Revenue management in Hotel industry Essay Example | Topics and Well Written Essays - 500 words

Revenue management in Hotel industry - Essay Example identified three conditions which would be necessary for revenue management: there should be adequate fixed resources for sale; the resources should be perishable; and customers should be willing to pay different prices for the resources. Hotels sell rooms as fixed inventory which are highly perishable and attract different prices depending on size, location and availability of unique features. Appropriate forecast enhances identification of cost drivers leading to development of appropriate measures of performance. It would enable an organization understand how operational drivers affect its financial performance outcomes. As budget forecasts are highly dependent on demand and supply, hotels should consider their room occupancy and the charged rates should increase with increase in reservations. But in practice, this does not happen and Salerno (2012) argues that most hoteliers would blindly set rates for future and then get disappointed. Poor accuracy of budgets still remains a problem in many organizations. When forecasts are made way above or below the budget, the organization risks making bad decisions based on the incorrect projections. This would also cause the management to pay less attention to budgets as they become unreliable and not trusted. Generally, inaccurate forecasts significantly affect revenue management system performance as the organization will suffer lack of proper planning (Weatherford & Kimes, 2003). When the forecasts are set so high, Hayes and Miller (2011) argue that the forecast then becomes a motivational tool for increased performance and not a revenue management tool. However, the authors note that no organization should seek to make inaccurate forecasts. These inaccuracies would be a result of deriving facts from poor tools of budgeting such as spreadsheets fed with wrong formulae. Limited time for employees to come up with good projections and their subsequent lack of motivation could also be a reason. Additionally, sidelining

Thougt it Was Safer Than Starting His Own Business Case Study

Thougt it Was Safer Than Starting His Own Business - Case Study Example Secondly, since he rose through the ranks, having retired as a senior execute from the previous firm makes Fred highly skilled in terms of possessing the knowledge, abilities and skills needed to operate a franchise within the same industry. However, there is disparity in the specific service offered by the previous organization he was employed with (automotive parts) and that of his franchise (car repair). Therefore, in terms of having direct and previous experience on operating a car repair business, Fred seemed to start as a neophyte in this kind of business endeavor. 2. Evaluate Fred’s misconceptions about being a franchisee. Speculate how common these misconceptions may be for all new franchisees. As indicated in the case facts, Fred perceived that there were apparent misconceptions in terms of â€Å"being his own boss and running his own company† (The Franchise Handbook, 2000, par. 5). According to Gappa (2012), â€Å"there are many misconceptions about franchising, but probably the most widely held is that you as a franchisee are "buying a franchise." In reality you are investing your assets in a system to utilize the brand name, operating system and ongoing support. You and everyone in the system are licensed to use the brand name and operating system† (Gappa, 2012, par. 5). ... red’s assertion that one of the misconceptions of franchising is thinking that when one enters into a franchising agreement, the franchisee would be his own boss and would run his own company. As a franchise, all the terms of the franchisor would be followed and adhered to. Likewise, it was emphasized that â€Å"as a franchisee you own the assets of your company, which you have chosen to invest in someone else's brand and operating system and ongoing support. You own the assets of your company, but you are licensed to operate someone else's business system† (Gappa, 2012, par. 11). It could be therefore common for new franchisees to assume that by entering into a franchise agreement, the new venture would give one the opportunity to own a business and be one’s own boss – since one would invest considerable amount of funds that could be parallel with investing on establishing a practically new business venture. The only difference in franchising is that one opted to invest in a previously established business with previously established historical performance to gauge customer’s response to the product (or service) and therefore provide a plus factor in terms of image, core competence and competitive advantage. 3. Suggest what Fred could have done differently to be better informed and advise Fred on action he can or should take now knowing his situation. For new entrepreneurs and business practitioners who are thinking of starting a new business venture or opting to enter into a franchising agreement, to be better informed, there must have been a more comprehensive and extensive research undertaken on the alternative courses of action: to establish a new business venture or to enter into a franchising agreement. There are advantages and disadvantages to both