Proposal on New Revenue Management Strategy

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Proposal on New Revenue Management Strategy

  1. A Review Of Current Room Rates

The Luzern Townhouse Hotel should increase its room rates. Currently the hotel charges only Sf 200 per room per night for business market (Monday to Thursday nights) and Sf 150 for tourist market (Friday to Sunday). This tariffs are too low for a 3 star hotel (Fallon & Rutherford, 2011). Business and tourist market has relatively inelastic price elasticity of demand. This means that increase in price will not affect the customers’ attendance behavior. Increasing the tariffs will help the hotel to target the high end market which will be more profitable, and which will improve the hotel’s reputation. The upward review of the hotel current room rates will help to increase annual revenue. According to the price-quality effect, higher price will signal that the hotel offers high quality services (Raghubalan & Raghubalan, 2009). The hotel should adopt market-oriented pricing. In this pricing strategy the hotel will carry out a research and an analysis of the hotel industry in the region and use the results to adjust the price upwardly. The factors that should be considered include competitors’ prices, and customers’ perception.

  1. Developing Existing Accommodation Markets

The hotel should concentrate on accommodation market, by marketing itself as a business and tourist hotel. It should improve the size, decorations and features of its rooms to meet this market needs (Venison, 2005). The management should ensure that the rooms are as comfortable as possible. The hotel should liaise with the management of the outsourced hotel on the grounds floor to ensure that guests are provided with breakfast and or supper. The quality of the food and drinks given should be high quality (Venison, 2005).  The company should enhance its booking where customers will be able to book the rooms from home through the hotel’s website, and should accept different payment methods. The hotel should liaise with tour companies and other leisure services companies in order to develop its tourism business segment (Sheela, 2002).

  1. New Accommodation Markets

The hotel should venture in other accommodation markets such as conference, leisure, events hosting (e.g. birthdays, weddings, and parties), workshops, and seminars. The management should buy public address systems, install decorative lights in its conference rooms, and liaise with design companies to ensure that they decorate rooms according to them of the function. For example, if theme of the wedding is purple, the hotel should ensure that all the decorations are carried out in the theme colors (Verret, 2008). This will ensure that the hotel has diversified its revenue source from being heavily reliant on room bookings only. Diversification of the accommodation services will also help to ensure that the hotel has a sustainable source of income.

  1. Other Sources Of Possible Revenue

Other revenue sources include business referrals and recommendations for other services such as events organizing and tour companies, in long run the hotel should invest in other markets such as stock market and bond markets. The hotel can also get income from other sources that include outsourcing its employee to public events, telephone revenue, and other room charges.

Budget Proposal for the Coming Year 2016

  1. Sales Forecast

The hotel is expected to have a total room revenue of Sf 4,072,744. After the acquisition of another office building, the hotel will have 80 well-appointed and stylish, twin studio type rooms. This means that the h………………….

Price: £130

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