revenue management

Tasks Background The Queens Hotel is a large, impressive and well-known local landmark in the city of Newcaster, Hertfordshire. It has 80 bedrooms, a 100-cover restaurant catering for residents and non-residents, and its own corner pub. The hotel also has four function rooms of varying size, the largest of which accommodates up to 120 people. Each room is equipped with modern conference facilities and they are used for local weddings, by some local organizations for meetings and a few regular clients holding residential conferences. The city itself has grown considerably in the last ten years. It has a strong local economy, a highly skilled workforce, an excellent location for rail, road and airports and is seen by many employers as a desirable place to be. The district also benefits from the proximity of one of the country’s leading business orientated universities. Well -known companies such as Deloitte, AECOM, PriceWaterhouseCoopers, Premier Foods and Aon Hewitt all have large office bases in the area. It also has many distributive industries such as the Sainsbury’s Retail Distribution Centre at London Colney which employs over 600 staff. The city is in close proximity to many tourist attractions. Around half of Hertfordshire has been designated as ‘Green Belt’ and there are 43 sites of Special Scientific Interest, 1 National Nature Reserve and 15 Local Nature Reserves. Farm land, ancient woodland and river valleys combine to make up the beautiful and varied landscape. The hotel is designed to appeal to both business and leisure guests. The nearest competition is provided by three four-star hotels and a five star hotel – all but the one of these is part of a chain. The hotel has recently been refurbished. The owners have spent £1.2 million on having the hotel renovated into a Boutique/ Contemporary Hotel. This hotel, and a similar establishment in the North of England, are the only two hotels belonging to the company. They are not part of a consortium because the owner is concerned that the hotels may lose their individual identities. However, it is the intention of the group to expand gradually, with hotels of similar standard and character throughout the UK. Figures in the catering press show that national room occupancy percentages have increased from 62% – 65%, with the city of Newscaster having an average occupancy of 68%. The Queens is showing only 61% occupancy for rooms, and has, in fact, declined since opening. The rooms’ occupancy percentage are generally in the 65 – 75% from Monday to Thursday, 45 – 55% for Friday and Saturday and as low as 20% on a Sunday. To maintain the budgeted room-occupancy projections for the year, the sales department have been accepting a large number of groups at discounted rates and the average room rate has declined from a budgeted figure of £150.00 to £105.00. Tasks At a meeting of heads of department, the general manager, reports that room occupancy and sales have fallen for the third month in a row. You have been asked to prepare a report for the general manager on the failure of the rooms division to meet its targets. 1. Set out the problems as you have analysed them 2. Explain how the hotel can use Revenue Management to maximise revenue. You answer should include: • A description of the how the Queens hotel should apply the revenue management cycle • Details of the data they would need to collect and review to help them analyse the problem • An overview, using examples of best practice from industry of the different strategies and tactics they can use to maximise revenue.

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