INTRODUCTION Revenue per available room (REVPAR) and Labor

Topic: BusinessLeadership
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Last updated: May 21, 2019

INTRODUCTIONThe hospitality industry is a broadcategory within the service industry. It includes lodging, theme parks, eventplanning, transportation and other additional fields within the tourismindustry. The hospitality industry.Hotel Industry is closely related withthe tours and tourism industry. According to the survey done by statista theindustry was forecasted to reach around 553.8 billion U.S.

dollars in retailvalue in 2018.As stated in Srivastava and Maitra(2016) the Key Performance Index for the hotel industry are Average Roomrate  (Average Daily Rate), BedroomOccupancy rate (Occupancy rate), Revenue per available room (REVPAR)  and Labor Cost Ratio.                                                 Occupancy rate is measured as thepercentage of available rooms occupied over a specific period of time.Average Daily Rate is the average pricepaid per room on a given day.REVPAR or Revenue per available room isthe average daily room revenue generated by available room.Customer Satisfaction can be a difficultto measure but without satisfied customers it is difficult to compete. It ispossible to develop a process to measure customer satisfaction.

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Advertising ROI is the revenueadvertising and promotions bring.According to the survey by statista, asof 2016, the highest occupancy rates are highest in Europe with 70.4%, followedby Asia Pacific with an occupancy rates of 69 percent. The Middle East andAfrica had the lowest occupancy rates at 61.6%. According to the same survey,the average daily rates are highest in Middle East and Africa.

The tourism and hospitality industry inIndia is emerging as one of the key drivers of growth among the service sector.According to IBEF, domestic tourist visits, or DTVs to states/union territoriesgrew by 15.5% year-on-year to 1.65 billion during 2016. The top 10 States/UnionTerritories contributed about 84.2% to the total number of DTVs.oreign touristarrivals or FTAs in India have increased by 18% year-on-year to reach 723thousands as of 2017 September.  FTAs onw-tourist visa in India have increased by 71% year-on-year to 118 thousand inSeptember.

India is expected to move up five spotsto be ranked among the top five business travel market globally by 2030.Due to all these reasons internationalhotel chains will likely increase their investment and expansion plans and areexpected to account for 50 percent share in the Indian hospitality industry, arise from the current 44 percent.Customer  relations is very important in the hospitalityindustry. If hotels want guests to keep visiting the hotel premises andincrease the business the hotels need to have an exemplary customerrelationship that entices and attracts the customers to come back to the hotel.Managing the guests’ experience does notrevolve around just the service. It is the summation of all privileges that areachieved to cultivate a solid and compatible client relationship. Customer relationship management hasbecome a very important strategy for personalizing and improving customersatisfaction in hotels.

It is a tool to attract, acquire, retain and maintainhotel customer engagements as a long term goal. As said by Hyun and Perdue(2016) the main change in the last 25 years in the marketing theory of hotels id that it has shifted from transactionsto relationships. Long term customer-hotel relationships are recognized as akey determinant of marketing success.

      LITERATUREREVIEW Influence of national culture andbalanced organizational culture on the hotel industry’s performance by Nazarian et al. (2017). They describedthe impact of culture on organization performance. The relationship betweennational culture and the organization management and the factors influencingit, adopting mix culture in the organization results helpful in understandingthe behavioral and psychological instances. A balanced organizational cultureis positive key for overall performance of the hotel management. Culturalbehavior and organization management should be a perfect blend to yield theefficiency and performance in any hotel management. Guidelines for Developing HotelManagement in Phitsanulok to Compete in Changing ASEAN are explained by Phisunt Tinakhat (2015).

Tourism is ahigh revenue indicator to economy and indicates peace and friendly relationshipbetween nations. Decline trend in the foreign visitors in Phitsanulok compriseson many factors to govern for.  Hotelsmanagement should implement the most practical and efficient methods to impresstheir clients. Issues like pricing is a universal problem that people face butby offering discounts is minimized, other factors such as facilities, location,brand image and services these should be handy to incorporate to customers  to build strategic variable impactingcustomer satisfaction and loyalty.

New initiatives in marketing via segmenttargeting and use of marketing tools in hotel industry can have an effect. Langvinienand Daunoravi (2015) discuss the factors behind choosing theideal business model to be adopted by hotel management and hospitalityprofessionals. It is discussed that the hotel industry is different from otherindustries in terms of intangible deliverables, perishability andheterogeneity. In order to deliver the needs of the most demanding customers,the strategy needs to be customer centric. Thus, good customer relationshipmanagement and internal marketing strategy needs to be well established.Employee empowerment is also a crucial part of building the right business planas employees who are at full productivity will contribute more to customerservice, which in turn will improve the customer’s opinion of the hotel.Innovation and efficient use of technology are also to be seen as factors whichnot only improve service quality and customer satisfaction but alsoprofitability and reduce operating costs. Customer relationship with differentdimensions is related to the various marketing research actions as discussed inHyun and Perdue (2017).

Theydiscussed the key forces that have impacted the marketing strategy of the hotelindustry, as how the marketing theory shifted from transactions to therelationships. Marketing success is viewed as the long term customer-firmrelationship. Short term transaction volume and revenue are thetransaction-oriented marketing. The various customer relationship dimensionsdiscussed in the paper are: customer acquisition, retention, expansion anddefection. The emphasis is also given on understanding the return on investmentfrom hospitality marketing. The paper develops a customer relationship scalewhich is multidimensional and validated with both marketing effectivenessmeasures and financial performance measures. They identified six dimensions forthe customer relationship scales: engagement, motivation, cross buying,commitment, customer defection and commitment.

 They concluded that there is a positive correlation between customerrelationship scale and marketing effectiveness and also positive correlation betweencustomer relationship scale and customer lifetime financial value. Customer satisfaction which should bethe most important output is often ignored in many hotel efficiency studies. Assaf and Magnini (2012) have discussedhow customer satisfaction is directly related to the hotel efficiency scores.Many studies have measured the hotel efficiency using methodologies like DEA(data envelopment analysis), BDEA (bootstrapped data envelopment analysis), SF(stochastic frontier) and MI (Malmquist Index). Their study gives the empiricalevidence of how there is a significant difference in the ranking of hotelefficiency scores when customer satisfaction was excluded. They have derivedthe hotel efficiency scores using the stochastic frontier method based on asample of leading hotel chains (Hyatt, Hilton, Mariott, Starwood, etc.) in theUS.

They divided their study into two models: one where the customersatisfaction was excluded and other where it was included. They used the publicdata from American Customer Satisfaction Index and founded that a hotel’sefficiency ranking among competitors changes when customer satisfaction is notincluded as an output variable.  Dominiciand Guzzo (2010) have studied the overall customer satisfactionlevel for the hotel and for each service supplied.  Customer satisfaction, decides if the customerswill return to a hotel or advise it to other tourists.

It is pivotal to thesuccess of the hospitality business. Neglecting to pay attention to those hotelattributes considered most important by guests, may lead to negative evaluationof the hotel. Dominici performed a qualitative analysis of a large hotel inSicily (IT), the Sporting Club Hotel in the town Cefalù, using the CriticalIncident Approach (Hayes, 2008).

Customer satisfaction is the startingpoint to build customer loyalty, therefore a long-term relationship. Thiscreates a loyalty’s stock in the enterprise which improves corporate image.Through the analysis, he evaluated theoverall customer satisfaction level for the hotel and for each servicesupplied. Customer satisfaction is casuallyrelated to service quality, consumption emotions, customer loyalty andperceived value as described in Deng etal (2013). They concluded that service quality directly or indirectlypositively impacts customer satisfaction.

They also concluded that customersatisfaction is positively and directly impacted by consumption emotions.Consumer complaint is negatively related to consumer satisfaction. Influence of strategies and keymanagement decisions on customers experience are explained in detail by Voorhees et al.

(2016).The perceptionof customers on quality and the overall customer satisfaction across servicesector is described. They suggest that service delivery alone cannot be thecriteria to measure customer satisfaction but the overall pre, post and coredelivery should be metric for service industry.

They also explain how awarenessof service builds expectations of service delivery for the customers. Theyprovide insights into how social media can be used as platform to buildcustomer awareness on the services provided. They stress on the need to expandbeyond the core business strategies to gain service targets and retain customersatisfaction.

 Neirottiet al. (2014) discuss that technology actually improvesvisibility and revenues, but does not increase profitability. They illustratethat that social media as a tool for value generation amongst hotels.

For thepast few years, social media as a tool has to enhance visibility amongmasses.   The observation was that astrong online presence has a positive effect as far as the revenue isconcerned. This is due to quality of ratings rather than the volume of theratings given. However, we can see that even though their revenues go up, theiroverall gross profit margin is not affected or is negatively affected. This isdue to the immense cost of fee provided to the info mediating agencies. This isobserved as being less in hotels with higher star ratings, located in placeslacking competition. However, small and medium range hotels should plan theirsocial media budget and strategy according to the target customers’demographics and its intended positioning, due to the strong visibilityobtained and to keep costs under control.Gender Differences among Hotel Guesttowards Dissatisfaction with Hotel Services are explained by Salleh et al.

(2016). Dissatisfactionis cause due to failure in providing expected services to a client in quality,service, promises and failures in brand benchmark levels. As increase in thecompetitors count and providing service to large volume of clients of highlydiverse cultures is it not easy to hotel management to make renovations.

Highdissatisfaction level are usually seen in females compared to males because ofattribute comparisons ,such as advertising , poor experience , word of mouth etc. women are likely to  focus more on interpersonal component i.e.they guide by personal experiences or evaluations. They try to interact morewith skilled person.

Males are more dissatisfied when compared to females andthis result out because females are not expressive their feelings towardsnegative experiences. Study was to understand the behavior of customers andwhat factors were influencing there dissonance level among gender basedcomparisons. Gender based differentiation strategy isalso an important part of establishing customer satisfaction. Omar et al. (2015) states that genderhas a significant effect of service quality and customer experience. Females,being more social oriented are most likely to have better satisfaction ofservice quality and experience than males, who are seen as more goal oriented.This makes it important to differentiate approaches towards male and femalecustomers albeit in a subtle manner. But, how do we measure the intangible? Zeithaml and Berry (1998) havedeveloped an instrument called SERVQUAL which consists of five dimensions:reliability, responsiveness, empathy, assurance and tangibles of servicequality.

Thus, we can develop a correlation analysis of service quality withthe above factors. This will help us quantify intangible aspects like servicequality and help us improve customer service and experience. The relation between customer sentimentsand online ratings of hotels are explained by Geetha et al. (2016). They try to answer whether customer sentimentexplains customer ratings and whether customer review sentiments and hotelratings are consistent across hotel categories. From their research theyconclude that the customers have better sentiments associated with premiumhotels.

They also conclude that the variation in hotel ratings ae explainedbetter by customer satisfaction in the budget hotel range than the premiumhotel and it is possible that multiple factors are affecting customer ratingsfor premium hotels. The need to know the influencers forcustomer experience in budget hotels are researched by many scientists. Intheir research paper Subramanian et al.

(2016)after their research on budget hotels in China confirmed that drivers likephysical product and services are an essential port in budget hotel industryand that services provided and cause a difference in customer satisfaction. Similarly,Ren et al. (2014) had done similarexperiments on hotels in China have come to conclusion that the customers of budgethotels check from basic attributes of the hotel room to professionalism ofservice staff including location and all these parameters positively impact thecustomer experience. Imranet al. (2017) have studied effect of customers experience onconsumer’s satisfaction, brand loyalty and word of mouth. They found out fewfactors that positively affect the consumer’s satisfaction, brand loyalty andword of mouth are peace of mind, moment of truth, outcome focus and productexperience.

 Kandampullyand Suhartanto (2000) studied relationship between customersatisfaction and customer loyalty. Due to increasing competition in thisindustry, hotels have to focus on uniqueness; there is very little distinctionbetween products and services of one hotel with another. There are only 2 strategies followed byhotels to gain competitive edge: Low Cost and Unique Services.

A satisfiedcustomer will not only become a loyal customer but will make other customerscome to your hotel. They came to conclusion that hotels need to be consistentwith their services as customers highly values consistency as well aspersonalised services. Customer loyalty can be nurtured by providing consistentsuperior room facilities, complemented by the personalised services by housekeepingstaff. The effect of service performance on thehotel customers and their retention in culturally diverse Iran is explained by Hosseni et al. (2015).They describeneed to efficient use of manpower to build brand visibility and enhancecustomer loyalty. They studied the need of improving functional quality ofservice offering and the need of enhancing the use of experienced staff forbetter service and improving loyalty towards brand.

They analysed how qualityof service is influenced by workforce experience, performance and how itimpacted brand association and experience of the customer. They describe howdirect and indirect experiences of customer build the perception that customersdevelop on the hotel chain and how it influences customer choices.Aliet al. (2014) have studied various dimensions of customer’sexperiences along with the guests’ memories to check customer loyalty inMalaysian Resort Hotels. This study has concluded that the customer’sexperience can be classified in four dimensions viz., entertainment, education,esthetic and escapism. The study further concluded that these four dimensionsdevelop customers’ memories which ultimately affects the loyalty.

Gee (2000) has stated that resorts arebuilt on the concept of creating such an environment that will give customers afeeling of well-being, enjoyment and satisfaction. Ali et al (2013) concluded that guests get the motivation to travelto Resort hotels in order to escape from their daily routine life or normallife.Stefanoet al. (2015) describe the use of qualitative methods to evaluatethe value of service offered to customer in the hotel industry.

They describehow the use of customization, communication, developing credibility andreliability on the service through responsiveness can help retain customerloyalty by using SERVQUAL scale. They used customer perception on service,actual service level, membership function describing the frequency of thevisits to build a fuzzy decision making model to determine service quality.They determined how service quality helps in positioning the hotel chain withinits customer segment and build loyalty. They emphasis on need to understand thecustomer culture, improve process of managing human resources within the hotelchain to retain customer loyalty.Hussainet al.

(2015) describe how team building, knowledge sharing ofbest practices and customer service be measured to improve customersatisfaction in hotel industry. They explain how socio-economic positioning ofthe hotel sector helped scale industry. The need to enhance quality as well asinnovative practices to improve services is also discussed.

They usedstructural modelling and Partial Least Squares method to identify the relationbetween knowledge sharing behaviour between employees, team culture and howthey influence service innovation. They stress on the need of employ serviceinnovation and new service techniques development to achieve high customerloyalty and enhance market share.

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