This study is based on travel and tourism toolkit. Travel and tourism industry provide various facilities relating to travel packages, accommodation services and many more which assist the customers in their trip. This assignment will include TUI group for defining various section of this task. TUI group is a leading firm in the field of travel and tourism sector in UK. They provide various facilities to their customers such as accommodation, travel services etc. TUI have number of employees more than 50000. This study will include various principles relating to revenue management and its application in travel and tourism sector. Furthermore, this study will include about managing human resource life cycle as part of HR strategy. Moreover, it will include the impact of legal and ethical consideration on Travel and tourism business. This assignment will also explain about managing budget and statistical and financial record.
P 1 Rationale and principle of Revenue management
Revenue management assist the organisation in increasing the overall productivity of the firm by effectively managing the resources of the firm in order to generate more revenue (Crouch, Huybers and Oppewal, 2016). It is a collection of strategies which the firm uses in order to increasing the demand of the products and services to generate revenues. Revenue management principles consist of the following :
- Pricing : Pricing in revenue management is related to the pricing strategies which the company uses in order to attract customers which helps in generating revenues. Pricing strategies helps in making the value of the product and services offered to the customers. Optimal pricing strategy are implemented by TUI in order to provide customers with fair pricing for the product and services. TUI provides various discounted packages in order to attract customers for travel. Differentiated pricing strategy is based on different situation existing in the market.
- Inventory : Revenue management principle is based on controlling inventory in order to increase their profitability by allocating capacity with the best prices. Inventory management assist the organisation in attracting more profit (Adido, 2018). For example, TUI in situation where there high demand of the product ensure that customers are provided with the products and services at the prices which are estimated by the company. TUI in order to control inventory ensure that the customers are provided with high packages in situation of high demand and also reduce the product and services if there is less demand.
- Marketing :Marketing assist the firm in attracting more customers by using various promotional tools such as advertising in television, magazines, newspaper etc. which helps TUI in getting more customers towards the brand and helps in increasing their profitability. TUI in order to attract more customer ensure that social media marketing is properly managed in order to provide customers with various facilities relating to new services and products and also provide support to the customers with the help of online booking that provide ease to customers in their travel. Market segmentation in marketing assist the firm in dividing the customers between potential customers and existing customers.
- Channels : Revenue management principle include channels of distribution through which profitability is increased. Travel and tourism industry provide customers with different channels of distribution which helps in delivering the products to the customers (Chong and Balasingam, 2018). There are changes in prices according to the way of distribution such as prices are different when the customers purchase from the physical store and when the product is purchased online. TUI group offers their customers with different channels of distribution which assist in attracting more customers.
There are various factors that must be considered for revenue management that includes the following ;
- Seasonality: revenue management of the organisation is based on this factor as it play as important role in increasing the revenue for the firm. For example, the tourism services provided by TUI generate more revenue in winter season as most of the tourist are attracted in that season.
- Capability: The capability of the firm to generate revenue is measures in order to improve the performance of the firm top generate more revenue. TUI in order to manage the revenue identify its capability to measure the income generated according ton its capability.
- Operationality: TUI for managing the revenue ensure that the various operation of the business are performed effectively and efficiently to generate more revenue.
- Competition: Revenue management require identification of the competition to increase the revenue for TUI. Identifying information about the competition in the market provide understanding for managing the revenue to increase the profitability of the firm.
P2 Application of revenue management tools in food and beverage sector of Tourism industry
Revenue management tools are used in order to increase the profitability of the organisation. Revenue management tools consists of budgeting, dynamic pricing, inventory control etc.
- Budgetary control: This tool of revenue management assist the organisation in reducing the expenses and increasing the profitability of the firm. Budgetary control is related to comparison between the actual income with the planned income in order to identify the revenue generated (Kristensen, 2018) . With the help of budgetary control TUI is able to find out the deviation between the actual income with the forecasted in order to find out if the plans are being followed or there is a need to change in plan.
- Dynamic pricing: Dynamic pricing strategy of revenue management assist the firm in increasing revenue by applying varied prices rather than fixed prices of the product. Dynamic pricing the prices of the product and services fixed on the bases of the demand of the customers . Different prices are offered to different customers on the bases of that product demand in the market.
- Inventory control : inventory control is a tool of revenue management because it assists the organisation in controlling the resources of the organisation by analysing the demand of that product in the market (Mowforth and Munt, 2015). Inventory are maintained in order to gain the competitive advantage in the situation of high demand for the product in the market. Inventory control helps in reducing the cost for the company and increasing the profit by maintaining optimum inventory in the business.
P3 Different stages of HR life Cycle as part of HR strategy
TUI is providing travel services to the customers and for that human resource manager have to perform various activities to formulate various strategies. Human resource life consist of different function of the human resource manager as part of its strategy. Human resource manager formulated various strategies in order to provide resources to the company for achievement of organisational objectives. Human resource life cycle consist of the following:
- Recruitment : This function of Hr life cycle is associated with hiring the best people for the best position. Recruitment decision are very crucial because it affects the growth and productivity of the firm (Shaw, 2016). Different strategies are formulated by the human resource manager in relation to staffing plan which assist the organisation in identifying various expectation of the candidates and also helps the organisation in attracting the potential customers.
- Education : Education is provided by the human resource manager to its employees in order to inform them about the culture of the company and it values. Education in HR life cycle assist the employees in providing knowledge to improve their performance and skills in order to achieve the objectives of the firm. Education involve providing training to the employees regarding various techniques required for completing their work. Human resource manager formulate various strategies in order to assist the employees in improving their performance level.
- Retention : Human resource managers in order to retain the employees in the firm provide them job satisfaction by providing them motivation and incentives and encouraging them for better work. HR manager Motivate new hire in order to retain them in the company. HR manager provide recognition to the employees to those which are performing their best in the organisation.
- Evaluation: In this stage of human resource life cycle human resource manager evaluate and measure the performance of the employees. Evaluation assists the manager in finding out deviation in the performance level of the employees so that proper actions are taken to improve their performance which helps in achieving the goals of the TUI.
- Celebration : This stage of HR life cycle is related to providing their employees with various benefits for their hard work such as flexible work schedule, bonus, gift cards etc. Celebration is related to providing employees with benefits to motivate them in order to increase their morale and provide satisfaction to them in relation to their job position and work.
- Separation : Human resource manager life cycle include separation as part of Hr strategy to terminate the employee for the poor performance, misbehave etc. to improve the position and performance of the organisation.
- Development : HR managers perform various function in order to develop the skills and knowledge of the employee to improve their performance.
The human resource manager in order to perform various function of Hr life cycle ensure that proper strategies and plan are formulated which assist in increasing the profitability of the firm. The human resource manager of TUI provide its employees with motivation in order to improve their performance level.
P4 Performance management plan of Hr manager
Performance management is as process of improving the employee effectiveness through monitoring their performance. It helps the employees in utilising the skills and knowledge effectively and efficiently.
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Performance management plan of human resource manager consist of various stages . They are :
- Assess : the performance of the employees is assessed in order to identify the areas in which the improvement is required so the Hr manager can plan accordingly improve the performance of the employees.
- Planning : Human resource manager of TUI in order to make an effective performance management plan make planning for the various activities to improve the future performance of the employees to achieve the goals of the firm. Planning assists the Hr manager in formulating a plan in order to resolve the issues. Different issues which affect the performance level of employees such as proper training is not provided to the employees in order to perform the job, colleagues are uncooperative etc. these all issues affect the performance level of the employees and thus the overall performance of the organisation in hampered.
- Develop a Draft plan : After identifying the issues relating to performance deficiency. HR manager in order to make an effective performance management plan ensure that performance objectives are set on the basis of SMART objectives (specific, measurable, attainable, relevant, timely). The goal based on the performance must be cleared and measurable which are relevant and timely attainable by the employees.
- Inform : It provides information to various members of the organisation about the plan made for improving the performance of the employee's to get various suggestion to improve the plan.
- Review the plan : Hr manager before implementing the plan review the plan which is developed in order to focus on removing any bias against the employee. Reviewing the plan helps in finding out any problem associated with performance management.
- Implementing the plan : Implementing the plan is related to execute the plan which is being developed in order to find out any deviation existing in the performance management plan. Human resource manager in order to find out if the performance management plan is working properly or if there is any need for changes in the plan to improve the performance level.
- Monitoring the plan : Monitoring the plan is related to controlling the deviation in order to have smooth functioning in the organisation (Stewart and et.al., 2018). Monitoring the performance management plan assist the hr manager in identifying the performance of the employees and also helps in identifying the deviation if any in order to control them on time.
Performance management plan formulated by the human resource manager helps in reducing the issues relating to staff retention. HR manager by identifying various issues relating to reduce performance of the employees assist in providing support to the employees and resolve their issues with the help of effective performance management plan. Performance management plan implemented by the HR manager also helps them in resolving the negative behaviour of the employees regarding the job by providing them motivation and training which helps in improving their performance.
P5 legislation that TUI have to adhere to
TUI group of company in order to provide its customer safe trip have to adhere to the laws and legislation which are imposed by the government in order to protect the customers from unfair travel. Tourism laws are made in order to provide customers with safe and reliable journey. Travel is a legal right of every individual. Traveller must be provided with proper accommodation facilities. Legislation relating to travel and tourism include protection of environment, provide quality services to the customers etc (Nwankwo and Uche, 2014). TUI have to follow laws relating to trans-border movement such as foreign exchange laws, immigration laws etc. There are various laws relating to transportation such as airline regulation, fares and tariffs etc. TUI have to follow various laws relating to consumer protection such as health,hygiene , quality services etc. these are various legislation related to environment protection, monuments and historical sites etc.
Following are the laws which are imposed by government on travel and tourism organisation (TUI):
- Consumer protection act
- environment Act
- Wildlife protection Act
- Air prevention and control of pollution Act
- Health and safety Act
These are the laws which TUI have to follow in order to provide customers with better service and safety of their journey. TUI must adhere to the legislation formulated by the government in order to perform its activities in the field of this sector.
P6 impact of company , employment and contract law on the decision -making of TUI
Company law : Company law regulate the corporate affairs of country. It defines various laws which the companies have to follow. Company law have a great influence on the decision making of TUI because there are various rules and regulation involved in company law (What is the Definition Revenue Management, 2016). Laws relating to investment, capital etc. For example decision regarding investment have a great impact on the TUI .
Employment law : it is the law which governs the relationship between employer and employee. This law is implemented to protect the rights of the workers. This law prevent discrimination, promote healthy and safety, prevent work disruption etc. employment law include the following :
- worker's compensation
- employment discrimination
- labour relation
- social security
- employee benefits
- wrongful termination
Employment law have its influence on the decision making of the TUI to protect right of the employees. For example, salary of the employees is not provided to the employees in that case employment law will govern the activities of TUI and possible actions are taken by the government for not providing the salary.
Contract law : It is a legally binding agreement between the two parties. It is formed only when the both the parties agree to all the terms and conditions of the contract. Contract law contains the following :
Contract law affect the decision – making of the TUI group such as contract for package holidays which is a contract between the customer and tour operator of TUI in which customer state its different demand and facilities which tour operator have to meet for satisfying needs of the customer.
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P7 Different types of financial statement and reporting mechanism for TUI
Financial statement are the records which are maintained by the company in order to know its financial position at the particular point of time.
There are three types of financial statements . They are
- Income statement : these report of financial statement shows the financial performance of the company for one accounting year (Laws, 2015). It includes income and expenses to arrive at the net profit and loss for the company.
- Balance sheet : These report of financial statement show the financial position of company at a particular point of time. It includes assets , liabilities and equity. Balance sheets of the TUI assist the investors , customers , government etc. to know about the position of TUI in the market on the basis of report prepared.
- Cash flow statement : Cash flow statement of the company shows inflows and outflows of cash in a reporting period. Cash flow statement helps the company in identifying its various cash inflows and outflows in different activities of the firm such as operating , financial and investing activities.
Financial report of TUI
Ratio analysis of TUI : The ratio analysis of TUI shows that there has been a reduction in net margin percentage in 2016 it was 6.04 which got reduced to 3.48. It also shows that there have been increase in quick ratio from 0.38 to 0.50. Asset turnover ration of TUI have increased to 1.29 from 1.20
Income statement of TUI : income statement of TUI shows that there have been an increase in gross profit from 1,907 to 2000. It also shows the earning before interest and tax of TUI which have increased from 1,384 to 1.727 in the year 2017-18
Balance sheets of TUI : balance sheet of the TUI show its financial position a particular point of time. There have been a decrease in its total current assets from 5,326 to 4,318 in 2017-18. There have been also decrease in total current liabilities from 7,220 to 6,535 in 2017-18.
P8 Importance and value of budget for controlling business performance and identifying variances
Budgeting is a process through which resources are optimally utilised. Budget assist the firm in identifying the various financial need of the business in the future. It is created in order to find out future financial need of the business. Budgeting helps in estimating the future income and expenses which assist the enterprise in operating its various activities (Lamsfus and et.al., 2015). With the help of budget various deviation are identified. Budgeting is a plan that is used in order to identify various deviation in the business plan which leads to decrease in the profitability level of firm.
Forecasting is the process of estimating the incomes and expenses for the future in order to identify the future profitability of the organisation. TUI uses forecasting in order to identify the future profitability and performance of the organisation.
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Importance and value of budget
- It assists the organisation in setting goals of the business and improve performance level by estimating the future needs of the firm.
- Budget are important for increasing the profitability of the firm and reducing the deficiencies.
- Budget assist TUI in decision -making process by forecasting the various activities of the organisation.
- Budget provide assistance to the organisation in implementing various strategies and plans in order to improve the performance of the organisation (6 Reasons Why You NEED a Budget, 2017).
- Budget create value for the organisation by comparing actual expenses with forecasted and finding out deviation in order to control the deviation to improve the profitability of the firm.
- Budget assist in creating value and increasing performance of the TUI by optimum utilising its resources.
Techniques of budgeting
- Incremental budgeting : this technique of budgeting involves cost identified from previous accounting period with percentage additions.
- Zero- based budgeting : this budgeting technique provided standards for the performance measurement by justified the expenses for each period and it has zero base for each new period.
Techniques of forecasting
- Quantitative forecasting : it involves mathematical tools to past and present information to determine the future outcome.
- Qualitative forecasting : it does not involve mathematical figures for forecasting rather it uses sales force composite method and user expectation method for forecasting
From the above study it had been concluded about various principles of revenue management which has helped TUI in improving their performance level by implementing these principles. It has also included about various revenue management tools which has helped TUI in maximising the profit of the firm. Furthermore, it has explained about various legislation and regulation which TUI have to follow such as consumer protection Act etc. moreover it has provided with the impact of company law , employment law and contract law on the decision – making of TUI. This study has also explained about various financial statements of the organisation and their reporting mechanism. This assignment has also provided with the importance of budget in the travel and tourism company.