Hospitality Operations Management


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Hospitality operations management is a process of developing business skills to work in an organisation within various areas in hospitality industry. In relation to hotel industry, it includes areas like management of human resources, front desk operations, food and beverages and housekeeping (Alexakis, 2011). The present assignment is based on Grosvenor House hotel which is a part of JW Marriott chain, located in Mayfair are of London, England. It is a luxury hotel opened in 1929 providing flawless service. In this report, we have discussed about nature of services offered by hotel and the factors that influence their demand. Also, it links various customer profiles and their expectations to the services offered. The report includes the key stages involved and opportunities and constraints during provision of services. Along with that, the pricing and planning strategies adopted by the organisation are covered.

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

Hospitality industry is an essential element of part of the service industry. It emphasizes upon satisfaction of customers and meeting the preferences and desires of customers (Kimes, 2011). In hotel industry, it includes services like accommodation, room service, food and beverages, conference and banqueting, entertainment etc. The manager of Grosvenor House also focus upon such areas which are described below:-

  • Rooms: Its the responsibility of management of Grosvenor House to ensure that the visitors have a comfortable stay. Proper cleaning of rooms is done before arrival of guests. Also, the rooms provided are spacious, air-conditioned, properly ventilated and have direct access to room service staff by way of telephones.
  • Safety and security: It is essential that security of guests is kept in mind at all the times and hotel follows measures like keeping fire extinguishers, security guards etc. to avoid any security issues that may arise.
  • Food and Beverages: The top management ensures that the food available in hotel is cooked by adopting proper hygiene and quality measures. Menu includes variety of dishes so as to suit customer preferences.
  • Conference and Banqueting: Its essential that the hotel has at least one conference or banquet hall to host any business conference or special events (Lashley, 2012).
  • Staff: A professional and polite staff should be at the service of customers. Also, it is ensured by management that there is proper staffing at all times to handle the queries of guests.

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

The operations of a hospitality organisation are influenced by various factors as it is the most essential element of service industry.In relation to hotel industry, these factors may include preferences of customers, trends in market, seasonality and economic conditions of the country. Some of the factors considered by the management of Grosvenor House are:-

  • Seasonality: This is one of the most influential factor that drives the business of hotels. Peak seasons allow more customers to move in to experience luxurious comfort and memorable experience.
  • Time of day/week: It is yet another driving factor for hotel industry. Visitors move in more during weekends or festive seasons. Also, there is high movement of visitors during the day time, thus the hotel management need to keep these factors in mind to ensure quality service for guests (Sigala, 2013).
  • Living Style: The hotel management aims at providing flawless service, lavish lifestyle and finest of amenities to meet the standards of its brand image in market.
  • Regional and ethnic influences: The regional and ethnic preferences of visitors also impact the business in hotel industry.
  • Economic factors: The economic conditions of a country also affect the demand in hotel industry as high disposable income of customers imply more use of luxurious services. On the other hand, low disposable income of visitors means unwillingness of customers to spend money on premium services.

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

The amount of money a particular person can spent is based upon the income group which he belongs. There are three type of income group in moderate, high, elite. It is the set of particular population which is divided with respect to the level of income (Sunder, 2013).

The person or an individual comes in the moderate income group can stay over the places where he can get the basic facilities and the rooms which have standard lifestyle,there expectations regarding the meal and price are only that which can satisfy there essential needs like food water and electricity. They only need a comfortable location, healthy and friendly environment.

While the person who belongs the high income group needs all the basic facility, plus some additional luxury of food items and the location which they prefer are more close to the nature and peaceful places. The Grosvenor hotel also provides the facilities of separate bathrooms and swimming pools in their area separately and they are ready to pay any amount which gives value to their money (Tsang, 2011).

The person who comes in the elite income group they do not worry about spending the money. They just need those facilities which are only for the elite class of people in The Grosvenor hotel gives premium bathroom, separate gym area, special beverage section, 24 hours dining facility, private chef and butler services. The expectations of this type of customer always new at different places and they are able to pay any price for the specific services of the hotel.

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

There are various factors which affect the average spending power of customers which are explained below:-

Size of income- Income of people is high then there spending power are also good, those people are able to spend larger amount of money in the accommodation and able to take benefit of luxury facilities. While those people have low income can also spent money but at the decent rate which could be afforded by them (Vlachos and Bogdanovic, 2013).

Social and cultural influences- Low income group generally follows the culture of saving money, while the high income group follows the culture of spending more and more money so, Grosvenor hotel offers and address cultural diversity among the different by knowing the preference and choices of customer. As part of the current trends of hotel industry, it provide all basic plus some premium facility to high income group, while discount on the room is provided by company to lower income group. Also, for higher income group extra facilities are also available as their spending power are much higher.

Economic situation- The economic background of an individual also make influence on the average spending power of a person. The individuals whose economic background is sound, their spending power for luxurious accommodation is also effective. If the inflation and interest rates are higher then it would not allow person to spend more (Alexakis, 2011).

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

In context of Grosvenor House, for the development of new product and services in the hospitality sector, there are various stages which has been followed for the purpose of analysis and evaluation. These are as follow:

Idea generation- This stage involves the generation of new product and services idea's with the set strategic objectives and addition in the current portfolio of products or services of the hospitality sector.

Idea screening- It is a quick analysis and evaluation of an idea which is made against any set criteria and take care of the objectives with the development of new product or services.

Concept development and testing- This stage tells about the initial requirement of setting an idea of new product and services development and analysis it in accordance with the forwarding it to research and development department.

Business analysis- This stage tells about the brief analysis of the idea generated and know how it will benefit to the organisation. It also disclose how this idea is good for locate or situate into the market and its suitability in context with customer.

Product development- This stage actually belongs to the part of the R&D department. The personnel their gives it the shape of actual product and add new key features and characteristic such as colour, shape, size and design etc (Bartram and Dowling, 2013).

Test marketing-  It involves the commercial testing of a product to judge the actual potential and abilities of a new product after the production stage to the qualified customers.

Commercialisation- This phase comes before the launch stage of the product. It decides the strategy of when, where, how and by whom new product and services will be launched and initially at what price and targeting which market of the customer's.

Launch- This is the final and last stage of this whole process. It includes commercial launch of the product in the potential market. It is an kind of event where the physical launch of any products or specific as such in the hospitality sector services take place.

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

There are various features in relation to the perception of customers regarding the services in hotel industry that are considered by the top management explained below:-

  • Price of the product or service- In the Grosvenor House, pricing of a particular product or services decides the changes in the mind of the consumer and their quick perception about the hotel sector (Bharwani and Butt, 2012). If the price is too high, it presumes that they can get same or high benefits at the lower price. This shows that price is one of the most important factor of the consume perception.
  • Service quality- Quality of a service in the Grosvenor house hotel should be more than the expectation of the customer and be specific, quick and impressive. Visitors generally expect service would be higher than the price they are paying for availing it.
  • Brand image- Continuous generation and building the brand image is the most common factor of the perception process. Serving the customer utmost best, providing the best quality and their ethics and values creates the positive image of the particular hotel to the customer. This can also lead to mouth publicity of hotel by customers in front of their acquaintances (Causin and Ayoun, 2011).

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

There are a number of factors that impact the growth and development of any business or industry with respect to market scenario. With reference to Grosvenor House, being a part of JW Marriott, it offers lavish services and comfortable lifestyle for the guests so as to maintain its brand image in market. They provide a memorable experience to customers by offering flawless service and premium services. The staff of the hotel is courteous, jovial and passionate to deliver high quality services to visitors (Crawford, 2013). The management of hotel aims at satisfaction of customers by delivering amenities that are beyond the guests’ expectations. Exceptionally distinguishing lavish environment with variety of cuisines keeping in consideration the health conscious people makes this hotel one amongst the best in the UK. Detailed attention to every facility offered by the hotel and handling of queries of guests as and when they arise, has given a competitive advantage to the business.

It is well known that various responsibilities are associated with luxury hotels. These responsibilities if not handled well can act as constraints for the business. Some of the constraints in hotels are change in inflation rates, customer preferences, technological advancements. These factors if not tackled by the management of Grosvenor House can hamper their revenues and brand image.

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

Merchandising refers to display of products in such a manner that it arouses the interest of customers and entices them to purchase that good (Ferdinand and Kitchin, 2012). This includes ascertaining the quantities, deciding the prices of goods and services, using attracting display designs and techniques, developing promotional strategies and analysing the need of discounts and rebates. In hotel industry, the process refers to understanding the preferences of customers and then delivering services in a way that influence visitors to raise demand for hotel. In context of Grosvenor House, there are various opportunities available for the top management to increase its brand name and stake in market.

Nowadays, with various new trends in technology, hotel has given the chance to buyers to book the rooms via internet through hotel site, mobile applications while they are in their homes, there is no need to visit the property. Also, by establishing healthy communication with visitors while they are in property, they can influence the behaviour of guests in such a way that targets at customer loyalty for the hotel in future. Also, hotel can offer special discounts or rebates if the visitors book directly instead of through a third party service provider. Thus, the organisation builds an understanding of the needs of customers, ensures their ease in booking of rooms and delivers lavish services while the guests are in property. By this, top management of Grosvenor House aims at improvising their brand image in hotel industry and also open routes for acceptance by customers at the time of expansion of hotel across different locations (Kimes,  2011).

AC3.1: Evaluate different methods of pricing taking into account additional pricing considerations

There are various methods of pricing available to managers in hotel industry. Grosvenor House also recognises the importance of these methods and thus follow some methods which are explained below:-

  • Cost oriented pricing: Cost-based pricing refers to a pricing method in which a certain percentage of desired profit is added to cost of product to obtain the selling price. Management of Grosvenor House uses this technique as the entity runs for the motive of profit making along with delivery of finest services to maintain its stake in market.
  • Market oriented pricing: Every organisation conducts operations in a manner that keeps in consideration the pricing strategies being adopted in the industry by rival organisations (Hospitality and Operation Management, 2018). This pricing method is adopted by Grosvenor House to ensure that the organisation keeps a track of the prices at which services are being delivered by competitive entities.
  • Service charge: The management of Grosvenor House aims at providing premium services to its guests even beyond their expectations. So, top management charges prices according to the quality of services delivered.
  • Cover charge: The hotel management does not just focus on delivering luxurious room services but also makes provisions for the entertainment of its visitors by organising various cultural or music events. Cover charge pricing techniques used by Grosvenor House is for charging the visitors for any kind of service provided over accommodation.
  • Minimum charge: This pricing technique is used by Grosvenor House to stay ahead of its competitors in industry. This method refers to offering the services to customers at minimum prices when compared to their rival hotels.

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

Grosvenor House provides elite class services and thus for ensuring its long term existence in market, it is necessary that management ensures that the sale made is able to meet cost of provision of service. There are various factors that are considered by them to make sure that revenue is being generated for business with an element of profit. These factors are explained below:-

  • Labour Intensity: To conduct the daily operations in Grosvenor Hotel, managers need to maintain a skilled staff which is courteous and jovial in communicating with guests and deliver services that match the standards of hotel (Ferdinand and Kitchin, 2012). Thus, every year, hotel has to spend a lot of money on giving training to its staff. Thus, efficient delivery of services will generate revenue for the entity and also increase profitability of business.
  • Elasticity of Demand: The demand for services in hotel industry also impact the revenue and profitability of business. If the demand is high, it will result in generation of revenue and increase the chances of profit-making for Grosvenor House and vice-versa.
  • Price: The pricing of rooms decide by the management of Grosvenor House has a very big role to play in the generation of revenue. High pricing would result in lower revenue generation for the entity and vice-versa.
  • Procurement: There are a number of products and services offered at the hotel which are procured by hotels from the market (Crawford, 2013). The cost of procurement of these services also affect the profitability of business for Grosvenor.
  • Average Spending power: The spending power of a customer also affects the sales and profitability of Grosvenor hotel. A customer who is willing to spend a large sum of money to ensure that he receives premium services in response will result in the generation of high revenue and profits for entity.

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

Performance measurement is the process of determining how well an individual or organisation is operating to achieve the desired gaols.This includes quantification of inputs, outputs, processes, services and performance to assess whether the pre-decided targets are met or not (Causin and Ayoun, 2011). Appraisal techniques are the methods adopted by an organisation to evaluate the performance of an employee.Management of Grosvenor Hotel also use various such techniques to evaluate the performance of staff against the standards which are described below:-

  • Quality Management: It is imperative to assess whether the quality of services delivered are up to the standards set by hotel management.
  • Customer Service: The utmost goal of entity is customer satisfaction. It is important to determine whether the staff is delivering services as per requirements of visitors.
  • External comparison: Comparing the services provided by the entity with those of rival business organisation is necessary to ascertain whether operations of Grosvenor are aligned with industry.
  • Sales performance: The overall performance of organisation is analysed to ascertain whether the extent of revenue generation is aligned with the profitability goal of company.

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

Grosvenor House use various quantitative and qualitative techniques to track productivity of their staff. These can be used to reward employees and work units and to give promotions. Also, these can aid managers in termination or discipline of poorly performing workers. But these techniques have some adverse effects also like sense of insecurity among those who don't get promotions or salary raises. Also, it makes them feel alienated from the group of personnels (Bharwani and Butt, 2012).

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AC4.3 Apply approaches to business analysis, evaluation and planning appropriate to hospitality operations, making proposals for action

Business analysis is the process of ascertaining business needs and developing solutions to business problems (Bartram and Dowling, 2013). Business evaluation means evaluating performance of operations of an entity. Business planning refers to the process of determining business goals and making plans that aims at accomplishment of those goals. In context of Grosvenor House, management develops processes and methods for delivery of excellent quality of services. Also, it makes plans in accordance with the hindrances that may arise in their future operations. Training of staff is done to ensure that the queries of guests are handled as soon as they arise. This results in accomplishment of organisational goals of revenue generation and profit making.


From the above report, it is concluded that the provision of services in a hospitality industry need to be well planned. It is also analysed that pricing strategy in hospitality organisation should be adopted after considering the internal and external factors of an enterprise. Also, it has been observed that there are various stages involved in effective delivery of services which should be planned well in advance so that any hindrance that may arise during the process can be properly handled. Along with that, it is important for managers to train the staff effectively to ensure delivery of high quality services to visitors.


Books and Journals

  • Alexakis, G., 2011. Transcendental leadership: The progressive hospitality leader's silver bullet. International Journal of Hospitality Management. 30(3). pp.708-713.
  • Bartram, T. and Dowling, P. J., 2013. An international perspective on human resource management and performance in the health care sector: Toward a research agenda.
  • Bharwani, S. and Butt, N., 2012. Challenges for the global hospitality industry: an HR perspective. Worldwide Hospitality and Tourism Themes. 4(2). pp.150-162.
  • Causin, G. F. and Ayoun, B., 2011. Packing for the trip: A model of competencies for successful expatriate hospitality assignment. International Journal of Hospitality Management. 30(4). pp.795-802.
  • Crawford, A., 2013. Hospitality operators' understanding of service: a qualitative approach. International Journal of Contemporary Hospitality Management. 25(1), pp.65-81.
  • Ferdinand, N. and Kitchin, P., 2012. Events management: an international approach. Sage.
  • Kimes, S. E., 2011. The future of distribution management in the restaurant industry. Journal of Revenue and Pricing Management. 10(2). pp.189-194.
  • Lashley, C., 2012. Empowerment: HR strategies for service excellence. Routledge.
  • Sigala, M., 2013. A framework for designing and implementing effective online coupons in tourism and hospitality. Journal of Vacation Marketing. 19(2), pp.165-180.
  • Sunder, M. V., 2013. Synergies of lean six sigma. IUP Journal of Operations Management. 12(1). p.21.
  • Tsang, N. K., 2011. Dimensions of Chinese culture values in relation to service provision in hospitality and tourism industry. International Journal of Hospitality Management. 30(3). pp.670-679.
  • Vlachos, I. and Bogdanovic, A., 2013. Lean thinking in the European hotel industry. Tourism Management. 36. pp.354-363.

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