Thomas Cook Case Study: Revenue Management Strategies and HR Practices

Desklib provides past papers and solved assignments for students. This report analyzes revenue management, HR, and legal aspects of the travel industry.

The Travel and Tourism Business Toolkit
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Table of Contents
Introduction....................................................................................................................................3
Part 1: Sales, Budget and Revenue Management........................................................................4
Part 2: HR Life Cycle and Human Resource Strategy.................................................................11
Part 3: Legislation and Ethics in Travel and Tourism..................................................................17
Conclusion...................................................................................................................................19
Reference list...............................................................................................................................20
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Introduction
Revenue management is an important activity to generate maximum amount of revenue from
constant amount of sales of product or services. This report will be discussing the concept and
theories of Revenue Management that would help to manage the profits of the travel and
tourism industry. This report will discuss the rationale and principles revenue management in
context of Thomas Cook Company, which is in a leading position of UK’s travel and tourism
industry. A comprehensive idea on the result of effective revenue management tool in a specific
sector of travel industry will be derived from the following study. The report will assess the
diversified stages of HR life cycle and there affects development of talent in different job roles.
The ethics, values and morals of tourism industry impacts on the rise or fall of tourism business.
This study will develop a few mechanisms for management of budgets and maintenance of
financial records.
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Part 1: Sales, Budget and Revenue Management
Discuss the rationale and principles of revenue management for the travel and tourism
industry
Revenue management is the framework to maximize the revenue of an organisation although
the same amount of product or service sale (Mauri, 2013). The Thomas Cook implements the
following principles for their revenue management:
Figure 1: Principles of Revenue Management
(Source: Mauri, 2013)
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Pricing and Establishment of baseline: The organisation knows that the service provided by
them would be constant; hence, the organisation aims to set up a base line of the sales. Travel
industry differentiates the target market in several segments depending upon their income,
travel interest, perception and demands (Ivanov, 2014). This helps to determine diversified
business strategies to manage the business revenue. Thomas Cook group determines the
pricing structure of their perishable inventory in such a manner that most of the customers could
pay for that. Revenue management involves the strategies to develop a price structure for both
competitive and non competitive environments.
Analysing the reasons and scopes of demand and forecasting: This principle focuses on
the prediction of consumer’s demand and travel satisfaction (Denizci Guillet and Mohammed,
2015). Correct prediction will always help to develop effective strategies of selling and marketing
hence, the revenue would gain. The travel agencies must have a correct prediction on the
desirable destination of the travellers, proffered timing, and attractive events of the destination
to gather more travellers and increase revenue. The organisations also need to have an
overview on the competitor’s strategies, consumer’s behaviour and limitation of supply of
service. The wrong forecasting of demand will contribute to aggressiveness or
conservativeness of inventory control.
Strategic planning to develop RM: The staffs of travel agencies must get well trained in order
to get familiar with the job role and revenue management technology. The training includes both
concepts of RM and operational techniques. The tourism organisations must remodel the
existing tourism products and align them with consumer’s demand, supply capacity as well as
tourism environment (Cleophas, 2012).
Outcome monitoring: The organisations must monitor the revenue management activities and
identify the faults of the management operations. Monitoring the outcomes would help to
determine effective strategies to congregate more revenue.
Investigate how a specific sector of the travel and tourism industry applies revenue
management tools to generate and maximise profit
The revenue management tools are very important to generate maximum amount of profit from
the existing supply (Kimes and Wirtz, 2015). The managers of travel and tourism organisation
apply the tool of revenue management to develop efficient strategies that would help in profit
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maximisation. The managers of tourism department use the tools like booking engine, Price
Shopper, channel manager and lastly the Property Management System.
Booking engine: The tour manager connects Booking Engine with Property Management
System. Booking engine gives the facility to know about the accommodations of tour
destinations. This helps to manage international reservations through online payments.
Moreover, this toolkit permits international currency transactions.
Channel manager toolkit: this tool will help to manage the online inventory and prices without
signing in several portals that provide reservation facility. The managers use this tool to sale
online all the holiday packages and hotel rooms avoiding the issues of overbooking.
Price shopper: this tool helps to draw comparison between the competitor tourism
organisations. This helps to develop an effective price structure for the holiday packages. As an
example, Thomas cook sales a holiday package in 5000 pound and ABC is selling the same
package of worth 4600 pound. This is obvious that consumers will be more attracted by the
second company. Using price shopper, the manager will be aware of competitor’s selling price
and then will develop new pricing strategies to attract more consumers. Thus the revenue of the
organisation will be increased.
Property Management System: The technological tool manages the flow of work and makes
the workflow easier. The managers use this system to ensure effective execution of business
activities (Heptonstall, 2014). This saves the time and money and benefits the process of
revenue management.
Explore the different types of financial statements and reporting mechanism for
organisation within the travel and tourism industry
There are several financial statements such as income statement, balance sheet, statement of
cash flow and statement of equity changes.
Income statement: These financial statements help to analyse an organisation’s financial
statement. For the industry of travel and tourism, this statement will help to understand the
financial performance, net sales, profit and loss of the travel and tourism organisation (Brigham
and Houston, 2012). In the sector of tourism, this is admired as the most important financial
statement as this gives a grade of performance and service of a tourism company.
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Balance sheet: This includes a specific point of time to reveal an organisation’s financial
position. The balance sheet of a tourism company comprises of its liabilities, assets, equity
(Moyer et al., 2012). The balance sheet of a tourism company will indicate the liquid items of the
industry.
Figure 2: balance sheet of Thomas Cook
(Source: Thomascookgroup.com, 2019)
Cash flow statement: In the context of travel and tourism industry, the cash flow statement will
show the inflows of cash and outflows of cash within a reporting period (Brigham and Houston,
2012). This statement includes three types of cash flows namely financing activity, operating
activity and lastly investing activity.
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Figure 3: cash flow statement of Thomas Cook
(Source: Thomascookgroup.com)
Equity statement: This statement reveals all changes in equity in the period of reporting
(Moyer et al., 2012). The insurances, losses, profits and dividends of a travel and tourism
organisation are revealed through this statement.
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Figure 4: equity statement of Thomas Cook
(Source: Thomascookgroup.com)
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Explain the importance and value of budgets for controlling business performance and
identifying variances
 Budget is important to determine how much capital will be needed for the business and
how much is to be earned from business
 Budget aligns the business activities with the business objectives. This helps to improve
the performance evaluation
 This gives a platform to discuss the effectiveness of the manager’s activities to meet
organisational goal. This encourages the business areas to be more efficient
 Budgeting estimates the annual revenue, plan the expenses and restrict the
unnecessary spending that does not create value for the organisation
 A well-structured and communicated budget helps in understanding the necessities of
the business so that the company cannot spend in unnecessary business activities
 The process of developing budget provides employees opportunities to engage and
allow them to share methods for effective budget control
 Budget is important in comparing the budget with original investment so that the
company can understand the strengths and weakness of its business performance.
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Part 2: HR Life Cycle and Human Resource Strategy
Human resources include five stages in its life cycle named- Recruitment, Education,
Motivation, Evaluation and lastly Celebration (Cascio, 2015). Thomas Cook’s human resources
have its five phased life cycle that help to develop and uphold the talent and success of the
travel guides as well as the tourism organisation.
Stage of employment: This is the first phase of HR life cycle. This stage is based on proper
staffing within an organisation. In the context of the job role of tourist guide, the travel agencies
develops staffing plan and identifies those staffs that best aligns with the job roles (Noe et al.,
2017). The companies offer best packages that attract the candidates having superior talent.
The process of interview for the tourist guide includes communication tests, IQ test, active
listening and so on. The candidates try their best and improve their knowledge in order to pass
the interview. Thus the stage indirectly results in the improvement of candidate’s talent.
Education/ training stage: This stage comes after the stage of recruitment. The selected
candidates in the job role of tourist guide are undergone through the process of instructing their
job role. The company trains the candidates to get aligned with organisation’s ethics and values,
understand and perform the responsibilities, be able to manage all difficulties emerged during
travelling, communicate to the travellers and providing the best service to satisfy the customers
(Noe et al., 2017). The training activities contribute to the employee to enhance their proficiency
on their field. Moreover, the trainees get the opportunity to clarify all doubts regarding their job
role. The training makes the employee more productive hence the revenue of travel and travel
and tour Company also increases.
Motivation: The third phase of HR life cycle is turnover. The Thomas Cook Company keeps
motivating the tourist guides to create interest and attachment to the job. Only training is not
sufficient to bring out the best productivity of the employee. Motivation gives birth of self-belief
of the employees and makes a strong relationship between the tourism company and the guide
(Cascio, 2015).The motivated tourist guides are more confident and delivers their best
performance to satisfy the travellers.
Evaluation of human resources: in this stage, the employees are examined, appraised and
evaluated based on their performance. The managers or supervisors draw feedback regarding
the employee’s performance. In the scenario of tour guide, the guides are evaluated on the
basis of the output of customer service, intelligence, managing capacity, hard labour and
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honesty. The manager of Tourism Company evaluates the tour guides and gives feedback on
regular basis. This activity makes the employee tourist guide aware of their faults, deficits and
issues. When the employees start working on their faults as per the feedbacks, they start
improving. Thus, the stage of monitoring helps to retain and develop the talent of the tour guide.
Celebration: the last stage of HR life cycle is Celebration of the efforts and performances of the
employees. The tourism companies appreciate the tour guides for their service, offers several
benefits and appraisals such as incentives, gift cards, flexible work schedules to admire their
performance. This make the tour guides more satisfied with the job. Job satisfaction motivates
the tour guides to learn more to give better performance. Thus the stage contributes to develop
endowment of the employees in context of the job role of tourist guide.
Figure 5: Stages of HR life cycle
(Source: created by learner)
Develop a performance management plan for a specific travel and tourism job role,
applying techniques to resolve negative behaviour and to overcome issues of staff
retention
Months Performance management plan
January  Planning the job roles and major responsibilities of the
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HR Life
Cycle