An Assignment
On
Hospitality Operation Management

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Executive Summary
In the assignment, an overall context of the hospitality industry is discussed. Here, the hospitality
industry is discussed from different perspectives, figuring out different pros and cons of the
hospitality business. In the first part of the assignment, overall understandings of the economic
and operational characteristics of hospitality operations are discussed. In the second part, an
understanding of the product development within the hospitality environment has been
developed. Here, it is cleared that sustainable tourism may be identified as one of the effective
attempts to generate employment for the people but it creates minimal impact on the culture and
the environment of the country or respective region. In the third part, the overall understanding
of the pricing and profitability concepts in the hospitality operation are clearly discussed by
referring different pricing model and revenue generation approaches. In the fourth and final part
of the assignment, different appraisal techniques are applied to analyze and improve hotel’s
operational performance. Whatsoever, throughout the paper, the readers will get a clear overview
about the hospitality industry, which will help them in their personal and profession life.

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Table of Contents
Executive Summary.........................................................................................................................ii
Introduction......................................................................................................................................1
Learning outcome 1: Understanding the economic and operational characteristics of hospitality
operations.........................................................................................................................................1
1.1

Analysis of the nature of hospitality products and service areas......................................1

1.2

Evaluation of different factors affecting pattern of demand.............................................2

1.3

Customer profile with different expectations and requirements.......................................2

Learning outcome 2: Understanding the product development within the hospitality environment
.........................................................................................................................................................3
2.1 evaluation of the key stages in the products and service development.................................4
2.2 Analysis of the features contributing towards the customers’ perception of products and
service..........................................................................................................................................4
2.3 Opportunities and constrains affecting product and service development............................5
2.4 Various merchandising opportunities for the hospitality services and products....................5
Learning outcome 3: Understanding pricing and profitability concepts in hospitality operation...6
3.1 Different methods of pricing considerations.........................................................................6
3.2 Factor affecting revenue generation and profitability in hospitality industry.......................6
Learning outcome 4: Using appraisal techniques to analyze and improve hotel’s operational
performance.....................................................................................................................................8
4.1 Use of different performance measure and appraisal techniques..........................................8
4.2 Effectiveness and drawbacks of different qualitative and quantitative appraisal
techniques....................................................................................................................................9
4.3

Application of approaches appropriate for hospitality operation......................................9


Conclusion.......................................................................................................................................9
References......................................................................................................................................10

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Introduction
The High Valley Hotel is one of the small numbers of local businesses comes from a range of
tourists. Situated on the edge of the Snowdonia National Park in Wales, the hotel has currently 60
different types of single (5 bedrooms), double (30 bedrooms) and twin with space for expansion
(25 bedrooms). The major types of clients coming in the hotel are families or couples, or other
interest group people like ramblers, hikers, climbers and other sport enthusiasts. Now, to meet
the demand of the two national companies, the council has approved the plan by permitting the
expansion of the business park.
Learning outcome 1: Understanding the economic and operational characteristics of
hospitality operations
The High Valley Hotel is currently planning to build more bedrooms, a restaurant, a conference
hall, and a banqueting centre. As the operational manager of the hotel, I have been authorized to
research about different pons and cons of the planning and to report to the Executive team.
1.1 Analysis of the nature of hospitality products and service areas
In the hotel business, the products can be foods and beverage. All these products are very much
perishable. However, based on different criteria, the nature of the High Valley Hotel’s hospitality
products and service areas are discussed here:
i.

Perishable: The food and beverages along with other types of hospitality products are not

ii.

much durable and very much perishable (Korstanje, 2013).

Tangible and intangible elements: The service quality of the hotel business has two
aspects along with their respective strength and weakness. Here, tangible service can be
interior and exterior design of the hotel, the equipment of the hotel, ambient condition of
hotel, all which is very much visible to the customers. On the other hand, intangible
service factors are customer responsiveness, reliability, empathy, as well as assurance,

iii.

which are not visible (Reynolds, 2013).
Service Areas: The main types of services areas of the High Valley Hotel are room
divisions for customers, food and beverage service, conference hall for meeting or
discussion as well as a banqueting system to help the customers to arrange big feast like
lunch or dinner.

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1.2 Evaluation of different factors affecting pattern of demand
Hotel business does not have same types of demand all over the year or even all the days in the
week. There are different factors by which the demand of the customers varies. Four major
influential factors are discussed here:
i.

Seasonality: The one of the major customers of the High Valley Hotel are the ramblers,
hikers, climbers etc. most of the cases, these types of customers come in the worm season
(Hassanien, Dale and Clarke, 2015). That is why demand in this season increase than

ii.

other seasons.

Time of the week: Another important customer groups are the families and couple, who
mainly choice weekend or any kinds of vacation to travel. In this case, the weekend

iii.

within the week may have the highest demand.
Healthy living: The customers who are very much concern about their health and prefer
to lead healthy life always choice the hotel where they can get the standard level of

iv.

sanitation. This factor also affects demand of customers.
Economic factors: If there are any kinds of national or regional crisis in the economy or
the income of major types of customers falls, then the demand of the customers falls.

1.3 Customer profile with different expectations and requirements
Based on the different customer expectations and their respective requirements, the customer
profile of the hotel can vary. Here, based on the expectation differential, the customer profile of
the High Valley Hotel are prepared.
i.

Types of hospitality business: There are mainly three types of hotel business. Food and
beverage, Accommodation and Travel and tourism. In this case, High Valley Hotel is
mainly based on the accommodation of the customers. That is why, the customers come

ii.

here mainly to meet their accommodation purpose.
Pricing considerations: The major types of customer of the hotel are families and
couple. These types of customers are concerned for their service rather than their cost


iii.

consideration, which leads to the relatively higher price for all services.
Meal experience: The standard of the meal of its customers is high. Besides this, there
have different customers like sportsmen and their team. In this case, their meal menu is
likely that is not so heavy foods.

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iv.

Expectation requirements: As in High Valley Hotel different types of customers come,
their demands are also different. Whatsoever, the demand differential, the customers get
service likely to their expectations.

1.4 Analyze factors affecting average spending power (ASP)
In the context of hospitality business, the customers are offered with wide range of services with
different level of price level, which brings about average spending power (ASP). According to
the UK Essays (2013), average spending power (ASP) reveals customers’ overall expected
whims or impulse. There are different factors that vary average spending power (ASP).
i.

Size of income: The overall income level of the customers/guest is highly related to the
average spending power of the customers. If the income level is higher, the average

ii.

spending power of the client is upgraded.

Status: Status is another important factors based on which the average spending power of
the customers is improved. If any customer is socially royal person, s/he cannot minimize
cost by any mere cases, rather let him/her make higher cost with better service, which in

iii.

effect improve his/her average spending power.
Social/cultural influences: Sometimes, many different social/cultural factors influence the
average spending power of the customers. For example, in case of main festival

iv.

customers is eager to spend more than other festival or occasions.
Economic situation: Finally economic situation comes. It is above the customer’s
expectation, rather due to the lower economic condition they are forced to cost less and
lessened their average spending power.

Learning outcome 2: Understanding the product development within the hospitality
environment
As the operational manager of High Valley Hotel, when I am going to analyze and research over
the new planning of the hotel, I have to look up the product development opportunities, related
strengths and weakness, the perceptions of the customers towards the hotel’s products etc.

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2.1 evaluation of the key stages in the products and service development
Whenever the High Valley Hotel is going to initiate a plan of product development, as an
operational manager, I have to analyze and evaluate the related key stages, which have been
discussed here:

 Idea evaluation: The idea of product development needed to be tested. The viability of
the idea along with related new opportunities and treats are to be analyzed.
 Market research: In the market research, the demand of the new products as well as the
customer preference needed to be analyzed.
 Market segmentation: In case of hotel business, market segmentation is very much
important. That is why I have choice whether the hotel is taking price-taking initiative or
its plan is just to differentiate cost (Brands, 2013). If it want to attract more customers.
Then it needs to reduce cost. Then sport enthusiasts and sportsmen will come more rather
than families and couple.
 Advertising and awareness: Another important factor is upholding the special features
of the products to the customers. In the advertising, the focus should be persuasion,
market desire, awareness creation, increasing selling.
2.2 Analysis of the features contributing towards the customers’ perception of products and
service
If High Valley Hotel wants to attract more customer, it needs to create such a position in the
market in respect of brand image, service quality etc. so that it can make the customer’s good
perception towards the its products and service (Perner, 2008). In this case, Strong brand image
about the product and service of the hotel can draw positive perceptions of the customers.
Besides, if the food menu of the hotel becomes nutritious, delicious, and obviously dietary, then
it can attract more customers. Special arrangement for the disabled persons can make the
popularity of the hotel high. In addition, if the hotel can ensure enough availability of resources
all access to the customers, then more customers become willing for the hotel. Moreover, style of
service can affect preference. If the service for female, male even families and couple can make
separate, with separate service holders, then the customers hold good perception. Above all, for
the customers, standard level food menu with reasonable price is much desirable.
 Letting the customers to use enough space is also an important factor to hold positive
perception.
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2.3 Opportunities and constrains affecting product and service development
Opportunities are those that help to boost up business, which in effect increase sales revenue and
profit whereas different constraints restricts the business operation that leads to the decrease of
the sales revenue and profits. Now, for High Valley Hotel, if I want to appraise opportunities and
treats of the product developed, I need to make an overall SWOT analysis.
Opportunities:
High Valley Hotel has greater opportunities to compete with its competitors, when it is
going to provide similar and larger types of facilities under its new planning. Another
important opportunity is that the hotel is planning to grasp variety of customers ranging
from single person, couple, and families to sportsmen and sport enthusiasts, which can
help the hotel to make better position in the market (Frehse, 2006).
Constraints:
Its major constraints was the limited accommodation facilities and less facilities, when
the competitors provided many extra service and attract a wide range of customers.
Though the hotel is planning to increase service, nevertheless, it would be difficult to
gain competitive advantage. Another important constraint of the hotel is that there have
been very small amount of local business opportunities around the business park and so
are the people of the surrounding village.
2.4 Various merchandising opportunities for the hospitality services and products
In the process of globalization, now people have to travel much for both business and recreation
purpose, which in effect increases the hospitality business overall world. However, the
hospitality business gets many different merchandising opportunities over the other types of
business. All these aspects are as follows:
 Most of the cases, the travelers expect more or less high quality of service based on their
respective purchasing power. That is why, these types of business would have the
opportunity to create more value with premium charge.
 Besides, if the economic condition of the travelers’ country or even the economic
condition of the traveler is improved, then it gives the hospitality business a good
merchandising advantage.


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Learning outcome 3: Understanding pricing and profitability concepts in the hospitality
operation
In the operation of the hospitality industry, there are different methods of determining price of
different products and service. In the determination of pricing, the hotel can make profit. The
level of profitability has also different considerations.
3.1 Different methods of pricing considerations
In the hospitality business, different types of pricing methods are observed, such as cost plus
pricing, market orientation pricing, competition based pricing etc. In the context of High Valley
Hotel, two major methods types of pricing methods are discussed here:
1. Cost-oriented pricing: It is the simplest form of pricing, where the price is determined
based on the production cost. Obviously, a percentage profit is added with the production
cost to determined selling price (Peppers, 2010).
2. Marketing oriented pricing: In this case, above than the cost oriented pricing,
marketing research is conducted to understand the competitor’s pricing (Parker, 2009).
And based on their pricing, marketing oriented pricing are conducted.
In addition of these two types of pricing model, High Valley Hotel can follow other different
pattern of pricing. In this case, service charges are imposed on the customers/guests after having
their meal. Cover charge is the fee implied, at the time of entering within the hotel. Besides
these, sometimes, whether the customers have in their meal, a minimum charge is implied on
them.
3.2 Factor affecting revenue generation and profitability in hospitality industry
There are different factors affecting the revenue of the hospitality business and so the
profitability of the business. Different types of revenue generating factors (sales mix, average
spending power, and customer turnover) as well as different profitability factors (labor intensity,
shelf life, portion-control, standardization, and elasticity of demand) affect much the hospitality
industry (Econsultancy, 2011). These factors are discussed here through a table:
Appraisal of revenue generation and profitability

Name of the hospitality business: High Valley Hotel
Elements to be considered

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Observations/remarks


1. labor intensity

1. Amount of labor In the hospitality industry, the use of
used,
capital is much less than the use of labor.
2. Amount of capital
That is why the industry can be said as
used
labor intensive.

2. Shelf life

1. Number

of

customer,
2. Value of

1. After taking a new and good
product development plan, the


brand

name,
3. Degree of customer

firm can sustain in the market.
2. The
degree
of
customer
satisfaction must be increased.

satisfaction,
4. Level of positive
initiative taken by
management,

3. Elasticity

of

demand

1. Demand

of

products.
2. Price of demand


the In the High Valley Hotel, price-elasticity
of demand is inelastic, which means the
change in the demand of the customers is
less than the change in the price of the

4. Standardization

products and service.
1. Menu selection
High Valley Hotel in its management is
2. Coming of royal
very much sanitary and maintains higher
customers
level of standard in menu selection and
3. Sanitary issue
other service. That is why here royal
customers come more.

Learning outcome 4: Using appraisal techniques to analyze and improve hotel’s
operational performance
Basically, performance appraisal is one of the best methodologies to measure the performance of
the organization as well as the employees working there. As an operational manager of the High

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Valley Hotel, I have to consider the service cost of the products and the quality of the products as
well as the time management for performance appraisal.
4.1 Use of different performance measure and appraisal techniques
In the operation of the High Valley Hotel, what a have seen have to be appraised based on

different techniques to understand the pros and cons of the total operational system. Here, I have
used different appraisal techniques to measure overall performances, which have been discussed
below:
1. Quality management: In the quality management process, I need to analyze not only the
overall service quality of the hospitality products but also need to determine the ways
about how to improve it.
2. Speed of Delivery: In the serving time, how fast the customer orders are accomplished is
also needed to measure, which is very much important in the hotel industry.
3. Developing Qualitative and Quantitative data: To measure the overall operational
performance of the hospitality business, I need to collect and develop different qualitative
(service quality, customer satisfaction, customer reliability etc.) as well as the quantitative
data (customer per week, product pricing related to competitors, number of royal
customer etc.) to conduct and accomplish the appraisal (Kokemuller, 2015).
4. Data analysis and evaluation: Now, I have to analyze different qualitative and
quantitative data gathered earlier and compare with the expected performance. In this
way, I evaluate the present performance of the hotel.
5. External comparison: All these have been done are the internal comparisons of the
business. Now external comparisons are needed. The related peer hotel can be set as the
benchmark for the external comparison, where pricing, service quality etc. are compared
with the target business.
6. Sales performance: Another important technique is to measure the sales performance,
overall increase in the sales revenue of the business, which in effect leads to the increase
of the gross and net profit of High Valley Hotel (Robbins, 2009).
4.2 Effectiveness and drawbacks of different qualitative and quantitative appraisal
techniques
Most of the cases, these appraisal techniques are run based on the sample data, which
sometimes cannot be taken as the true performance measurements. For example, the quality
of the service and products, the attitude of the employees, the quality of the employees are
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considered as for the quantitative appraisal methods (Manoharan at el., 2010). Now these
factors can be assessed by different questionnaires or interviews or even through the group
meetings, which can be applied for the wider population. The main criticize of the qualitative
approach is that the result coming from the analysis may not applied for the wider
population. For example, the products of High valley Hotel seem to be delicious to average
customers. That does not mean it will be delicious to all customers or even in the same level.
4.3 Application of approaches appropriate for hospitality operation
When applying different approaches to the hospitality business, it may be very much difficult
to consider the approach for the operation of the hospitality business such as service or
facilities are to be offered, catering as well as accommodation marketing and also the demand
generating source. For example, earlier in the Indian hotel, customers are treated by only the
lodging facilities provided to them. However, in the later, the facilities were increased by
much value adding services like safari. Whatsoever, focusing on the catering market is also
important. Three major categories may generate profit for the hospitality industry like inhouse guests, non-residents and the organized groups (Powers and Barrows, 1999). Also there
are three different types of source of demand in the hospitality business like institutional,
transit and recreational. All these have good impression on building good market demand. All
these additional service can be proposed for further expansion of business of High Valley
Hotel.
Conclusion
Sustainable tourism may be identified as one of the effective attempts to generate employment
for the people but it creates minimal impact on the culture and the environment of the country or
respective region. In this specified case, the High Valley hotel was small hospitality businesses,
which at present feel the emphasis of the new development in the business. That is why, the firm
is planning to go for product and business development, which is a good planning indeed.

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