Brief Сharacteristic of the Hotel 3
Accomodation and Additional Services 4
II. Revenue Management Techniques 4
Conclusion 6
Description of Shangri-La Hotel
Brief Сharacteristic of the Hotel
Shangri-La Hotel is located in London on St Thomas Street. It is the well-known 52-floor building, from which excellent panorama is opened (Trip Advisor, 2016). The colourful galleries of Tate Modern and architecture of St. Paul’s Cathedral are located near the hotel. There are GONG bar and swimming pool on the 52th floor of the hotel (Official Site of Shangri-La Hotel, 2016).
The hotel offers one hundred and eighty five guest rooms and seventeen spectacular suites. Main features of the suites are presented in the table 1 (Official Site of Shangri-La Hotel, 2015). As we can see, signature suites differ by higher luxury and as a result higher prices.
There are banquet and conference room, a lot of restaurants and bars (Lang, Ting, Gong). All these are the part of the additional services in the hotel.
Accomodation and Additional Services
In addition to dining and leisure options, there are a lot of extra services that are offered in the hotel. Hotel facilities include: conference, banqueting and events facilities, parking facilities, non-smoking suites. Each customer can use some services in the hotel: car rental, butler, shoeshine, 24-hour concierge, spa and massage, photo and postal services, safe deposit box, Wi-Fi throughout the hotel. Shangri-La Hotel also offers babysitting or child care service and special menus for them. The hotel start pays much more attention to the development of corporate social responsibility. One of such project is Shangri-La’s Care for People Project. Its “care is expressed with the most powerful icon for embracing others – a heart” (Official site of Shangri-La Hotel, 2016).
Revenue Management Techniques
As we know, revenue management techniques (also known as earnings management or real-time pricing) are an optimization model based on forecasting the demand for market segments. Revenue management method maximizes the two sources of income: the volume and the price per unit of service. At the same time, there are some conditions which are mandatory for using techniques of revenue management.
According to expert it needs to analyse “customers’ particular characteristics that can affect their perceptions of the fairness of hotels’ revenue management pricing practices” (Heo and Lee, 2011). Optimal conditions, which are required for the implementation of revenue management techniques in Shandri-La Hotel, are as follows: the capacity of resources for the sales must be fixed – hotel has fixed number of rooms which are available for sale; resources should be considered as a perishable product – rooms which are not sold today, cannot be sold tomorrow, because rooms are sold in advance prior to their actual use; demand can be segmented for different markets or price levels. It should be noted, that AirBnb and similar services have quickly become a threat to hotels (Mahmoud, 2016). In this case, the number of traditional hotel customers will be decreased from year to year.
According to the experts Hayes and Miller (2011), the most important goal of revenue management is “charging the right price, to the right customer, for the right product, through the right channel, at the right time”. In our case, let’s analyse which techniques hotel Shangri-La uses in its activity. Firstly, it needs to analyse main steps in setting up the revenue management program of the hotel. They are as follows: historical results, segmentation, booking pace, pricing, channel management, budgets and forecasts, group revenue management. Shangri-La Hotel actively uses such technique of revenue management as a re-booking system to maximize the volume of income. It should be noted that re-booking rate is calculated for each day. Statistics for the exact same day of the previous years participates in all calculations.
In general, it is desirable to leave some safety stock rooms in the hotel. If the actual number of visits will be more, the hotel will have to pay at least the cost of alternative accommodation, or even the cost of some rewards customers for failure to provide accommodation. Such insurance fund can be calculated as the median number of casual visitors. This situation can be even more profitable as occasional guests pay the published prices (or rack rate), which are much higher than the prices when a client books room or contract prices. Examples of these booking curves of Shangri-La Hotel are presented in appendix C. First of them shows target figures of hotel occupancy rate. The second one shows actual figures. As we see, the actual booking reservation is lower than the desirable rate. In this case, the hotel must make reservations with some discounts, special offers and actively attract new clients. This strategy primarily assumes positive implications for customers. It should be noted, that Shangri-La Hotel belongs to the high price segment and, as a result, much less customer can allow themselves such expensive rooms.
Another technique of Shangri-La Hotel is optimization prices. According to expert Evans (2016), the calculation includes base fees and incentive fees. The main idea of the this method of revenue management is to change prices depending on demand. Optimization prices are based on the booking curves. Implications of the above mentioned strategies of the hotel are more positive for the company than for clients.
In addition to these techniques of revenue management Shangri-La hotel also uses group quotas and optimization of groups (when it can conclude about the possibility of booking for a particular group on the basis of forecasts, or vice versa refusal of booking for the benefit of more income group), control the length of stay, control rates and up- sell (selling more expensive room when the guest arrives). Hotel also use so-called “customer room choice model” (Mei and Zhan, 2013). It is based on the logic model. The last one aims to analyse the data of customer room choice and identify attributes, which can affect his choice without prior information.
Conclusion
In conclusion one can say that Shangri-La Hotel differs by quite high profitability and is known as one of the largest and most expensive hotels in London. Implementation of the re-booking system an optimization prices are the main methods which are used in the hotel to improve is activity and profitability. There is a lot of special software for increasing profits and maximizing direct bookings in the digital environment. One of them is Fastbooking (Hospitality Net, 2016). It can be quite useful in the further activity of the hotel.
References
Evans, R. (2016). Hospitality Net - Are Hotel Management Companies Getting Short Changed in Fees? | By Richard B Evans. [online] Hospitality Net. Available at: http://www.hospitalitynet.org/news/global/147000329/4074848.html [Accessed 11 Mar. 2016].
Hayes, D. and Miller, A. 2011. Revenue Management for the Hospitality Industry, Wiley: New Jersey
Heo, C. and Lee, S. (2011). Influences of consumer characteristics on fairness perceptions of revenue management pricing in the hotel industry. International Journal of Hospitality Management, 30(2), pp.243-251.
Hospitality Net. (2016). Hospitality Net - Fastbooking And TrustYou Partner To Help Hoteliers Influence Traveller Choice And Bookings. [online] Available at: http://www.hospitalitynet.org/news/global/147000329/4074819.html [Accessed 11 Mar. 2016].
Mahmoud, A. (2016). Hospitality Net - The Impact of AirBnb on Hotel and Hospitality Industry | By Ahmed Mahmoud. [online] Hospitality Net. Available at: http://www.hospitalitynet.org/news/global/147000329/4074708.html [Accessed 11 Mar. 2016].
Mei, H. and Zhan, Z. 2013. An analysis of customer room choice model and revenue management practices in the hotel industry. International Journal of Hospitality Management, 33, pp.178-183.
Official Site of Shangri-La Hotel, (2016). Services & Facilities. Shangri-La Hotel London. [online] Shangri-la.com. Available at: http://www.shangri-la.com/london/shangrila/about/services-facilities/ [Accessed 11 Mar. 2016].
Official Site of Shangri-La Hotel, 2015. Facts and Information of Shangri-La Hotel. 1st ed. [ebook] London, pp.1-4. Available at: http://www.shangri-la.com/uploadedFiles/Shangri-la_Hotels/Shangri-La,_London/Shangri-La%20Hotel,%20At%20The%20Shard,%20London%20Fact%20Sheet.pdf [Accessed 11 Mar. 2016].
Official Site of Shangri-La Hotel, 2016. Embrace. CSR. Shangri-La Hotel London. [online] Shangri-la.com. Available at: http://www.shangri-la.com/london/shangrila/about/corporate-social-responsibility/ [Accessed 11 Mar. 2016].
Trip Advisor, (2016). Shangri-La Hotel, At The Shard, London (England) - Hotel Reviews - TripAdvisor. [online] Tripadvisor.co.uk. Available at: https://www.tripadvisor.co.uk/Hotel_Review-g186338-d6484754-Reviews-Shangri_La_Hotel_At_The_Shard_London-London_England.html [Accessed 11 Mar. 2016].
Appendix A
Booking Process in Shngri-La Hotel
Appendix B
Page of Shangri-La Hotel on https://www.tripadvisor.co.uk/
Appendix C
Comparative analysis of target and fact indicators (2015)
