revenue management.docx
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revenuemanagement
RevenueManagement:
CreatingaStrategicManagementPlaninBelezaSpa
Author
Abstract:
Thespahasbeenmoreandmorepopularintherecentyears,whichhasgreatprofit.However,therearestillproblemsofthespaindustrybecauseofthecompetitionaswellasthemanagementofthespa.TheBelezaSpastudiedinthereportmeetstheproblemofalowtotalrevenueandroomoccupancyratio.ThepapertriestodefinetheprobleminBelezaSpabasedonitspreviousdataandthengivingthecorrespondingactionstosolvetheproblem.
1Introduction
Withtheeconomydevelopingrapidlyandtheimprovingstandardofliving,peoplefocusmoreonthequalityoflife.Healthwillbetheprimaryconcernofthepeople.Butinthereallife,peoplehavestrongcompetitivepressureandunhealthylifestyles,leadingtomostofthecitypeoplelivinginsub-healthstate.However,theSPAwouldhelppeoplerelaxandimprovethehealth.Thisisthebaseoftherapidgrowthoftheapsindustry.Theamountofthespahasincreasedramaticallyrecently.Moreandmorepeoplehaveknownthebenefitofthespaservicesandawonderfulfacilitytorelyon.Theincreasepopularityofthespabringsgreatinteresttotheindustry.Thus,itisimportanttocatchtheopportunity(PatrickL.2011).
Theauthor,theManagerofBelezaSpareceivesthetaskfromtheSEGBoardofDirectorstocreateandimplementastrategytooptimizeandmaximizetheoverallrevenuestreamofthespa.Themanagerofspaalwaysknowstheimportanceofthereliablestatisticsanditscomparingperformancewithindustryaverageslevel,keepingaheadofthenewesttrendsofthespaindustryaswellasmonitoringthewholeindustry.Thedataofrevenuecangivemanageranoverviewofthespamanagementbyidentifyingtheproblems,theareaneedingimprovement,relevancetothemarket,andhowmuchtheprofitis.Moreover,thequantitativefindingsshouldbenotonlybasedonthestaticallydata,butalsotheexperienceofthemanagerbecauseitneedtotakeactionsafterdefiningtheproblem,aswellaspredicttheeffectoftheactionsandevaluatetheplan(NinaC.2010).
Therearethreesectionofthereport.Sectiontwocollectsreliabledatafromthedailyoperationofthemanagementandthespaindustrydata.Atotalof6keymetricsofthespaindustryrelatedwithperformanceofthespaoperationisanalyzedsoastofindtheproblemofthespa.Inthenextsection,theauthormakesadetailactionplanofthespaandthetimetablebasedonthepreviousanalysisresult.Andthen,insectionfour,afurtherevaluationofthedecisionisobtainedbypredictingtheeffectoftheplanandcalculatingthepredictingrevenueofthespa.Inthefinalpart,theconclusionofthewholestudyisprovided.
2Problemdetermination
Inthispart,theauthorwillpresentthecurrentsituationofBelezaspabyusingtherevenuemanagementmethodandcriticallyanalyzingthesixmetricstoevaluatetheperformanceoftheBelezaspa.Thesemetricsareusefulforthemanagerknowingthesituationofthespaandhelpoperatethespawellsoastoincreasetheprofit.
2.1revenuemanagementanalysis
AtotalofsixmetricsarestudiedinordertounderstandthecurrentsituationofBelezaSpa,whicharethemainperformanceindicatorstocompletetheevaluation.
2.1.1AverageTreatmentRevenueperTreatmentSold
TimeFrame:
from06,Febto06,Mar
Calculation:
AverageTreatmentRevenueperTreatmentSold=TreatmentRevenue/
No.ofTreatmentsBooked
TotalTreatmentRevenue:
5500.50CHF
No.ofTreatmentBooked:
89treatments
AverageTreatmentRevenueperTreatmentSold=5500.5÷89=61.80CHF
Themetricresultshowsthatverytreatmentsoldcangetarevenueof61.80CHF.Asmostoftheproducthaveahigherpriceoftheresult,itindicatesthattheaveragetreatmentprvenuepertreatmentsoldisrelativelylow.Thereisspacetofillup.
2.1.2AverageDailyTreatmentRevenueperTreatmentRoom
TimeFrame:
from06,Febto06,Mar
Calculation:
AverageDailyTreatmentRevenueperTreatmentRoom=Treatment
Revenue/AvailableTreatmentsRooms
TotalTreatmentRevenue:
5500.50CHF
AvailableTreatmentRooms:
5rooms
WorkingDay:
18days
AverageDailyTreatmentRevenueperTreatmentRoom=5500.5/(5*18)=61.12CHF
Thismeasurementistomeasuretheprofitofaunittreatmentroommaking.Onetreatmentroomcanmakeprofitof61.12CHFperday.
2.1.3AverageDailyTreatmentRevenueGeneratedbyTherapist
TimeFrame:
from06,Febto06,Mar
Calculation:
AverageDailyTreatmentRevenueGeneratedbyTherapist=Treatment
Revenue/AvailableTherapists
Therapist:
Jeff
TotalTreatmentRevenue:
915CHF
WorkingDays:
5days
AvailableTreatmentHoursperDay:
4hours
AverageDailyTreatmentRevenueGeneratedbyTherapist=915/(5*4)=45.75CHF
Therapist:
Alex
TotalTreatmentRevenue:
350.5CHF
WorkingDays:
3days
AvailableTreatmentHoursperDay:
4hours
AverageDailyTreatmentRevenueGeneratedbyTherapist=350.5/(3*4)=29.21CHF
Therapist:
Regine
TotalTreatmentRevenue:
681CHF
WorkingDays:
6days
AvailableTreatmentHoursperDay:
4hours
AverageDailyTreatmentRevenueGeneratedbyTherapist=681/(7*4)=24.32CHF
Therapist:
Christa
TotalTreatmentRevenue:
140CHF
WorkingDays:
3days
AvailableTreatmentHoursperDay:
4hours
AverageDailyTreatmentRevenueGeneratedbyTherapist=140/(3*4)=11.67CHF
Themeasureofeffectisveryimportanttoevaluatetherevenueofthetherapistwhocanmakeandhelpthemanagertomanagethetherapist.Theseresultsshowdirectbenefitthetherapistmakesandevaluatetheefficiencyofthetherapist.
2.1.4.RevPATHRevenueperavailabletreatmenthour
TimeFrame:
from06,Febto06,Mar
Calculation:
Revenueperavailabletreatmenthour=TreatmentRevenue/Available
TreatmentRoomHours
Totaltreatmentrevenue:
5500.50CHF
Workingdays:
18days
AvailableTreatmentroom:
4rooms
AvailableTreatmentHoursperDay:
4hours
AvailableTreatmentRoomHours:
18*4*4=288hours
5500.50/288=19.10CHF
REVPATHshowstheRevenuePerAvailableTreatmentHour,itiscalculatedbythetotalrevenuedividingthethenumberoftreatmentroomhours,whichcanbealsocalculatedbytreatmentroomsmultiplyingnumbersofhoursopened.
TheREVPATHresultshelpstogetanoverviewoftrendofdayintheweekandtimeintheday.Itisusefultoenablemanagerstodevelopsuitablestrategyandmakefulluseoftheroomssoastogetapromotionofthetotalrevenueevenduringalowdemandtime.
2.1.5.Utilizationoftreatmentroom’shours(%)
TimeFrame:
from06,Febto06,Mar
Calculation:
Utilizationoftreatmentroom’shours(%)=No.ofTreatmentRooms
HoursOccupied/AvailableTreatmentRoomHours*100%
TreatmentRoom
Occupiedhours
Availablehours
Utilizationoftreatmentroom'sours(%)
Fire
17.75
72
22%
Metal
13.5
72
17%
Wood(hair)
21.42
72
27%
Wood(nail)
323.08
72
29%
Earth
3.75
72
5%
Total
79.5
360
22.08%
Theutilizationrationofthespadeterminesthetimeandspacethathavebeenused.Fromthiscouldknowthathowmuchprofitspacecanbeabletoutilizetoachievethemaximizedutilization.
2.1.6.Utilizationoftherapist’shours(%)
TimeFrame:
from06,Febto06,Mar
Calculation:
Utilizationoftherapist’shours(%)=OccupiedTherapistHours/
AvailableTherapistHours*100%
Therapist
Occupiedhours
Availablehours
Utilizationoftreatmenttherapist'sours(%)
Regina
21.08
24
87
Jeff
14.37
16
89
Alex
6.35
12
53
Crista
10.55
12
88
Total
52.35
64
82
Total(withCorali)
79.5
104
76
TheseresultsshowthatwhoisthemostpopulartherapistinBelezaSpaandwhoistheleastpopulartherapistandforthis,wecouldmakesomemeasuretohelptheleastpopulartherapisttoincreasingbusinessandalsoenhancethebusinessofthemostpopularone.
2.2Theproblems
Basedontheanalysisresults,wecanseetherearethreemainproblemsoftheBelezaSpa.
2.2.1Thelackofcustomers
Theoccupancyratiooftreatmentroomsislowduringopeninghours.Moreover,thetotalrevenueofthespaislow.Anotherkeyindex,theUtilizationoftreatmentroom’shoursalsoindicatesthattheaverageutilizationoftreatmentroomisnoly22.08%,whichstaysinaverylowlevel.Ifitcanbeincreasedto60%,thetotalrevenuewillincreasesuddenly.Theonlyreasonthatcanexplainthesceneisthelackofcustomers.AftertheTAC,itisconcludedthatthelackofcustomersisthemostseriousproblem.Tofindtheproductionoftheproblem,theauthortriestoanalyzethemarketofthespa.TheBelezaspaislocatedinLeysin,Swithzerland,whereisthewonderdestinationfortouristwholikewintersportandthenaturescene.However,thelocalmarketislimitedbecausethereisalimitationofthetotalpopulation.Moreover,theauthorfindsthatmostofthevisitorscomefromstaffs,facultyandstudentsofSHMScampus.Thegroupmaybethetargetofthemarket.
2.2.2apoorperformanceofretailsalesinBelezaSpa
ThereisfewretailsalebasedontheTAC.However,inthespaindustry,theretailsincomesaccountformorethan20%ofthetotalincome.Thus,theBelezaspaprovidesareallypoorservicefortheretailprodect.Astheresearchofthemarketofthestudentandstaff,mostofthepeoplewillbuyretailproductduringthespaserviceperiod.Thus,theproductionstructureisnotreasonable.
2.2.3ThepayrollofBelezaSpaisnotrational
ThepayrollofBelezaSpaisnotrational.Inthestudyofthesituationofthespa,itshowsthatthetherapistscouldgain80%commissionofthetreatmentwhiletheBelezaspacanonlygetthelast20%.Moreover,asthespaalwaysneedtoprovidespecialofferdiscountforthecostumers,whichmeansthespawillsuffermoreloss,finally,thespawillge