Evaluation of Capacity Planning and Revenue Management - Hilton - Case Study Example

Managing resources in hospitality Place In the present time, the hospitality and leisure industry include a wide spectrum of such businesses as hotels, restaurants, pubs, travel and tourism and sport and leisure. Since this sector is dependent on consumer confidence and business environment, it faces an increasing pressure in terms of delivering best quality of services and value. Such conditions are caused by the consumer’s tightening their belts with the continuing weakness of the European and UK economies that made their impact of how hospitality business is performed. That calls for certain strategies of the companies involved into hospitality industry in order to earn brand strength and effective distribution of channels. These are strategies directed on effective management of staff involved in the hospitality industry, its development and training for creating competitive advantage of the certain organization within the hospitality business sphere. With the modern technologies hospitality business is able to engage digitally active consumers, who are wants their needs to be met in terms of interaction with brands on a personalized and multichannel basis (Laws, 2004). Introduction The hospitality industry is the integral part and the most important in the tourism industry since a broad range of specific skills of those involved into the industry give all segments of industry to focus on providing the best quality of services to others and generate revenue for the company that offers its possibilities. This is the only industry that places the customer as the central focus, whose demands are high and the only industry, which success depends directly on the quality of satisfying of those demands. That is why for modern companies, it is essential to understand customers in their needs and expectations and be able to plan activities and manage people involved into the hospitality business for representing better performance of certain segment of hospitality industry (Andrews, 2007). The following paper will present an evaluation of capacity planning and revenue management of such type of hospitality business as hotel, in particular London Hilton on Park Lane, UK. Further a critical appraisal of human resource planning, recruitment, selection and retention processes will be conducted along with the evaluation of the training and staff development practices within such business unit. Evaluation of capacity planning and revenue management  In the current economic climate, UK hotel market is elastic and is raised by its unique status in the world scale despite a relatively weak pound. Such conditions have called regional hotels to show contrasting performances while cities are raising prices because of the weak economy. One of modern trends of UK hotel industry is the rapid expansion of the budget hotel sector that is able to offer competitive rates for business and leisure travellers. Moreover, in the recent years UK hotels sector has met room supply enlargement, especially London. The only question is how easily it can realize such additional capacity, if to take into account the biggest players in the hotel industry, such as Hilton Hotels and Resorts, an international chain of full service hotels and resorts. Being the largest hotel chains in the world, Hilton Hotels and Resorts receives much of return on investment and thus its profitability is high. Thus, the net cash used in investing activities for the year 2013 were estimated as five hundred and fifty-eight million dollars, which is compared to three hundred and eighty million dollars during 2012. Cash flow from operating activities was generated from management and franchise revenues and the operating income from Hilton’s owned and leased hotels and resorts and sales of timeshare units (The Annual report, 2013). While capacity planning is a long-term strategic decisions, its increase depends on the volume and certainty of anticipated demand, strategic objectives regarding growth, customer service and competition and the growth costs and operation (Hassanien, Dale & Clarke, 2010). At Hilton, capacity planning is represented by occupancy, which is estimated in the total number of rooms sold and divided by the total number of rooms available at the hotels. Occupancy measures the use of Hilton hotel’s available capacity. Such occupancy allows management to assess the demand for services at a specific hotel for the certain given period (The Annual report, 2013). In addition, the demand-management decisions are guided by the revenue management that involves managing of companies interface within certain market. While revenue management responds such important demand-management decisions, as structural, price and quantity decisions, for hotel industry they mean determination of the segmentation mechanisms which should be used in terms of trade to offer. In addition, the revenue management enables the organization to understand how to set the prices for individual-offer prices and the reserve prices. Quantity decisions allow the company within hotel industry to accept or reject the offer to buy to determine how to allocate the output and capacity to different products. The conceptual framework for hotel industry is applied where the tactical demand management is important and the management culture is implemented (Talluri & Van Ryzin, 2005). The revenue management for Hilton hotels is aimed to achieve superior market share and profitability. Its reservation engine, the distribution channels deliver a strong strategy of selling the property. Hilton experts are utilizing world-class technology developed for Hilton Worldwide for years. That experience drives performance through forecasting, price and business mix optimization and the formation of demand. Hilton’s revenue management integrated platform provides its managed properties a value-added benefit using information sharing. Thus, Hilton revenue management collects information from different geographic markets, which allows managing hotels in a particular city and region. With the wide variety of products of Hilton, such as Waldorf Astoria, Conrad, Canopy and Curion, information should be shared in order to make better revenue decisions. Hilton management services of revenue management brings Yield Generation and Management, Forecast Validation and Demand Generation. Hilton uses revenue management tool as the Worldwides Revenue Management Consolidated Center that is created to support properties in their desire to achieve superior market share and thus bring profitability to the company. Specialists of Revenue Management Consolidated Center has specialized technology that enable them to analyze the past, current and future trends of the hotel industry in assisting of price setting and strategies invention. However, only the right revenue management decisions are able to make the immediate and quantifiable impact on propertys profitability. Thus, the Center has generated more than fifty-two million dollars in market share growth in the last half year. (Making decisions, Managing revenue, n.d.). An appraisal of human resource planning, recruitment, selection and retention processes As part of a greater transparency and engagement with the consumers, all modern companies are striving to realize and quantify their impact on the society. That means that businesses are not focused on simple cash and profits and measuring the wider effects on society. Moreover, such contributions as job creation and taxes, environmental impact from carbon emissions, along with the skills development companies are paying more attention to the human resources potential that can greatly influence all those contributions, as positively as negatively. With some notable exceptions, the hotel sector has been slow to respond to the corporate world, however, it is now firmly on the minds of CEOs who are grappling with how best to respond the questions concerning management of employees, planning, recruitment selection and retention of staff. From the general perspective, recruiting and selecting people who would fill new or existing positions in hospitality organizations is essential element of human resource activity. Despite the importance of service quality the increase of pressure on the organizations that provide services in hospitality sphere, researchers still notice that most decisions connected with the recruitment and selection of the right kind of individual is often associated with the informal, ad hoc and reactive manner of choosing of that right person. It is also true that only bigger companies use HRM functions or systems for searching candidates. Other smaller organizations recruit irregularly based on the informal systems and methods. Researchers found that two hundred and forty-one hotels sampled in the research used job descriptions or person specifications and had a lack of general systematic procedures for recruitment and selection (Nickson, 2007). The human resources practices influence the way employees will perform their organizational citizenship behavior within the company. To conceptualize the connection between the these HR practices and organizational behavior, there can be used a Social Exchange theory that assumes that employees can have the tendency to perform their function better if they see how organization supports their contributions. Further, these employees change their sometimes incorrect perceptions into positive attitudes and behaviors to the organization, which increases their willingness to engage the high level of organizational behavior (Noor, Khalid & Rashid, 2013). From the global perspective, companies, especially those from hospitality sphere should capitalize on diversity of workforce, ensuring, however, that recruitment and selection processes will be free from stereotyping and discrimination issues. Therefore, a positive approach to diversity will give hospitality organization availability to choose and select the best talented people for the job. Thus, for instance, age, gender, disability and race should play no part in the recruitment and selection processes. Beside, in the eyes of community and society, these initiatives will create the organization a considerable advantage over other that do not play fair. Instead, positive and progressive place to work by diverse workforces will add more popularity to the certain company (Hayes & Ninemeier, 2009). If to take Hilton Hotels & Resorts Company with more than five hundred hotels and resorts and more than hundred new locations in development it offers people all around the world the authentic experiences in using its services. The company has already recognized its innovative and forward-thinking approach in offering best-in-class products and services. However, such success depends only on the people who contribute the overall goal- to fill the earth with the light and warmth of hospitality and be the preeminent global hospitality company (Discover our vision, mission, and values, n.d.). The team of professionals for Hilton hotels is recruited from around the globe and is taught to bring a wealth of experience, knowledge from various markets and economies. The leading positions are chosen based on the comprehensive interview process with the use of extensive systems and theory training that enable new team members to be accredited and shadowed in their first few weeks or months within the hotel business. The company develops and delivers training to the employees on the regular basis to ensure its hotels and resorts receive the latest in revenue management expertise. There is a critical element that all the workforce of Hilton Hotels & Resorts will have necessary knowledge and skills in order to perform their job effectively and have the ability to grow within the company in personal and professional way. Therefore, the company should provide its employees with the learning opportunities from the on the job training and to the virtual courses, management development programs and learning seminars. The opportunity to teach potential workers is the part of planning program of human resource at Hilton. Thus, Hilton Worldwide University offers all the employees and people who want to working the hospitality business extensive training, providing access to the right skills, knowledge and learning experiences to be successful in certain hospitality sphere. Besides, there is an executive coaching available to Hilton Worldwide senior leaders who wish to explore options, test out tjheir ideas and gain clarity and self-insight, utilize their strengths and increase their skills. Not all world- known hotels have an opportunity to offer learning opportunities, like Hilton does. Thus, Hilton offers such learning availabilities for the current students and new graduates, embracing diversity and innovation that new talents can brings to the company. Its global workforce constitute now three hundred and fourteen thousand team members in more than four thousand owned, managed and franchised hotels. The presence in more than ninety countries across the globe gives the company the most diverse quantity of employees. While developing culture, talent and marketplace strategies, the company seeks to understand its unique global communities that are present within the work environment of all Hilton enterprises. With the availability to find right people while they are still learning and with the diverse cultural peculiarities, Hilton is focused on recruiting and retaining the unique people with the extensive talents and skills, who would be able to provide the outstanding hospitality experience. For that purpose, Hilton uses best-in-class Human Resources systems, such as PeopleSoft and SuccessFactors that enable the company to recruit and retain the finest staff and most talented graduates. It maintains strong relationships with some of the top hotel schools across the world. The databases give possibility to track statistics on turnover, drug testing costs and other background research necessary for recruitment process. An evaluation of training and staff development practices In order to enhance the abilities and capabilities of organizational workforces, employees’ trainings and development processes are the integral components. When effectively managed, training and development practices help in contributing success of the organization in general. Researchers also state that training can be utilized to overcome organizational problems such as high turnover rate, lack of the right people for specific positions. In addition, such activities as training and different developmental techniques have a great impact on employees’ attitudes and performances. In the case of diverse workforces, training programs are used to cope with such problems as race discrimination and help on increasing respect for individual differences despite of attitudes, values and behavior. Organization can effectively manage its diverse workforce if recruiting processes by retaining them are organized in accordance. Diversity awareness training, on the other hand, can increase group integration among minority and mainstream employees. Such training will assist in improving understanding of diversity value, social cohesion and level of contribution that will help to improve individual and organizational performance (Hameed & Waheed, 2011). Hilton is focused on providing the highest level of service for its guests, thus the extensive training for employees where they obtain enough knowledge and skills is crucial for the employment benefits and compensation and maintains an excellent quality of Hilton hotels. Besides, Hilton ensures all the training activities to be aligned with each of its brands. For that purpose, Regional Training Managers work directly with Hilton managed properties. The development of skills and abilities is also the essential part of Hilton strategy to be one of the best hotels and resorts in the world. Thus, by focusing on the growth of the individual abilities, using the conscious and unconscious learning, implementing different development programs are the most important steps for employees to be skilled enough within the Hilton Company. To increase individual skills, knowledge and effectiveness, Hilton designed interpersonal interventions that are provided by the meeting facilitator where more specific topics are discussed. Cross-cultural training is also offered in order to address the unique challenges that employees can face. It enables the participants to gain a heightened understanding of the main company values and attitudes of the specific culture and such knowledge leads to better strategies for accomplishing of business and personal goals. What should Hilton do to improve their company? In times of fierce competition, organizations should realize the great challenge it calls for their businesses. All aspects matter to regain customers, from the quality of operational staff to the important strategic decisions that help companies to be on the top. At such critical condition, Hilton should use it all powers to build up its corn competition and enlarge its market share, increasing equity multiplier to obtain the interest of tax avoidance scheme, however, its managers should weigh all the pros and cons between the benefits and the financial risk (Ying-Chang, 2011). Improving training for employees will also increase the performance of Hilton business. That will create a competitive advantage if to leverage partnership and use smart business practice. With all learning opportunities that Hilton offers to many people around the world, a certain talent management revision should also be done. To oversee diversity, recruitment, performance management, Hilton leadership should use a unified approach to people’s management. Thus, Hilton needs to provide more offerings to its franchises. The Hilton Worldwide plans to do much more in branding training and advice. That would make Hilton more attractive investment possibility for the current and potential franchises (Eggleston, 2012). In addition, with the revenue-management professionals, Hilton is able to assess the business, its performance of each property in order to capture the Revenue Generation Index and its percentage change. What should not be forgotten is the external factors that help to determine pricing strategies. Thus, Hilton should be aware of flights, new or cancelled routes, travel restrictions, etc. All these factors affects the customer directly. Besides, by utilizing numerous green practices Hilton will be able to implement such preventative measures to save unnecessary costs as energy consumption and recycling. The final outcome of these actions will be winning situation for the company and will help it to reduce operational costs and harmful environmental impacts at the same time. Conclusion Hospitality is the people’s industry, a chain where its each part constitutes the integrity of any organization of that sphere. That is why the proper managing of human resources is the main target of each organization within hospitality industry. If the companies are successful in meeting all the requirements for fulfilling the human resources niche, all the employment and workplace laws are adhered and strategies as to the growth and development of people are found, the organization is able to attract more talented employees, minimizing turnover and maximizing productivity and thus have more profitability. References Andrews, 2007, Introduction To Tourism And Hospitality Industry, Tata McGraw-Hill Education Discover our vision, mission, and values, n.d., Hilton Worldwide, the official website, Available from http://hiltonworldwide.com/about/mission/ [Assessed on 22 January, 2015]. Eggleston, M. 2012, Hilton Worldwide: Partnering for a Competitive Advantage, Training industry, Available from https://www.trainingindustry.com/professional-education/articles/hilton-worldwide-partnering-for-a-competitive-advantage.aspx [Assessed on 22 January, 2015]. Hameed, A. & Waheed, A. 2011, Employee Development and Its Affect on Employee Performance A Conceptual Framework, International Journal of Business and Social Science, Vol. 2 No. 13 [ Hayes, D. & Ninemeier, D. 2009, Human Resources Management in the Hospitality Industry, John Wiley & Sons Hassanien, A., Dale, C. & Clarke, A. 2010, Hospitality Business Development, Routledge Laws, E. 2004, Improving Tourism and Hospitality Services, CABI Making decisions. Managing revenue, n.d., Hilton Worldwide, the official website, Available from http://www.hiltonworldwide.com/development/management-services/revenue-management.html [Assessed on 22 January, 2015]. Nickson, D. 2007, Human resource management for the hospitality and tourism industries, Elsevier Ltd. Noor, A., Khalid, S. & Rashid, K. 2013, Human Resource Diversity Management Practices and Organizational Citizenship Behavior: A Conceptual Model, International Journal of Academic Research in Business and Social Sciences, Vol. 3, No. 8 Talluri, K. & Van Ryzin, G. 2005, The Theory and Practice of Revenue Management, Springer Science & Business Media The Annual report, 2013, Available from http://ir.hiltonworldwide.com/files/doc_financials/Hilton_2013_AR.pdf [Assessed on 22 January, 2015]. Ying-Chang, C. 2011, A Case Study on the Business Performance Management of Hilton Hotels Corp, International Business Research, Vol. 4, No. 2 Read More