Travel and Tourism Business Toolkit: A Case Study of British Airways

Desklib provides past papers and solved assignments for students. This project analyzes British Airways' business operations.

TRAVEL AND TOURISM BUSINESS
TOOLKIT

Table of Contents
Introduction......................................................................................................................................2
LO1..................................................................................................................................................4
P1 Discuss the rationale and principles of revenue management for the travel and tourism
industry........................................................................................................................................4
Pprinciples of revenue management............................................................................................5
P2 Investigate how a specific sector of the travel and tourism industry applies revenue
management tools to generate and maximum.............................................................................7
M1 Analyse the impact of differentiated pricing strategies on revenue management in a
specific sector of the travel and tourism industry........................................................................8
LO2................................................................................................................................................10
P3 Review the different stages of the HR life cycle applied to a specific travel and tourism job
role, and their importance for retaining and developing talent..................................................12
P4 Develop a performance management plan for a specific travel and tourism job role,
applying techniques to resolve negative behavior and to overcome issues of staff retention...19
M2 Evaluate the importance of the HR life cycle in relation to strategic talent management
and overcoming issues of staff retention...................................................................................22
LO3................................................................................................................................................24
P5, M3 Explore specific legislation that organisations in the travel and tourism industry have
to adhere to................................................................................................................................24
P6 Using specific examples, illustrate how company, employment and contract law has a
potential impact on business decision- making in the travel and tourism industry’..................26
LO4................................................................................................................................................28
P7. M1 Explore the different types of financial statements and reporting mechanisms for
organisations within the travel and tourism industry.................................................................28

P8 Explain the importance and value of budgets for controlling business performance and
identifying variances..................................................................................................................34
Conclusion.....................................................................................................................................35
References......................................................................................................................................36

List of figures
Figure 1: Revenue management......................................................................................................3
Figure 2: Human Resources life Cycle..........................................................................................11
Figure 3: Perform Model...............................................................................................................15
Figure 4: Income statement of BA.................................................................................................23
Figure 5: Balance sheet..................................................................................................................24
Figure 6: British Airways Cash flow statement for the year 2017................................................25
Figure 7: Statement of changes in equity......................................................................................27

Introduction
Setting up the right budget in an organisation for the valuable assets present is considered as very
important. Revenue Management was also called as Yield management as yield is referred to
production of an output or return. The revenue tools in the organisation support the revenue
managers to become more efficient, offering them efficient time for creating and implementing
strategies in various business processes. Budget act as an indicator for all the revenue and costs
for performing various business activities that can be used for cost controlling if required through
analysis. In the present report discussion has been made regarding effective business operation
the organisation need to implement various laws including Employment laws, contract laws and
company laws.
1

LO1
Executive summery
Revenue management is a new issue in the sector of travel and tourism. This concept in simple
words is to sets direction for an organisation for supporting them to enhance their revenue
through the given budget. Revenue management also deals in setting up product pricing
considering the consumer need rather the rate of supply or production. The task below discusses
the fundamental revenue management in Travel and tourism sector considering the case study of
British Airways.
Introduction
Revenue management is a proactive ways of make the most of revenue of British Airways by
selling tickets along with other perishable products at the right time to the right consumer.. In the
present task principle of revenue management along with various revenue management tool that
can be applied by the manager for maximizing the organizational business will be discussed also
with importance of differentiation pricing strategies in British airways.
P1 Discuss the rationale and principles of revenue management for the travel and tourism
industry
Revenue and yield management:
Revenue management is referred to implementation of various disciplined analytics for
predicting the behaviour of the consumer behaviour at the level of micro-market along with
optimization of effective price and product availability for increasing the revenue growth of an
organisation (Anderson, et. al., 2018). Yield management on the other hand is offering of
variable pricing strategy to the customers by the organisation on the basis of anticipating,
influencing and understanding the consumers behaviour for maximize profits using fixed or
time-limited resource
Similarities between Revenue and yield management
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Both the Revenue and yield management is the management of finance with an aim to maximise
the yield. This concept was applied firstly in airline sector. Both the revenue management and
yield implements analytics for predicting customer demands and behavior, optimize price and
attendance. According to Cross (2011), the airline revenue management is to sell right product to
right customer at right price at right time.
Figure 1: Revenue management
Pprinciples of revenue management:
The concept of revenue management of travel and tourism considering British Airways is based
on the following principles:
 Inventoryis perishable: According to this any product or services offered by BA is for
specific time period. For BA, the o ticket reservation is values till flight depart (Cross,
2011).
 Diverse customers eager to pay diverse price for perishable product: In case of British
Airways, customers choose to pay different amounts even for the same trip as per the
services offered.
Need of revenue management
The strategies revenue management is relevant in the travel and tourism sector even in case of
BA, in which the cost are mostly related to scheduled departure including salary of cabin crew,
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pilots, fuel, vehicle amortization etc. that have important share in the business budget
(Rusmevichientong and Topaloglu, 2012). The cost share needs to be acquired despite of
generated revenue from sale of flight tickets. The average revenue of BA can be acquired by the
organization by applying effective pricing strategy. And for the success of pricing strategy
applied, the marketing team of the organization need to understand the present market trends and
price offered by other organization and product value as well. For example: BA can charge high
price for the seats in business as these customer are less conscious regarding the paid price for
tickets. While, for the passenger in economic class can be offered with discounts for the filling
the flight seats.
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P2 Investigate how a specific sector of the travel and tourism industry applies revenue
management tools to generate and maximum
Tools of revenue management
Revenue managers of British Airway implement various revenue management tools for proper
functionality of the organisation. Every tool is for performing specific tasks to ease the efforts of
required performing the same tasks traditionally. Some of the important revenue management
tools that are used in BA for generating maximum profit are discussed below:
Capacity utilisation (yield per available seat): Cancellation of ticket the last moment must be
abolished. The capacity management mainly refers to over booking. The associates in the front
office must be well skilled and experience for effective decision making for deciding the
situation of over booking which can be either more than cent percent or cent percent booking. If
BA in case of certain flight timing o date fall under the situation of over booking, then BA must
be holds fight or emergency tickets for satisfying the customer along with some concession like
meals and beverages etc (Rusmevichientong and Topaloglu, 2012). The Capacity management
also determines the number of walk-ins to be accepted on arrival on the basis of expected
cancellations, late arrival, early departure or no-show.
Discount allocation: Discounting is referred to selling the flight rooms at lower price rather than
the rack rates. For BA, seat availability is perishable product. Filling the seats in lower price is
better option for the organisation through discounts rather than keeping them vacant. The sale of
the seat will also increase the sale of food and beverages. BA can offer the customer with low
price of ticket in case round trip rather than the single trips.
Duration Control: If the availability of flight ticket on a certain date says 5th November is less in
comparison to dates before and after 5th November then BA can refuse to book any online tickets
on that date through different online sites (Shaw, 2016). However, BA will choose to sell the
flight tickets on the date in case the demand for the tickets for other days rises after or before the
specific date. Duration control will support the organisation for optimizing the overall ticket
revenue for the flight.
5

M1 Analyse the impact of differentiated pricing strategies on revenue management in a
specific sector of the travel and tourism industry
Impact of differentiated pricing strategies on revenue management:
Lowering or pricing of the product price is one of the important tasks of revenue manager in an
organisation like British Airways. Differential pricing strategy in BA the organisation is to adjust
the product or ticket pricing based on different circumstances or situations. Variation of price is
of different type including offering discounts to a certain group, online ticket, rebates and
coupons etc. Thus, different customers pays different price for the same product. Differential
pricing strategy is considered as an effective and strong pricing strategy, this technique utilised
the brand name and image for offering different products to increase profit margin.
However, differentiate pricing strategies has both positive as well as negative impacts in the
British Airways.
Positive impact:
 The offered discounts for the tickets and products will be helpful got the organization to
expand its business by attracting more to customers towards the services offered.
 Lower ticket price can be effective for BA to enhance its sale through strong customer
base.
 The differential pricing helps BA to optimize the revenue by offer services to the
customer as per the value paid.
 Differential pricing strategies is considered to have strong association with the elevated
production efficiency.
Negative impacts:
 It has been found the differential pricing offers profits on discounted sales but continuity
of the same will lead to lowering in overall profit.
 If the prices of the tickets are revived back then BA can lose some of the customers
eventually that may refuse to pay full the price for the tickets.
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Conclusion
In the above task similarities anddistinction between revenue management and yield
management has been discussed. From the above task it can be concluded that effective revenue
management will support the organisation to create revenue along with increasing the profit
margin. In case British Airways, the process of revenue management can be beneficial for the
organisation with the implementation of various revenue management tools and techniques by
the manager.
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LO2
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