Introduction to Room Division in Hotel Industry
Division of room is one of the most important task that is performed in hotel industry because at operational level significance of this task is very high. Current report explains about the various tools such as revenue management, forecasting and statistical tool, which can include occupancy percentage, average daily rate etc. Five season hotel is a company operating in hospitality industry (Bennett and et. al., 2011).
They have large number of customer database in many countries. They are known for quality service and different variety of rooms that are available in their hotels. Their mission is to provide proper facilities to the customers who book and reside in their hotel and they want to expand their business in many countries. They believe in offering competitive price, so every class of customer can afford their services and memorable experience can be given to them (Hall, Timothy and Duval, 2012).
1. Explaining of Revenue/Yield Management
It is essential for hotel business organizations to sell their room to customers and charging a right price. This is one of the complex and competitive tasks to set a price which can provide desired profits and revenue. Therefore, the company is required to use various tools and approaches in order to manage their revenue and profitability in an effective manner (Yoshioka and et. al., 2012).
It is a technique which used to increase revenue in various sectors such as hotels, airlines etc. In the context of given case, the firm can use this method in order to increase maximum revenue by selling their room to its customers. In hotel industry, daily room performance is based on occupancy percentage or average daily revenue. For this, company can use various strategies like discounting in order to increase occupancy rate and revenue (Fortier and et. al., 2011). This process is known as revenue and yield management.
Potential Average Single Rate
PASR formula = Revenue at 100% single occupancy/ Number of room sold
PASR= 55*3000/180 = 2062 (Approx.)
Potential Average Twin Rate
PASR formula = Revenue at 100% Twin occupancy/ Number of room sold
PASR= 55*2800/180 = 850 (Approx.)
Potential Average Double Rate
PASR formula = Revenue at 100% Double occupancy/ Number of room sold
PASR= 70*4000/180 = 1555 (Approx.)
It is related with the price discrimination strategy where cited business organization can charge different rates from its customers for the same category of rooms. These prices can be set according to the customer needs and their behaviour as well as they provide discounting rate for advanced booking (Kuninobu and et. al., 2013).
This is another strategy which can be used at the time of overbooking by hotel manager in an effective manner. In the peak season; number of customers is too high due to which it is required to cancel advanced bookings.
2. Analysing Sales Techniques Used To Promote And Maximise Revenue
In the hotel industry, customers can be divided into different classes according to their needs and behaviour. For example, the business entity can divide their rooms in to economic, corporate and luxurious class. It will help to generate maximum revenue and profitability which is the common goal and objective for each and every firm (Koc and et. al., 2014). Apart from that, there are various sales approaches which can be used by business corporation which are given as below:
It is a situation where the total number of rooms are reserved in the peak season. In this situation, it is essential for hotel businesses to use revenue management schemes in order to increase firm’s sales and profitability (Shekelle and et. al., 2011). Therefore, this is the responsibility of hotel manager to analyse historical data and calculate maximum overbooking level in the hotel.
With the help of such tool, they can attain 100% occupancy rate which is too significant in the accommodation service sector. Overbooking practices also help to increase the efficiency which can lead to earn higher profits and overcome the potential risks on their business (Law, Buhalis and Cobanoglu, 2014).
Customer Loyalty Schemes
This is another approach which can be used by the company in order to increase their revenue and sales. In this tool, manager can provide reward system to its customers. With the help of such program, they can influence buying behaviour and purchasing decision of its customers. Apart from that, they can also provide discount or pre-booking services in the peak season (Landgraf and et. al., 2012).
3. Evaluating The Usage Of Forecasting And Statistical Data In The Room Division
Forecasting can be defined as a tool of management which helps the organisation to make an attempt to cope up with the uncertainty that can arise in the future. This is to plan in advance from the data available from past records and in the present context. Forecasting starts with some basic assumptions on the basis of company's experience, judgement and knowledge (Fortier and et. a