Revenue Management: Empirical Driven And Pragmatic Analysis Essay

Question:

Discuss about the case study Revenue Management for Empirical Driven and Pragmatic Analysis.

Answer:

Introduction

Novotel Sydney based on Darling Harbour operates as an effective hotel that potentially attracts different consumers belonging to business, leisure and family categories. Novotel Sydney being situated in the Darling Harbour helps its visitors to enjoy site seeing and touring facilities to different places of tourist attractions. Novotel Sydney operates as a 4.5 Star rating hotel that offers a host of different facilities to its customers like swimming pools, gyms and tennis courts. It also contributes in helping customers enjoy restaurant services from The Ternary that operates as one of the best restaurant in Sydney. Novotel also helps its customers conduct their bookings based on the development of a Smartphone application, Novotel Virtual Concierge that helps the customers in making online bookings of flights and also of hotel rooms. The application is also developed for helping the customers gain effective information associated with weather reports. Customers are also encouraged by the hotel company to generate effective views and feedbacks concerning the services generated by the hotel and also of the restaurant associated with Novotel. Novotel Sydney also entices its customers through the generation of other facilities like provision of car rentals, car parking facilities, transport services from airport to the hotels and other areas of interest in the city, laundry and dry cleaning services and also the existence of Wi-Fi services for helping the consumers enjoy hassle free internet(Novotel Hotels, 2016).

The report focuses on evaluating an effective revenue management and maximisation strategy of Novotel Sydney. It would focus on the incorporation of both empirical and case study based discussions for generation of effective understanding. Potential recommendations would be generated based on the findings carried out.

Analysis of Market Segmentation

The market segmentation in the hotel industry reflects different types of market segments that are highlighted as follows. Along the broader set the market segmentation of consumers in the hotel industry are essentially categorised as Transient and Grouped. The transient customers are identified as such customers that come in either single or in families and thereby make bookings of hotel rooms for a shorter duration. ‘Room Nights’ is an effective concept adhered to the stay of transient customers wherein the customers tend to stay overnight in the hotels and leave the following day. Grouped customers are such that focus on visiting the hotels in groups thereby requiring large number of rooms to be reserved for conveniently staying in the hotel along a specific period. The group reservations are generally carried out by the sales team of the hotel. The group reservations are observed to be business or corporate type such that the hotel rooms are booked or reserved based on corporate contacts for holding of essential conferences or meetings. The transient consumer categories for the hotel industry essentially relate to customers that focus on personal funding their tours or those whose tours are funded by their company or any other organisation(ROGERSON, 2013).

The hotel companies need to effective strategise their price offerings and product and service packages in a customised fashion for encouraging the stay of customers that essentially focus on self funding their visits. Similarly, the transient category of consumers visiting the hotels also needs to be categorised based on the purpose of their visits. The customers desiring of visiting a specific region for business purposes is taken to check out at a downtown hotel and usually focuses to stay in for a shorter duration. On the other hand, the visitor focusing on visiting a region for leisure, touring or travelling purposes focuses on staying in luxury hotels that would help them enjoy different facilities along with touring to different locations. The customers visiting the hotels can also be segmented based on age and income categories such that younger people and also people belonging to high income categories tend to visit hotels with increased facilities and amenities and also those belonging to the premium category(Ling, Guo, & Yang, 2014). The middle and lower income customers and also those belonging to higher age groups essentially focus on visiting value based hotels that generate services at lower or discounted prices. The market segmentation of customers in the hotel industry also needs to be carried out based on the marital status of the visitors. The hotel companies are required to focus on the development of effective product packages for attracting customers whether single or in family settings for staying in the hotels. Finally, consumer or visitor types to the hotels also effectively relate to such customer groups that focus on gaining visits to scenic places on a frequent basis. The developments of resorts, holiday inns, airport and other travel venue hotels and also other suburban hotels are required to be made on the above basis for helping in the accommodation of different visitor categories. The product and service packaging need to be formulated in an effective fashion for encouraging the frequent visits of the consumers(Duverger, 2013).

Novotel Hotel Sydney operates as an effective luxury hotel that focuses on attracting both transient and group customers. On the transient front, the hotel company aims at servicing both single and family visitors to the hotel along with helping the customers visit the hotel for meeting their business and touring needs. Different types of suites are designed for meeting the touring needs of the customers. The hotel has different rooms for conducting conferences and meetings while also generating effective facilities for children and adult customers to enjoy their stay(Novotel Hotels, 2016).

Competitor Set Analysis

The analysis of the competitor set for hotel companies is essentially based along different factors underlined as follows. The first competitor set for the hotel industry is identified as location or venue. Different types of venues are identified through classification like airports, highways, city centres, convention centres, rural areas and also suburban regions. The existence of different types of locations contributes in encouraging the development of same category hotels that focus on serving specific consumer categories. The availability of hotel companies at close vicinities contributes in serving customers pertaining to like segments or categories and thereby reflect same type of occupancy cycles. In other situations where the competitive landscape of hotels tend to span along a larger area like in the case of oil drilling and refinery sites hotel companies spreading across diverse towns or regions are thus needed to be accounted for generation of a competitive study. Hotels taken for comparison in a smaller area along the oil refinery and drilling sites are observed to be of bad quality for making of effective comparisons thereby requiring hotels to be incorporated along a wider scale. Again, the availability of large number of hotels along a smaller area requires the categorisation and grouping of hotels into distinct and separate categories for making of needed comparisons(Pereira-Moliner, 2015).

Apart from location, hotel brands also act as an effective competitor set. The existence of different types of hotel brands like full and limited service and also extended stay brands along with other categories like luxury hotels, upscale, midscale and also economy hotels contribute in effective comparison of hotel companies. Other additional features like the existence of loyalty programs, effective sales and customer servicing teams and also online reservation facilities contribute in enhancing the competitive landscape in the hospitality sector(Law, Buhalis, & Cobanoglu, Progress on information and communication technologies in hospitality and tourism, 2014).

Similarly, categorisation of the hotels based along product types also contributes in evaluating the level of competition among the hospitality companies. Different product types in the hospitality sector are like full-service, limited-service and also extended stay. The full-service hotels are identified to be hotels that have facilities like restaurants, lounges and other bar facilities also. Limited-service hotels on the other hand are identified to be hotel companies that have limited meeting space and offer complimentary breakfast services to their consumers. Extended-stay hotels are generally developed for hosting of guests or visitors that tend to stay for longer periods like for a week in the hotels. The hotel facilities are observed to match that of limited-service hotels. The hotel rooms of the extended-stay hotels however focus on providing customers with kitchen facilities(Chen, Lin, & Chi, 2016).

Quality standards of the product and service packages offered by the different hotels amount to be an effective competitor that helps in generation of comparison between like category hotels generating same quality of customer services. Quality standards of the hotels also require the incorporation of environmental and design elements for making of effective comparisons among the different competitor hotel firms(Pekg?n, Menich, Acharya, & Finch, 2013).

Finally, Average Daily Rates or ADRs are identified as an effective competitor set that contributes in categorisation of hotel companies pertaining to a specific region. The pricing practices of hotels is identified as an effective metric that helps the customers in segregating and differentiating between different types of hotels as value based hotels and other economy, mid and high priced hotels(HVS, 2012).

Novotel Sydney is evaluated to be a luxury hotel with a 4.5 Star Rating. It also operates as a full-service hotel in that it encourages its customers to enjoy both restaurant and lounge facilities along with a host of other facilities and services(Novotel Hotels, 2016). Other five star hotels operating along the Darling Harbour that generate effective competition to Novotel Hotel are the Parkroyal Darling Harbour operating as a 4 Star Hotel, Hilton Sydney Hotel, Marriott Hotel at Sydney Harbour and also the Pier One Sydney Harbour. The luxury hotels like Novotel Sydney also focus on generating a wide array of different services like having spa, swimming pools, gyms, Wi-Fi facilities, parking facilities, overnight booking and also effective security standards. The existence of the above features along the different hotels also helps in categorising the same as full-service hotels.

Demand Forecasting

The demand forecasting for the hotel industry is carried out both in a qualitative and quantitative fashion. The qualitative mode of demand forecasting in the hotel industry is essentially identified as judgemental forecasting wherein the hotel manager focuses on studying different symptoms and situations for making of effective forecasts regarding consumer visits. The hotel manager in this regard can focus on taking help of historical data that help in reflecting the historical movement of tourists along specific periods in the region(KULENDRAN, KING, & YAP, 2016). Further, in terms of judgemental forecasting the hotel managers also focus on reflecting the level of promotional and marketing activities conducted for the product and service packages marketed by the hotel. The generation of effective product and service packages is taken to help in attracting considerable number of visitors to the hotel at different occasional periods. Further, the planning of different types of events in the hotel is evaluated by the hotel managers would help in attracting potential tourists and visitors. The existence of favourable and unfavourable weather conditions in the region acts as an effective determinant factor that helps in deciding and forecasting the flow of tourists at different times of the year. The above factors are also used relating to the use of time series analysis for forecasting of tourist and visitor trends to the different hotels. The managers of the hotel companies can also effectively focus on evaluating the data gained from Google trends and also other data gained from the use of mobile phone apps and also social marketing based trends. The combined use of both qualitative and quantitative data gained from a host of different sources effectively contribute in making forecasting regarding customer visits to the different hotels(Croce, 2016).

Channel Analysis

The emergence of technology centric distribution channels has significantly contributed in the enhancement of revenue for the hospitality companies. The current distribution channels contribute in making the hospitality industry consumer centric in fashion. Different types of distribution channels like social media channels, applications for mobile phones and other online applications like Room key.com and Hotel Tonight are observed to have potentially revolutionised the revenue earning landscape of the hospitality companies. The growing popularity of e-commerce businesses along the social media networking platforms has encouraged different tourists and visitors for using the social media tools and sites like Facebook and Twitter in making reservations for their hotel rooms and other flight and train tickets(Robson & Noone, 2014). Hotel companies are also observed to encourage the customers for making of online bookings through the generation of effective discounts. Hotel companies have effectively introduced room-booking technology in Facebook that helps customers in making direct bookings from their personal Facebook accounts. Loews Hotels and Resorts is identified to be a hospitality firm that had generated its Twitter application for encouraging customers in making online bookings. Visitors using Twitter are thus required to type #BookLoews in comparison to making bookings through calling on hotline numbers. The use of social media tools like Facebook and Twitter for conducting of hotel bookings helps customers enjoy needed convenience while it encourages the hotel company in gaining needed potential for enhancement of customer satisfaction(Robson & Noone, 2014).

Similarly, hospitality companies also focus on the development of mobile applications enabled for Smartphones that encourage the customers in making reservations for hotel rooms through gaining access to websites and apps of hotel companies like Hilton and Marriott. The hotel companies can also incorporate support generated by Online Travel Agents or OTAs like Expedia and Priceline that also focus on the generation of websites and mobile applications for encouraging customers in making hotel bookings. The mobile apps are developed in an user friendly fashion such that it can help the customers in making hotel bookings in an easy and faster manner based on the use of a fewer clicks. The mobile apps are further enhanced through the incorporation of GPS technologies that help the customers in tracking and also in gaining access to regional and local hospitality companies(Law, Buhalis, & Cobanoglu, Progress on information and communication technologies in hospitality and tourism, 2014).

Another significant distribution channel that is employed by the hospitality companies for revenue generation is RoomKey. It serves as a potential search engine that contributes in helping the hotel companies reduce the involvement of online travel agents along the booking process. The above process of reducing the involvement of OTAs helps the hospitality companies for reducing the commission related fees and also in increasing the profits. The search engine was developed by five star multinational hotel corporations like Hilton, Hyatt, Marriott and Intercontinental Group(Ling, Guo, & Yang, 2014).

Finally, HotelTonight is developed serves as a booking channel on the mobile platform that helps the customers in making hotel bookings even at the last minute. The mobile booking channel serves both the customers and the hotel companies in a mutual fashion where it helps the customers and visitors in gaining access to value hotels and rooms it helps the hotels in filling the last-minute rooms. Hotel companies based on the use of the HotelTonight booking channel can encourage the customers for making value based bookings at the last minute through provision of effective discounts. The same thus helps the hotel companies in gaining needed revenues even at the last minute(Law, Leung, Lo, & Leung, 2015).

The development of the different digital channels that helps in revenue generation for hotel companies can be traced along the different periods in the following illustration.

(Thakran & Verma, 2013)

Novotel Sydney based in Darling Harbour focuses on using multiple channels like Online Travel Advisors (OTAs) and also its own website for encouraging customers to make their bookings and reservations. Similarly, the hotel company also focused on development of a Smartphone app like the Novotel Virtual Concierge for helping the customers in conducting bookings and reservations in a convenient fashion(Novotel Hotels, 2016).

Conclusions

The report reflects based on the use of both empirical and pragmatic analysis the revenue management strategies that is and also needs to be undertaken by Novotel Sydney based in Darling Harbour. The analysis being conducted based on segmenting the consumer market for the hotel, analysis of the competitor set, demand forecasting practices and channel management rightly reflects on the potential strategies that is and also needs to be undertaken by the hotel company for revenue maximisation. The understanding of effective strategies undertaken by other luxury hotels along the different segments effectively help in reviewing and evaluating the present revenue maximisation strategy of Novotel Sydney.

Recommendations

Based on the above analysis it can be effectively recommended that Novotel Sydney based in Darling Harbour needs to focus on the development of applications for the social networking platforms like Facebook and Twitter in that the same would help the customers generate bookings and reservations in an instant and direct fashion. The development of such apps would not only help the hotel company in developing an international market presence but also in attracting potential revenues. Further, Novotel Sydney needs to focus on the development of effective gaming and other events matching with the seasons and external occasions to help in attracting potential tourists. The management of the hotel is also required to effectively focus on understanding and evaluating consumer and tourist trends visiting the Sydney hotels. The trend analysis can be conducted based on the use of both historical and online data for generation of effective forecasts.

References

Chen, C.-M., Lin, Y.-C., & Chi, Y.-P. (2016). Do competitive strategy effects vary across hotel industry cycles? International Journal of Hospitality Management , 54, 104-106.

Croce, V. (2016). Can tourism confidence index improve tourism demand forecasts? Journal of Tourism Futures , 2 (1), 6-21.

Duverger, P. (2013). Curvilinear Effects of User-Generated Content on Hotels' Market Share: A Dynamic Panel-Data Analysis. Journal of Travel Research , 20 (10), 1-14.

HVS. (2012). How to Identify a Hotel Competitive Set for a Hotel Market Study. Ontario: HVS.

KULENDRAN, N., KING, B., & YAP, M. H. (2016). Using demand determinants to anticipate fluctuations in hotel occupancy. Tourism Economics , 22 (1), 179-187.

Law, R., Buhalis, D., & Cobanoglu, C. (2014). Progress on information and communication technologies in hospitality and tourism. International Journal of Contemporary Hospitality Management , 26 (5), 727-750.

Law, R., Leung, R., Lo, A., & Leung, D. (2015). Distribution channel in hospitality and tourism. International Journal of Contemporary Hospitality Management , 27 (3), 431-452.

Ling, L., Guo, X., & Yang, C. (2014). Opening the online marketplace: An examination of hotel pricing and travel agency on-line distribution of rooms. Tourism Management , 45, 234-243.

Novotel Hotels. (2016). Welcome to the Novotel Sydney on Darling Harbour. Retrieved August 8, 2016, from

Pekg?n, P., Menich, R. P., Acharya, S., & Finch, P. G. (2013). Carlson Rezidor Hotel Group Maximizes Revenue Through Improved Demand Management and Price Optimization. Interfaces , 43 (1), 21-36.

Pereira-Moliner, J. F.-A. (2015). The Holy Grail: Environmental management, competitive advantage and business performance in the Spanish hotel industry. International Journal of Contemporary Hospitality Management , 27 (5), 714-738.

Robson, S. K., & Noone, B. (2014). Show me what you see, tell me what you think: Using eye tracking for hospitality research. Cornell Hospitality Report , 14 (17), 6-12.

ROGERSON, J. M. (2013). Market segmentation and the changing budget hotel industry in urban South Africa. Urbani izziv , 24 (2), 112-123.

Thakran, K., & Verma, R. (2013). The emergence of hybrid online distribution channels in travel, tourism and hospitality. Cornell Hospitality Quarterly , 54 (3), 240-247.

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