL INDUSTRY..................................................................................................................7
LO4....................................................................................................................................... 8
DIFFERENT FINANCIAL STATEMENTS AND REPORTING MECHANISM FOR THOMAS COOK. 8
THE IMPORTANCE AND VALUE OF BUDGETS.....................................................................14
INTERPRETATION OF THE FINANCIAL STATEMENTS AND REPORTS IN THOMAS COOK.....14
PART 2:................................................................................................................................... 16
LO2..................................................................................................................................... 16
THE DIFFERENT STAGES AND IMPORTANCE OF HR LIFE CYCLE FOR A JOB ROLE OF
GENERAL MANAGER...........................................................................................................16
A PERFORMANCE MANAGEMENT PLAN FOR A GENERAL MANAGER................................17
PART 3:................................................................................................................................... 20
LO3..................................................................................................................................... 20
SPECIFIC LEGISLATION THAT TRAVEL AND TOURISM ORGANIZATIONS HAVE TO ADHERE
TO WITH EXAMPLE.............................................................................................................20
THE POTENTIAL IMPACT OF EMPLOYMENT COMPANY, AND CONTRACT LAW ON
BUSINESS DECISIONS..........................................................................................................21
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THE IMPLICATION OF THE REGULATIONS AND STANDARDS ON DECISION-MAKING.........22
CONCLUSION.......................................................................................................................... 23
REFERENCES........................................................................................................................... 24
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INTRODUCTION
Travelling becomes a quintessential part of the lifestyle of the majority of people around the
world. With the increasing interest of customers towards travelling the tourism
organizations are focusing on developing differentiated products and services to cater to the
rapidly changing needs of the customers in the industry. For providing prompt and quality
services, the organizations have to manage the different business functions efficiently. In
order to successfully operate, an organization should have a proper understanding of the
finances or revenue management, legal responsibilities as well as management of the
Human resources within the company. Therefore, in the context of the Thomas cook Group,
this report would discuss the key aspects and management of Finances, revenue, human
resources and legal obligation in the travel industry.
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ABOUT ‘THOMAS COOK’
The company is one of the prominent travel groups in the international market with total
sales of around £9.6 billion during the last year. It has been founded in 1841 and based in
London, England. Presently, it operates in around 16 countries with the contribution of
21,000 colleagues across the globe (Thomas Cook Group, 2019). It has 186 own-brand hotels
and resorts and 100+ aircraft.
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PART 1:
LO1
REVENUE MANAGEMENT
Revenue management is attempted to maximize the revenue of the overall organization by
using the varieties of tools and techniques to make the appropriate decision. Revenue can
be termed as the total amount of sales gained at a particular time. the term revenue
management could be well-defined as retailing a product or service to the right buyer, at
the right time, place and price (Kimes, 2011).
RATIONALE OF REVENUE MANAGEMENT
Revenue management is performed to increase the profit through analysing, evaluating and
developing strategies for managing the flow of products and finances in the company. In the
service organizations like restaurants, hotels, cruise lines, railways and airlines etc. where
reservations are taken for perishable products and demand and supply of products
fluctuates with the season, revenue management should be applied. The key objective
behind revenue management in every hotel is to maximize average revenue per available
room (Ivanov, 2014). Thomas cook uses revenue management for forecasting demand,
seasonality and capacity planning and management in the company.
PRINCIPLES OF REVENUE MANAGEMENT
 Market segmentation: market segmentation allows to target and souk to different
customer groups to match their needs and requirements effectively. With market
segmentation the business travel trends among different customer groups can be
effectively identified such as length of stay, cancellation rate, revenue per room and
no show ratio etc. that would support in effective revenue planning (Zangador, et al.,
2016).
 Forecasting demand: demand forecasting is very important for effective revenue
management. The demand could be estimated by evaluating historical data like
room type, rate, stay time, and advance bookings etc.
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 Forecasting budget: the budgets can be developed by segmenting the market in
room nights and revenue. A combination of historical data and OTB can be used for
making appropriate budget forecasting (Zangador, et al., 2016).
 Pricing and inventory management: inventories for hotels are rooms or for airlines
seat. An effective pricing and inventory management system simplify to manage
booking, prices, as well as the distribution of inventory across the different channels.
 Information systems: a hotel management software system should be used to
keeping track of the customer behaviour, demands and requirements to make
effective decisions (Zangador, et al., 2016). Customer's feedbacks could be useful in
improving the service quality and management at the hotel.
HOW REVENUE MANAGEMENT TOOLS CAN BE APPLIED IN THOMAS COOK
The revenue management system is developed for increasing the revenue of the company
by holding high rates during on-season and reducing rates during the season of low demand.
The different tools and techniques of revenue management that could be applied in Thomas
cook are;
 Capacity Planning: capacity planning involves the development of capacity strategy
by determining the facilities, labour, land, place, resources, materials and machines
to deliver effective services (Mauri, 2013). Demand forecasting: this technique is used to match and plan available capacity
according to the estimated demand for effective revenue management. It is done for
a specific period for forecasting number of units to be sold in a particular time in
future. Discount allocation: it involves the allocation of fixed or variable discount to a
product price to earn a greater profit. It is the process of decreasing selling price
without marketing down the list price. For examples; selling the perishable product
at reduced or discounted rates during the off-season. Duration control: under this, the staying patterns are analyzed to make sure that no
room left vacant for longer time (Mauri, 2013). For example, placing time
restrictions on accepting bookings to protect room for multi-day reservations would
support in earning a higher level of revenue.
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 Simulation techniques: it is used to determine the unit price in terms of the
dependent variable by changing the independent variable for a specific product. The
differential pricing strategy can be effectively used under this technique (Mauri,
2013).
Revenue management can support the company in combining fixed capacity with perishable
inventory and help in managing the impact of fixed cost structures. Thomas Cook can
effectively implement revenue management tools to understand the customer’s demand
and expectations and generate maximize profit.
INFLUENCE OF DIFFERENTIATED PRICING STRATEGIES ON REVENUE
MANAGEMENT IN HOTEL INDUSTRY
The differential pricing strategies are related to shifting from high –volume booking to high-
profit profit bookings. It uses more precise measures to set product pricing according to the
demand. Differential pricing involves measuring the demand to determine when to increase
the price or when to decrease the price to gain maximum profit for the company (Kimes and
Anderson, 2011). It also supports in balancing risks of overbooking against the possible
losses raised due to early departure, cancellations and no-shows. Thomas cook can
effectively use differential pricing strategy to control or limit the supply of rooms. The
differentiated pricing strategy has both positive as well as a negative impact on the hotel.
POSITIVE IMPACT
 Helps in optimizing sales and revenue by selling the product at a suitable price
according to the customer.
 It helps in establishing varied price points to cover the price of the products by
charging higher cost during peak season and low-price during off-season.
 It helps in capacity planning.
 It supports in attracting customers and creating customer loyalty (Kimes and
Anderson, 2011).
NEGATIVE IMPACT
 It may affect profitability and reduce revenue.
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 There are chances of consumption of profit by customers by purchasing the product
at a discounted price and selling it again at a higher cost to another customer.
LO4
Financial statements of a company enable the company and its stakeholders to have a
proper understanding of the financial status, business performance and cash flows of a
business (Brigham and Houston, 2012). Investors analysts and creditors of company support
in evaluating the financial health and earning potential of a company.
DIFFERENT FINANCIAL STATEMENTS AND REPORTING MECHANISM FOR
THOMAS COOK
INCOME STATEMENT: This shows the net income of a company for a specific time that is
indicated in the headline of the statement. It is also known as the statement of earnings,
statement of income, profit and loss statement (P & L) or statement of operations (Brigham
and Houston, 2012). It shows the financial capabilities of a company by calculating net profit
and loss.
[Source: Thomas Cook Group, 2018]
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STATEMENT OF COMPREHENSIVE INCOME: it represents the results of operations and
other comprehensive income of a company. The comprehensive income involves the profit
and losses that cannot be reported in the income statement of the company, for example,
translation adjustments, Revaluation surplus or unrealized gains for a particular period
(Brigham and Houston, 2012).
[Source: Thomas Cook Group, 2018]
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BALANCE SHEET: it is a statement of monetary position that informs about the assets,
liabilities, and shareholder’s equity account balances at a particular time. Generally, a
balance sheet is prepared at the end of a financial year i.e. December 31. A balance sheet
encompasses three key elements i.e. Assets, liabilities and capital. The total amount of
assets should be equal to the total amount of liability plus capital (Brigham and Houston,
2012). The balance sheet of Thomas Cook for the previous financial Year is presented below;
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[Source: Thomas Cook Group, 2018]
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