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Hospitality Operations Management


  • Unit No: 0
  • Level: High school
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          Hospitality operations management refers to a process which deals in the industry providing services. It helps in developing skills and providing proper training to people working in hospitality sector like hotels, resorts, tourism sector etc. By proper training, people are provided knowledge about how to manage the different areas included in hotels like front desk operations,food, housekeeping etc (Alexakis, 2011). This report discusses about Hilton Hotels and Resorts. It is a global brand which has its hotels all over world. The company was  founded by Conrad Hilton.  Basically,report is going to discuss about nature of services provided and factors influencing their demand. Also,involving key stages, opportunities and different pricing strategies affecting hospitality industry.


AC1.1: Analyse the nature of hospitality product and service areas

            Hospitality industry is considered as a wide portion of services industry which involves services like travelling, event planning, accommodation, transportation etc. Main objective of this industry is to provide high class services to the customers in order to satisfy them at high level. In relation to Hilton Hilton, this company belongs to hotel industry which offers different services like conferences, accommodation, room services, entertainment and banqueting etc. It can be said that operation manager of Hilton Hotel is required to perform various job roles in within the hotel in order to meet satisfaction level of its customers (Bartram and Dowling,  2013). For this, operation manager of this Hotel is mainly focusing below described as below:

  • Tangible- It is considered as those services which which can be seen or felt by individuals. It can be said that tangible services in hotel includes room services facility, appropriate infrastructure, well managed dining space area etc. In context to Hilton Hotel, the company is availing best tangible services to its customer in rooms as well as other areas. For example: Hilton Hotel is providing effective services like air conditioner, room services etc. to its customers which attracts them to remain loyal with the company for longer period.
  • Intangible-  Intangible services are not visible  as they can only be felt by the customers or the user. In relation to hotel industry, Hilton hotel offers variety of intangible services to its customers like conferences, banqueting etc. to its customers.
  • Perishable-  This refers to those products or services which might spoil quickly, in relation to the hotel industry this terms is basically used for food and beverages which are offered by hotel to its customers. It is required by operation manager of the Hilton Hotel to avail high quality food services to its customers so that they can eat healthy food. Along with this, kitchen staff of company is preservative like refrigerator in order to secure perishable products for longer period of time. For example: Hilton Hotel is providing vast range of food and beverages to its customers in order to avail all kind of food to the customers along with the taste.

AC1.2: Evaluate the different influences affecting patterns of demand within hospitality operations

             Operational activities of every organisation is directly influenced by different factors which are related to that segment. In relation to Hilton hotel, operational activities of this sector has its dependence over various kind of factors such as living scale, economic factors,  time of duration etc. Some of the essential factors which are related to the operational activities of the company are described as below:

            Healthy Living: Lifestyle of products/services which are offered to the customers generally influences their interest towards the organisation as they feel attracted to best class services,

  • Seasonality: Season belongs to the peak time when customers often visits hotels during their travel to other places rather than domestic place (Bharwani and Butt, 2012). In relation to Hilton Hotel, management staff of the hotel prepares themselves during peak season so that they easily manage excessive footfall of the Hotel. Effective services of Hotel in peak season influences customers towards it.
  • Regional and ethnic influences: Regional and ethnic connection of the place also attracts customers towards availing services of Hotel. For example: If a Hotel includes regional touch in its interior then it will attract huge number of customers towards it.

AC1.3: Compare customer profiles and their differing expectations and requirements in respect of hospitality provision.

            Hospitality sector gives high preference to its customers in order to make them feel satisfied. It can be said that every customer has different needs and their satisfactory criteria totally depends upon it. In relation to the customer zone of hotel, its customers categories  on the basis of their income and services.

            For example: Customers who belongs to middle class segment their initial need is to attain nominal services which does not cost much to them. These customers only feels attracted towards low cost areas where can satisfy their requirement on some set comprise manner.

            In context to Hilton Hotel, the company is mainly targeting high class people. For this, management team of this Hotel is availing quality and premium services like private swimming pools, bathroom, theatre area where customers customers can experience personalise experience (Causin and Ayoun, 2011). These special services of the hotel attract high class customers as they feel satisfied their.

             Apart from this, customers profile can also be differentiated on the basis of meals experience as might feel satisfied to that place where they get variety of food which will satisfy them at high range. Here, it has been analysed that high class customers gives higher priority to variety of food like continental, Mexican and many more. These people easily gets  raedy to pay high amount of money on the variety of food. On the other hand, middle class customers gives more preference to the quality of food.


AC1.4: Analyse factors affecting average spending power (ASP) in hospitality businesses.

            Average spending power refers to the amount of money an individual can spend on an average basis over a period of time. The various factors that affect spending power of an individual are as follows:

            Size of income-  Spending power of any individual is entirely based upon his income sources. If the income of a consumer is high , his spending capacity will also be high and vice a versa.

            Social and cultural influences-  As per income, the preferences of customers also varies. For example, the lower income earning sector tends to save more amount for future benefits, rather spend it in such lavish holidays etc. So, Hilton addresses this issue by providing better facilities to low income groups at discounted rates.

AC2.1: Evaluate the key stages in product and service development applied within a hospitality operation.

            Every industry is required to develop themselves develop their products and services according to the changed market. This helps them in increasing their sustainability at market place as highly developed services attracts customers and persuades them to use it effectively. In relation to Hilton Hotel, its operation manager is continuously focusing on developing its brand image of its services among customers in order to influence their interest towards it. This hotel is  offering luxury and premium services to its customers (Crawford, 2013). Along with this, the operational manager of the hotel is providing some value added services to its customers like  pick and drop service from airport in order to make the customers feel comfortable and relaxed during their travel. In this regard the hotel gets indulge in some stages which helps them in developing their products and services. Some of these stages are described as below:

  • Idea generation- In this stage, idea for developing the new develops from various sources like employee, customers, changes and trends in market, competitors etc. In relation to Hotel, it can be said its important for Hotel industry to analyse the current market in order to understand that whether it is valuable for company or not.
  • Idea screening-  At this stage, after collecting variety of ideas main objective of the company is to understand which is good or feasible for the organisation. It can be done  by matching it with organisations strength, weakness, affordability etc.
  • Concept development and testing- After screening, idea has now converted into the concept which is forwarded for the testing criteria in order to check that whether it will go in future or not. It also tells about some core areas which can be modified after testing procedure.
  • Business analysis-  In this stage, overall finalised concept is now evaluated in order to check whether the selected concept is beneficial for the organisation or not (Ferdinand and Kitchin, 2012). Here, the concept is also evaluated meeting it with customers need and demands.
  • Product development- At this stage, mainly the company shifts finalised concept to research and development department in order to modify it according to the customers expectation.
  • Test marketing-  Here, after product development company generally focuses on testing the product at market place in order to check whether it is beneficial for the company at market place or not in terms of monetary benefits. This stage also helps company in understanding needs and requirement of customers as well.
  • Commercialisation-  This stage arises after launching of the product at market place. In this stage, operation management team of company focuses on making strategy, targeting its customers, finalising area for launch etc.
  • Launch- At this stage, finalised product is finally launched into the targeted market  for its potential customers in order to aware people about the product. It is basically done through an event or activity for grabbing attention of the customers.

As per the above stated overall stages of product development it can be said that Hilton  Hotel can use this product development process in order to achieve its targeted goals and objective.

AC2.2 Analyse the features which contribute towards the customers’ perception of products and services.

            Perception of customers is directly affecting sales of the company as if perception and thoughts of customers are not positive towards the company then they will not be able to survive in the industry for long duration (Lashley, 2012). In relation to Hilton Hotel, perception of its customers mainly deals in various segments which are illustrated as below:       

  • Standardisation and space utilisation- Perception of customer also depends on designing of Hotel, interior decoration, products and services, utilisation of space etc. this  attracts customer of the hotel as they feel more relaxed in the open and spacious area. As a result, it contributes in increasing number of customers for Hilton Hotel.
  • Service quality- Quality of products and services also influences interest of customers and makes  perception of company in their mind. I relation to Hilton Hotel,  operation management of the company offers high quality services to its customers which  formulates an effective perception of the hotel among customers (Sigala, 2013).  As a result, it influences huge number of customers towards the Hotel.
  • Brand image-  Customers have different perception for hotel industry, its services, values etc. In relation to operational manager of Hilton Hotel mainly focuses on building its brand image among customer with high quality service in order to influence them to remain loyal for long duration of time. This will also help hotel in enhancing its command over  customers with mouth publicity.

            As per the above mentioned factors which impacts over perception of customers it can be said that all of them are important as they influences interest of customers towards the services of hotel and  persuade them to use it.

AC2.3 Assess the opportunities and constraints affecting product and/or service development within a hospitality environment.

             Every business organisation essentially seeks for the better opportunity which helps them enhancing their business at market place. It can be said that there are numerous factors which have their influences the growth of the  company. In relation to Hilton Hotel, it can be said that there are numerous factors which  influence growth of the hotel and might result in decline of  its services as it impacts negatively over its sales. Hilton Hotel is giving special preference to its customers which impacts positively over the growth of the company. This hotel is offering personalised services to the customer which makes  them relaxed and attached as a result it improves their level of satisfaction (Sunder, 2013). Its defective services directly differentiate them from rival organisation belongs to similar sector. This contributes in gaining competitive advantage and contributes in the enhancement of more number of customers. As a result, it increases profitability of the company

            Apart from this, it is considered as the responsibility of the operation manager of hotel to analyse external market and find out real expectation of the customers. This help them in developing new effective services that will own all the factor that contribute in satisfying customers at higher extent.

AC2.4: Evaluate different merchandising opportunities for hospitality products and services.

          Merchandising is an activity which is used by an organisation to promote sale of their particular products especially by its presentation. It includes pricing, design, display, techniques, ascertaining quantity of the products. In hotel industry, it refers to a process of identifying customer preferences to deliver services in a way that influence it's visitors in raising demand of their hotel. In context of Hilton, it essential for it's managers to increase it's brand image and stake in a competitive business environment.

          By the use of technology, most of the hotels is providing online room booking services to their customer which will helps them in building a healthy communication environment with its customers (Tsang, 2011). It is essential for the chosen organisation Hilton, to analyse needs of it's customer and provides them good services which will help them in building a good brand image in a dynamic business environment. It will also help Hilton in achieving customer acceptance at the time of it's expansion. There are various types of merchandise services with which hospitality industry can be indulged.

Digital Merchandising:

            It is a vital part of e- commerce business where shopping is done through online or digital stores. It guides the consumers about what to purchase and what not to purchase.


AC3.1 (a) Evaluate different methods of pricing taking into account additional pricing considerations

            Pricing is a strategy used by companies for finding out the selling price that is to be set by the firm.  It is determined after calculating the costs incurred by the firm in the production. The different methods of pricing used in HILTON hotel are:

            Cost oriented pricing- This pricing method is used by Hilton hotel in which the management determines the selling price of different products after a profit percentage is added in the costs incurred. The profit percentage is different for different organisations.

            Market oriented pricing- Hilton hotel evaluates the price of all similar services supplied by other prominent hotels present in the market and accordingly keeps the price of its services after evaluating the features of the services.

            Service charge- Every hotel charges a certain service charge. It is basically a fee that Hilton hotel charges for the services it provides to its customers. The service charge is always added in the initial bill itself and never taken outside the bill.

            Hilton hotel can use Market oriented pricing strategies to determine the prices of the services provided by it, keeping in mind the competitive market strategies and prices of its competitors.

AC3.1 (b) Which of these methods is not applicable in selected organisation and justification

            From the above explained methods, some methods cannot be brought into practice by Hilton hotel which are explained as under:-

            Cost oriented pricing- This pricing method involves addition of profits to the costs paid to the producers for the goods supplied by him. This method cannot be applied in this case as there is no supply of goods rather hotels work on providing services to its customers (Vlachos and Bogdanovic, 2013). Also, they do not charge any extra amount for maintaining cleanliness, good  and positive ambiance etc. They do it out of a sense of responsibility.

AC3.2: Assess the factors which affect revenue generation and profitability in hospitality operations

            Revenue generation is the basic aim of any organization structure. Every organization or business concern that starts works with the core idea of earning maximum profits and generating revenues. The factors which affect revenue generation and profitability in the hospitality industry are:

            Labour intensity- It is a process or an industry which requires extensive amount of labour or workforce for providing services or producing goods. In hospitality industry, large amount of capital is required to run a hotel and provide services to the customers. Labour intensity is decided on the basis of capital involved in providing services to the customers. This factor enhances profitability ratio of firm as extensive labour can provide effective services to customers according to their needs.

            Shelf Life- Shelf life refers to the life of goods ie the time period during the goods or services can be consumed by the customer (Vlachos and Bogdanovic, 2013). For example, if a jam comes with a expiry date after 6 months ,  shelf life of the jam is expected to be 6 months which means customer can effectively consume it in those 6 months. This factor affect revenues of firm as they cannot store  products for longer time durations this is because products are stored according to their expiry dates.

            Elasticity of demand-  This term is used by business professionals and economists to measure the change that occurs in the demand of any given product or service when the other factors keep changing.  It can be calculated by the percentage change in the quantity demanded dividing it by the percentage change in another economic variable This is an important factor as firm can analyse change in demand factor of customers and accordingly they can sell and store the products thus enhancing their profitability index..

            These are the factors which mostly affect revenue generation and profitability rate in the hospitality operations and also provide strategies how profits can be increased even if there are any unfavorable changes.


AC4.1 Apply a range of performance measures and appraisal techniques to individual aspects of hospitality operations, the product and the whole operationPerformance Management

            It is a process of identifying effectiveness of organisational operations to achieve it's desired goals and objective. It will help the chosen organisation Hilton to improve it's productivity in a dynamic business environment.

Appraisal techniques

            It is an technique used to evaluate performance capability of employees working in an organisation to achieve a specific goal and objective. It will help Hilton in making it's workforce efficient and effective.

Quality Management

            It used to manage quality of delivered services in accordance with the standard of hotel management. It will help Hilton in getting customer satisfaction.  This will result in enhancement of booking of hotel room as a result it will increase its profitability.

Qualitative Data        

            It is a non numerical data which is collected through observation. It is also known as categorical data. Data or information about anything that stresses more upon the qualities, for example softness of skin, colour eyes,efficiency of manager etc.



AC4.2 Determine the usefulness and limitations of the various quantitative and qualitative appraisal techniques and their application to hospitality operations

            Comparison of inputs and outputs of employees are termed as quantitative appraisal techniques. While qualitative techniques are determine to appraise behavioral pattern of workers. Hilton hotels are implementing numerous qualitative and qualitative techniques on their business culture to monitor their employees productivity. These techniques can be utilize by a company to provide reward to their workers and on work forces to give promotions. With the help of these techniques managers of Hilton Hotel can able to manage or terminate  performance of their poorly performing managers (Bharwani and Butt, 2012). As these techniques provide benefits it also create adverse effects which create a sense of insecurity in mind of employees who are not getting any appraisals or promotions and salary increment. This will create a bad impact and make them think alienated in comparison with other group of personnel. Managers of this hotel can motivate their employees by providing good source of increments. With the help of this company can able to increase their profit and productivity

AC4.3 Apply approaches to business analysis, evaluation and planning appropriate to hospitality operations

            Ascertainment of business obligations and developing results to business problems is known as business analysis. Evaluation of business signifies evaluating performance of procedures of any entity. Business planning associate with technique of determining business objectives and pre determined goals and prepare plans which directly aims towards accomplishment of targeted goals. In the context of Hilton Hotels, managers conduct business analysis by building understanding of wants and needs of their consumers and entities. With the help in business enlargement top management of Hilton Hotels can able to supervise and invigilate whether their organisation is proving services accordingly to brand positioning of hotel in marketplace (Causin and Ayoun, 2011). Development of systematic process and methods in order to deliver magnificent quality of services to accomplish goodwill. Training which are provided to employees and staff members is done to make sure that queries which are related to guests can able to handle as soon when  they arise. This will automatically provide help to organisation in attainment of their goals and objectives.

Also Check: Interrelationship Among Hospitality & Travel and Tourism Sector 


            From the above report it has been concluded that it is important that hospitality services plan their activities in an effective manner so that better services can be provided to its customers. For pricing strategy it is important that hospitality industry make effective pricing strategies and for doing the same internal and external factors must be considered. Along with this, it has observed that there are different stages which are required to be followed so that best services can be delivered. As a result, it will assist company in sustaining a better position at market area.

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