hotel operations simulation modelling for total profit management
TRANSCRIPT
Hotel operations
simulation modelling for
total profit managementStanislav Ivanov
Email: [email protected]
Web: http://stanislavivanov.com
Svetlana Vasileva-Boyadzheva
Email: [email protected]
Second Revenue Management Workshop, 15-17 December 2016, Orlando, FL, USA
stanislavivanov.com
Svetlana Vasileva-Boyadzhieva
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• Associate Professor in Computer Sciences, Varna University of Management, Bulgaria(http://www.vum.bg)
stanislavivanov.com
Stanislav Ivanov
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• Professor and Vice Rector (Research), Varna University of Management, Bulgaria (http://www.vum.bg)
• Editor-in-chief of the European Journal of Tourism Research (http://ejtr.vumk.eu)
• CEO of Zangador Ltd. (http://www.zangador.eu)
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Content
• Literature review
• Considerations
• Hotel operations modelling
• GPSS Model
• The way forward
• Beneficiaries
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Literature review
We decided that there is no need to include slides with review of related literature on revenue management, because you wrote the publications we have to mention here, hence you are well familiar with them
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Considerations:
Total profit management
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Room revenue management
Total revenue management
Total profit management
Room revenue
Room revenue
Room revenue
Ancillary revenue
Ancillary revenue
Costs
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Considerations:
Price elasticity of demand
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P
Q
D1
D2
D1 – linear demand
D2 – constant elasticity
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Considerations:
Price elasticity of demand
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P
Q
D3P1
Q1
D3 – kinked demand curve
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Considerations:
The “fixed” nature of fixed costs
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FC
VC=VC1*Q
TC=FC+VC
TR=P*Q
QE Q
TR; FC; VC; TC
0
E
FC
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Considerations:
The “fixed” nature of fixed costs
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FC
VC=VC1*Q
TC=ƩFCj+VC
TR=P*Q
Q1Q
TR; FC; VC; TC
0
E2
FC
Q2Qmax
E3
QE2 QE3QE1
E1
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Considerations:
The decreasing returns of sales
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FC
VC=VC1*Q
TC=ƩFCj+VC
TR=Ʃ(Pi*Qi)
Q1Q
TR; FC; VC; TC
0
E1
FC
Q2Qmax
QE1
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Hotel operations modelling
Blocks
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Revenues Costs
Performance metrics
Demand Hotel
Channel
Rules
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Hotel operations modelling
Demand→ Room demand• Length-of-stay
• Number of rooms
• Room types
• Board
• Lead period
• Price
• Distribution channel
• Segment
• Booking terms (refundable, non-refundable)
• Last minute cancellations, amendments, no-shows
• Elasticities for price increases and price decreases
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Hotel operations modelling
Demand→ Demand for additional services
• Part of it is a function of room demand, i.e. demand of services of already accommodated guests
• Part of it is independent of room demand, i.e. demand by guests who do not use hotel accommodation
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Hotel operations modelling
Hotel• Revenue centres
• Costs centres
• Hotel sections/wings
• Room types
• Service operations standards
• Job positions, number of employees per position, shifts patterns
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Hotel operations modelling
Distribution channels• Allotments
• Allotment utilisation
• Prices
• Release periods
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Hotel operations modelling
Costs• Directions of costs
• Fixed
• Variable
• Marginal
• Average
• Total
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Hotel operations modelling
Profit management rules• Room allocation
• Overcontracting
• Overbooking
• Upgrade and downgrade
• Booking confirmation priority
• Opening/closing of sections/wings/floors
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GPSS Model
Variables
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GPSS ModelInitial values of the cells of the matrices
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GPSS Model
Booking process and rules modelling
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GPSS Model
Blocks reports
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GPSS Model
Reports on model metrics
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GPSS ModelReport on room occupancy (1) and price (2)
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The way forward
To model:
A. Demand:
• Bookings with various length-of-stay, number of rooms, room types, board, lead period, price levels
• Last minute cancellations, amendments and no-shows
• Different price elasticities for price increases and price decreases
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The way forward
B. Hotel
• Hotel with different room types and price levels
• Organisational structure, number of employees, shifts pattern, salaries and other payments
• Departments beyond the Rooms Division
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The way forward
C. Costs
• Fixed and variable costs
• Salaries and other labour costs
• Marginal costs, average costs, total costs
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The way forward
D. Processes and rules
• Overcontracting and overbooking (marginal room revenue approach)
• Upgrade and downgrade rules and constraints
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The way forward
E. Performance metrics
• Complete set of revenue, cost and profit management metrics – for the hotel as a whole and for the different departments
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The way forward
F. User-friendly design
• User-friendly design for configuring the accommodation establishment, inputting the data, visualizing the reports
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Beneficiaries
• Education institutions
• Managers/owners of accommodation establishments
• Researchers in revenue management, operations management, service automation
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THANK YOU FOR THE ATTENTION!
QUESTIONS?
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