The hotel simulation tool is employed by managers in the hotel industry for managing business functions, analyzing market research as well as applying the knowledge of information systems in formulating strategic business plans. The hotel simulation tool outlines a hotel's real competitive market conditions, where different hotels compete. In this hotel simulation, a presentation of the activities done in the last two weeks will be outlined and the reasons for making such decisions explained. The performance results will also be portrayed and an evaluation of the strategies utilized outlined to offer effective suggestions for future periods.
|Month Revenue Data Was Collected||January||February||March|
|Variance in $||-$2,271||$29,725||$72,978|
|Variance in %||0.28%||3.64%||7.20%|
In this hotel simulation, total revenue was estimated based on the predicted occupancy for the hotel's rooms, totals of food and beverage used by the guests and income attained from other departments of the hotel. In this case, the other departments included event services, parking, telephone, guest laundry, and dry cleaning as well as entertainment. The analysis portrayed that there was a slight negative variance in January for the hotel. However, the great positive variance manifested in February and March illustrates a net increase in revenue in the hotel's performance. The revenue compares optimally with the net revenue of the competitors even though it is not the highest. Subsequently, this portrays a good performance of the hotel in the market and a fair competitive ability.
The total revenue projected was formulated based on forecasted occupancy rates as well as an average daily rate (ADR) for all categories of rooms. In addition, the occupancy capacity for January was estimated based on the previous year's average occupancy rates. The analysis of the occupancy rate for the hotel for the first four months illustrated a significant increment in the actual occupancy rates. Variance rate has significantly reduced for the last month and it is projected that the occupancy will remain the same for the current week. Additionally, that is because there are plans to acquire a large clientele from the city's industrial area. The hotel will be preferred due to its quality services and slightly lower costs compared to competitor hotels in the market.
|Month||Projected||Forecasted Occupancy Rate||Actual Occupancy Variance||Percentage Variance|
The ADR formulated for the hotel helped to set up the establishment at a slightly higher rating level than that of its competitors. In this case, the rate was higher than most of its competitors but at the same time, the level of services offered by the hotel was improved. The fundamental objective for the elevation of rates and enhancement of the quality of service was to enable the establishment to secure more revenue. At the same time, the enhancement of the two stated factors would promote the level of customers' satisfaction.
Special pricing or ADR for premium service guests was set at a higher rate since such clients for the hotel associate a higher ADR with the quality of services. The increased rates for the premium services were also meant to increase the hotel's revenue collected. Tour groups and corporate contract clients are price sensitive and in most cases, they search the hotels with the lowest ADR. As such, the ADR for the two forms of clients was set at $150/per night. Lastly, guests that used standard services at the hotel paid less than guests using the premium services. However, the rate for the standard services guests is higher than the rate for all the other groups of customers.
The rates for the current week will be maintained the same. That is so as to create a stable image for the hotel's clients with respect to pricing and offering of services. Also, instead of raising the ADR, the hotel projects to introduce a range of new services for its groups of customers to promote their convenience.
Food and Beverage
In the past weeks, meals and refreshments were set at 29% while the costs of beverages were set at 24%. The food cost was set at a reduced price because the hotel's management located suppliers who supplied raw materials at low prices. In the current week, the prices for meals and refreshments remained at 29% while the total costs of beverages reduced at 22%. The reduction of the price is projected to increase the amount of revenue attained by the hotel through an increased number of customers.
In the past weeks, the Soft Goods Redo for Meeting Rooms were made starting from February to April. In March, Contract Cleaning & Services for the hotel's guest rooms were performed. The refurbishments made are expected to make the living experience at the hotel more comfortable for the guests. In the current week, all the guest rooms at the restaurant have been deep cleaned and are ready for occupation. Past evaluation shows all the customers using the hotel services are highly sensitive about the quality of the services offered to them at the establishment. As such, the refurbishments will improve guests' satisfaction and add more revenue for the establishment.
The facilities added at the hotel were based on the available financial resources as per the prepared budget. Low capital investment projects that require low operating costs were started first. In the previous weeks, the facilities upgraded for Y1 were retail shops, valet parking, travel and tour costs, lobby and kiosk. At the current week, no facilities shall be required since they are all capital-intensive projects. That is because they are no sufficient financial resources to cater for such capital-intensive projects at the moment.
The services that require minimal operating costs but with the potential to generate a high amount of revenue shall be selected first. The rest of the services will be added based on customers' demand and the financial resources available in the next budget. The services added in the previous weeks include the creation of a foreign exchange center, Mini Bar F&B as well as internet connection in the guest room. In the current week, a music and entertainment system was enacted and also an express check-in/out center created. Also, the Concierge and Turnover Service for the hotel will also be added this week since they are within the provisions of the available budget.
The number of staff required was formulated based on the occupancy levels that were forecasted for the previous period. Moreover, approximately 3% of the payroll and salary were employed in the training of all the staff chosen for the hotel. In the previous weeks, the front office required 1 attendant, telephone 1, food production supervisor 1, and service attendant 4. In the current week, there will be no additional staff needed for the hotel. Instead, the already available employees will be offered incentives like training and salary increment to make them stay longer at their work positions.
Marketing and Advertising
Approximately 6% of the revenue forecasted will be employed for advertising purposes. Advertising allocation was founded on the revenues generated by different room categories and distribution channels. The total budget for marketing and advertising is $83,600. Marketing will take $50,000 while advertising $33,600. In the current week, the budget for marketing and advertising will still be 6% of the forecasted revenue. It is also the rate on the projected revenue that is used for marketing and advertising by competitor hotels in the market.
In the previous weeks, no premium payments were made on the borrowed amount apart from that made in January. Instead, the cash reserve will be employed in the refurbishment of the hotel and in adding more services at the establishment. Also, in the current week, no principal payments on the loan. That is because March's cash reserve will be used to refurbish and add more services to the hotel.
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