Rooms Divisions Department - Occupancy and Room Revenue - Assignment Example

Introduction Hotels offer an array of services and accommodations, for instance reservations, public dining and banquet facilities, room service, hair care, lounge, laundry, business services, and personal services, as well other recreational activities. All these services are aimed at providing revenue to the hotel. This is often attained through occupancy of the rooms. A study carried out by the UK Lodging Industry in 2009 reported that the majority hotel’s revenue approximated at 63.2 percent was accrued from the sale of rooms (VisitEngland, 2013). As a consequence, the paper will discuss the occupancy and room revenue focusing on the major aspects of measuring and maximising them. Discussion Revenue/Yield management Revenue or yield management is very crucial aspect of any hospitality business. Revenue management is defined by Cross as the application of disciplined analytics so as to predict the behaviour of the micro-market, as well as optimising the availability of products and services, along with price in order to maximise revenue growth (Cross, 2007, p.14). The major aim of revenue/yield management is to sell the right product to the right customer, for the right price, at the right time, and with the right pack. Mauri (2013, p.112) points out that yield management utilises data driven tactics along with strategy to make decisions on when to sell, what to sell, whom to sell and at how much so as to increase revenue. Yield management also increases the revenue using the demand forecast-technique that is used to establish if room rates need to increased or lowered (Cross, 2007, p.48). Basing on the economics of demand and supply, when the supply is low and demand is high, the room prices are increased. On the other hand, when the supply is high, and demand is low, the room prices are reduced. Sales techniques that rooms division staff can use to promote and maximise revenue There are various techniques that a hotel’s room division staff may use to promote and maximise revenue. These strategies are based on pricing, inventory and channels, as well as marketing (Cathy & Powers, 2007). First, revenue generation can be maximised through selecting the best blends of predicted demand for the existing prices. The use of sophisticated technology and optimisation algorithms needs to be geared towards selling the right quantities of inventory at the right price. Another technique is through the creation of a more dynamic and targeted pricing in the form of promotions and pricings in order to more accurately match demand and supply. The business entity may employ price markdown optimisation so as to maximise the revenue from the end-of-season items. In addition, Hanks, Cross, and Noland (2011, p.22) argue that strategies that drive promotion roll-off, as well as discount expirations, allows firms to increase revenue from the newly acquired customers. Fourthly, the business enterprise can discount products and services so as to increase volume. By lowering product and service prices, the organisation will be able to overcome weak demand along with gaining market share. This increases revenue on condition that every product sells more than its marginal cost. In instances where there is strong demand but the threat of cancellations looms such as hotel rooms, the firm can overbook to maximise revenue from full capacity (Mauri, 2013, p.32-36). Pursuing this further, so as to increase sales, the sales department needs to incorporate online selling techniques such us through the use of social networks (Facebook, LinkedIn), video-sharing sites (YouTube), micro-blogging sites (Twitter), and photo sharing (Instagram), among many others. To the sales department, the use of social media makes researching of the customers much easier, thus having knowledge of what makes them to purchase. According to Koo (2013), the use of social media permits the salespeople to view what their prospect’s opinions are, in relation to their brands and competitors. Finally, according to Walker (2004:108-111), price discrimination using differential rates and tariff structures maximises occupancy. This is attained by having different rooms for particular clientele that are priced differently. When the customer comes, he/she will pick a room that best suits his/her taste and preference. Purpose and use of forecasting and statistical data within the rooms division Forecasting can be used to project the number of casual people that will be employed during particular seasons such as peak and off-peak seasons. It also assists to create a statistical relationship between revenue, number of rooms occupied, and workforce. It also enables the management to determine the workforce diversity. It also enables the management to establish if there is an increase or decrease in business travel, along with need for technology. The statistics can also be utilized to determine the amount of time required to implement possible changes (Pizam, 2010). Lastly, it assists in greening of hotels and guest rooms (Hanks, Cross, and Noland, 2011, p.27) Rooms division performance indicators to measure the success of accommodation sales Occupancy statistics Percentage of occupancy= Rooms available/Total rooms available 180÷21 = 0.84 %. Double occupancy percentage = (Total number of guests-number of rooms occupied) ÷ number of double rooms occupied (260-180) ÷ 70 =1.14 % Conclusion The major purpose of yield management is to sell the right product or service to the right customer, for the right price, at the right time, and with the right pack. Inventory control creates efficiency thus increasing the revenue for the business enterprise. A successful pricing strategy that is supported by an analytical-based pricing technique rapidly improves a firm’s profitability and revenue. Revenue managers can manoeuvre demand and supply statistics in order to reach optimal results since the hotel industry is cyclic. Reference list Cathy, H. C., & Powers, T. (2007). Marketing Hospitality. New York: John Wiley & Sons. Cross, R. (2007) Revenue Management: Hard-Core Tactics for Market Domination. New York, NY: Broadway Books. Hanks, R., Cross, R. and Noland, R. (2011) Discounting in the hotel industry: a new approach. Cornell Hotel and Restaurant Administration Quarterly 33(1): 15–31. Koo, T. S. (2013, October 22). TINT. How to Increase Sales with Social Media: http://www.tintup.com/blog/how-to-increase-sales-with-social-media/ [Accessed May 28, 2014]. Mauri, A.G. (2013), Hotel Revenue Management: Principles and Practices, Pearson. Pizam, A. (2010). Principles of Hotel Front Office Operations . London: Prentice-Hall. VisitEngland. (2013). Hotel Accomodation. Palace Street, London: VisitEngland. Read More