HFR603BM Enkhkhishig Assessment 2

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 REVENUE MANAGEMENT SCENARIO EVALUATION Subject name: Hotel Finance and Revenue Subject code: HFR603BM Student name: Enkhkhishig Amgalanbaatar Student code: Word count: 1,500 Due date: 03/03/2024 ENKHKHISHIG AMGALANBAATAR 1

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 TABLE OF CONTENTS: 1. INTRODUCTION ………………………………………………………….…… 3 2. ANALYSIS & EVALUATION ……………………………………….………… 4 3. RECOMMENDATIONS ……………………………………………….….…….. 5 4. CONCLUSION …………………………………………………………….…….. 9 5. REFERENCES …………………………………………………………..……… 10 ENKHKHISHIG AMGALANBAATAR 2

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 2. ANALYSIS & EVALUATION According to Mocella (2023), Australia's hotel industry is projected to generate sales of US $6.75 billion in 2023 and the revenue is projected to grow at an annual Compound Annual Growth Rate (CAGR) of 1.85% until 2027. In 2027, the average revenue per user (ARPU) is projected to reach US$0.57k. Moreover, 14.1% of guests are within the 18-24 age group, 27.8% are aged 25-34, 27% are aged 35-44, 17.5% are aged 45-54, and 13.6% are aged 55-64. For that reason, recommendation of this report should be focused on targeting younger or middle-aged guests. In order to identify overall performance of QT Sydney, this report evaluated KPIs comparison between QT Sydney and hotels in Sydney in Graph 1. In doing so, average of ADR, RevPAR, and Occupancy in December 2023 are used. Graph 1 Clearly from the given Graphs above, QT Sydney had better performance than overall of Sydney hotels in December 2023. According to Booking.com (2024), there are 2187 hotels in Sydney and 1235 hotels in CBD areas. The Darling at the Star, Four Seasons hotel, Capella, and Hilton Sydney are the most common 5-star hotels in Sydney CBD. More specifically, Hilton Sydney is located close to QT Sydney and can be considered as the major competitor for QT Sydney. For that reason, this report will take into account Hilton Sydney as the main competitor for next analysis. ENKHKHISHIG AMGALANBAATAR 4 Occupancy 70.00% 75.00% 80.00% 85.00% 90.00% 95.00% 90.60% 77.10% KPIs comparison QT Sydney Hotels in Sydney RevPAR 0 50 100 150 200 250 300 350 312.5 245.64 KPis comparison QT Sydney Hotels in Sydney ADR 305 310 315 320 325 330 335 340 337.7 316.96 KPIs comparison QT Sydney Hotels in Sydney

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 3. RECOMMENDATIONS Sydney is the city amongst Australian cities which has the highest visitor spend (Camper Champ, 2022). For instance, in 2019, the city generated AUD$19,5 billion followed by Melbourne AUD$17 billion. Sydney had 8.8 million domestic overnight visitors, and which is up to 55% of all visitors including international travellers in 2023. For that very reason, hotels in Sydney highly focus on their marketing and other strategies to attract more guests while enhancing guest satisfaction. Even though this report revealed that major KPIs of Sydney hotels, such as ADR and RevPAR, have improved since the Covid19 pandemic, there is still room for improvement and expected demand in the market. For that reason, the following revenue management strategy recommendations are provided for hotels in Sydney to generate revenue in the coming 3-6 months. 3.1 Segmentation Hotel market segmentation involves categorising hotel customers based on their booking behaviours and travel preferences. Segmenting hotel guests into market groups allows hoteliers to pinpoint the source of their business, discover new opportunities in the area, and increase hotel revenue. According to Cvent (2022), hotel market segments are categorised into 7 major segments, namely, transient, Corporate Negotiated Rates (CNRs), Local Negotiated Rates (LNRs), MICE, discount, wholesale, and others. However, since this type of information is not available for publics due to hotel’s privacy, this report will take into account hotel guests with 3 major market segments which are travellers, corporate employees, and group. In doing so, travellers and corporate employees are frequent visitors of hotels compared to the group. According to Budget Direct (2020), the majority of corporate employees as a market segment are from domestic areas while travellers and group travellers are from international countries. IN doing so, the top countries travelled to Australia from are China, New Zealand, and Japan. For that reason, this report recommends that hotels in Sydney should focus on targeting international travellers and domestic corporate employees as a target market. Ind doing so, it is recommended that Sydney hotels should offer services such as availability of meeting or conference rooms for corporate employees while offering additional attraction opportunities for international travellers by co-operating with attraction businesses. 3.2 Pricing According to Fletcher & Crawford (2014), pricing is one of the most critical marketing mixes to enhance revenue and is rapidly changed due to external and internal factors. For ENKHKHISHIG AMGALANBAATAR 5

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 3.3 Inventory management Hotel inventory encompasses all resources utilised on a daily basis in a hotel, including rooms, housekeeping supplies like linens and laundry, food supplies, equipment, and services like those offered in the spa or gift shops. According to Melanie (2018), hotels utilise inventory management systems to mitigate losses and prevent theft. They utilise these methods to determine the appropriate quantity of products to get from different suppliers. Hotels receive reports on vendor performance, vendor accountability, and order management through inventory management systems. According to Masters (2024), Trawex is one of the best software for hotel inventory management for those who aims to enhance revenue while reducing costs and being cost effective. Trawex software encourages hotels to perform more efficiently. Since QT Sydney is one of the most popular hotels in Sydney which welcomes massive numbers of international travellers, Trawex software can support to managing rooms and inventories effectively. Normal inventories of QT Sydney include table, chair, sofa, bed, TV, remote control, bed rug, and pillows etc. Some products are filled daily in the kitchen area of the room, namely, multiple types of tea, coffee, milk, ingredients of cocktail, products in mini bar. Since this report recommends QT Sydney to offer small gifts for guests to encourage revenue improvement, inventory system should add and update small gifts as well. More detailed information about small gifts will be presented in the next section. 3.4 Product alignment Product alignment involves ensuring that a company's goods are consistent with its overarching business strategy and objectives. Since QT Sydney is luxury and unique designed hotel compared to its main competitors, QT Sydney has unique offerings in its rooms. For instance, QT Sydney has own cocktail making section in the room where ingredients are placed, and more resources are in the mini bar as well if needed. Moreover, overall room design well fits with photo shooting for international guests for their daily social media posts. ENKHKHISHIG AMGALANBAATAR 7

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 This report recommends QT Sydney to offer its guests small gifts for international travellers since they are target segment of QT Sydney. In doing so, revenue can be boosted via improved guest satisfaction and perceived value. For instance, mini souvenirs which represents Sydney or Opera House along with QT Sydney logo on it can be eye-catching gift. Moreover, mini refrigerator magnet and pen which represents Sydney along with QT Sydney logo can be meaningful for guests. 3.5 Hotel benchmarking Hotel benchmarking enables a manager to monitor business performance and assess how it stacks up against competitors. It enables people to recognise brand's strengths and opportunities for improvement, providing a clear understanding of the hotel’s positioning while distinguishing itself from main competitors (Regent Marketing, 2022). The most common metrics used in benchmarks are RevPAR, ADR, Occupancy rate, and Average length of stay. Since this report analysed some of major metrics in the evaluation section, customer satisfaction rate should be considered as the critical benchmarking for QT Sydney. The majority of Global Distribution Systems such as Booking.com or Tripadvisor.com have own review section in which guests rate hotels after their stay. For that reason, QT Sydney should focus on improving those ratings on global GDSs. In doing so, QT Sydney can conduct questionnaire survey amongst guests to improve their satisfaction along with their ratings in the system. 3.6 Distribution According to Mocella (2023), 23% of bookings are being conducted through offline channels. By 2027, online sales will account for 91% of total income, reaching a market volume of US$7.27 billion. The top Online Booking Agents in Australia as of January 2023 are: Booking.com, Expedia, Trivago and Hotels.com. QT Sydney utilises both direct and ENKHKHISHIG AMGALANBAATAR 8

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 for guests to improve guest satisfaction and conduct questionnaire survey to identify guest preference while improving ratings from guests. 5. REFERENCE LIST Budget Direct. (2020). Australian Tourism Statistics 2020. https://www.budgetdirect.com.au/travel-insurance/research/tourism- statistics.html#:~:text=How%20many%20tourists%20visit%20Sydney,average%20of %2020%20nights%20there . Camper Champ. (2023). Sydney Tourism Statistics. https://camperchamp.com.au/statistics/australia/sydney-tourism/#:~:text=How %20many%20tourists%20visit%20Sydney,(year%20ending%20September%202022) . Cvent. (2022). Hotel Market Segmentation: Find and Drive More Business. https://www.cvent.com/uk/blog/hospitality/hotel-market-segmentation#:~:text=Hotel %20market%20segmentation%20is%20the,area%2C%20and%20drive%20hotel %20revenue . Fletcher, R. & Crawford, H. (2014). International Marketing-An Asian-Pacific Perspective (6 th ed). Frenchs Forest, Australia. Pearson Australia Press: Hollensen, S. (2004). Global Marketing- A Decision Oriented Approach (3 rd ed). Harlow, England. Pearson Education Limited Press: Masters, C. (2024). 12 Best Hotel Inventory Management Software For 2024. https://thehotelgm.com/tools/best-hotel-inventory-management-software/ Melanie, M. (2018). Inventory Management in the Hospitality Industry https://www.unleashedsoftware.com/blog/inventory-management-hospitality- industry Mocella, S. (2023). Australia’s Hotel Industry – Into 2023 and Beyond. ENKHKHISHIG AMGALANBAATAR 10

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 https://www.innquest.com/blog/australias-hotel-industry-into-2023-and-beyond/ Regent Marketing. (2022). Hotel Benchmarking: The Basics. https://www.regent.marketing/hotel-benchmarking-the-basics/ the guidance necessary to develop the proper strategic direction, both short and long term. Sale & marketing and revenue management are then able to collaborate in both the plan development and execution – monitoring performance along ENKHKHISHIG AMGALANBAATAR 11

HFR603BM HOTEL FINANCE AND REVENUE 03/03/2024 monitor, adjust and communicate the demand forecast allows for strategic planning sessions to heighten performance for the hotel. What I need to know from this stakeholder is their target of sales and ENKHKHISHIG AMGALANBAATAR 13