revenue management.docx

1、revenue management Revenue Management: Creating a Strategic Management Plan in Beleza Spa Author Abstract: The spa has been more and more popular in the recent years, which has great profit. However, there are still problems of the spa industry because of the competition as well as the management of

2、 the spa. The Beleza Spa studied in the report meets the problem of a low total revenue and room occupancy ratio. The paper tries to define the problem in Beleza Spa based on its previous data and then giving the corresponding actions to solve the problem.1 Introduction With the economy developing r

3、apidly and the improving standard of living, people focus more on the quality of life. Health will be the primary concern of the people. But in the real life, people have strong competitive pressure and unhealthy lifestyles, leading to most of the city people living in sub-health state. However, the

4、 SPA would help people relax and improve the health. This is the base of the rapid growth of the aps industry. The amount of the spa has increase dramatically recently. More and more people have known the benefit of the spa services and a wonderful facility to rely on. The increase popularity of the

5、 spa brings great interest to the industry. Thus, it is important to catch the opportunity(Patrick L. 2011).The author, the Manager of Beleza Spa receives the task from the SEG Board of Directors to create and implement a strategy to optimize and maximize the overall revenue stream of the spa. The m

6、anager of spa always knows the importance of the reliable statistics and its comparing performance with industry averages level, keeping ahead of the newest trends of the spa industry as well as monitoring the whole industry. The data of revenue can give manager an overview of the spa management by

7、identifying the problems, the area needing improvement, relevance to the market, and how much the profit is. Moreover, the quantitative findings should be not only based on the statically data, but also the experience of the manager because it need to take actions after defining the problem, as well

8、 as predict the effect of the actions and evaluate the plan(Nina C. 2010).There are three section of the report. Section two collects reliable data from the daily operation of the management and the spa industry data. A total of 6 key metrics of the spa industry related with performance of the spa o

9、peration is analyzed so as to find the problem of the spa. In the next section, the author makes a detail action plan of the spa and the time table based on the previous analysis result. And then, in section four, a further evaluation of the decision is obtained by predicting the effect of the plan

10、and calculating the predicting revenue of the spa. In the final part, the conclusion of the whole study is provided.2 Problem determinationIn this part, the author will present the current situation of Beleza spa by using the revenue management method and critically analyzing the six metrics to eval

11、uate the performance of the Beleza spa. These metrics are useful for the manager knowing the situation of the spa and help operate the spa well so as to increase the profit. 2.1 revenue management analysisA total of six metrics are studied in order to understand the current situation of Beleza Spa,

12、which are the main performance indicators to complete the evaluation.2.1.1 Average Treatment Revenue per Treatment SoldTime Frame: from 06, Feb to 06, MarCalculation: Average Treatment Revenue per Treatment Sold= Treatment Revenue/No. of Treatments BookedTotal Treatment Revenue: 5500.50 CHFNo. of Tr

13、eatment Booked: 89 treatmentsAverage Treatment Revenue per Treatment Sold= 5500.589 = 61.80 CHFThe metric result shows that very treatment sold can get a revenue of 61.80 CHF. As most of the product have a higher price of the result, it indicates that the average treatment prvenue per treatment sold

14、 is relatively low. There is space to fill up. 2.1.2 Average Daily Treatment Revenue per Treatment RoomTime Frame: from 06, Feb to 06, MarCalculation: Average Daily Treatment Revenue per Treatment Room= TreatmentRevenue/ Available Treatments RoomsTotal Treatment Revenue: 5500.50 CHFAvailable Treatme

15、nt Rooms: 5 roomsWorking Day: 18 daysAverage Daily Treatment Revenue per Treatment Room= 5500.5/ (5*18) = 61.12 CHFThis measurement is to measure the profit of a unit treatment room making. One treatment room can make profit of 61.12 CHF per day.2.1.3 Average Daily Treatment Revenue Generated by The

16、rapistTime Frame: from 06, Feb to 06, MarCalculation: Average Daily Treatment Revenue Generated by Therapist =TreatmentRevenue/ Available TherapistsTherapist: JeffTotal Treatment Revenue: 915 CHFWorking Days: 5 daysAvailable Treatment Hours per Day: 4 hoursAverage Daily Treatment Revenue Generated b

17、y Therapist =915/(5*4)= 45.75CHFTherapist: AlexTotal Treatment Revenue: 350.5 CHFWorking Days: 3 daysAvailable Treatment Hours per Day: 4 hoursAverage Daily Treatment Revenue Generated by Therapist =350.5/(3*4)= 29.21CHFTherapist: RegineTotal Treatment Revenue: 681CHFWorking Days: 6 daysAvailable Tr

18、eatment Hours per Day: 4 hoursAverage Daily Treatment Revenue Generated by Therapist =681/(7*4)= 24.32CHFTherapist: ChristaTotal Treatment Revenue: 140 CHFWorking Days: 3 daysAvailable Treatment Hours per Day: 4 hoursAverage Daily Treatment Revenue Generated by Therapist =140/(3*4)= 11.67CHFThe meas

19、ure of effect is very important to evaluate the revenue of the therapist who can make and help the manager to manage the therapist. These results show direct benefit the therapist makes and evaluate the efficiency of the therapist.2.1.4. RevPATH Revenue per available treatment hourTime Frame: from 0

20、6, Feb to 06, MarCalculation: Revenue per available treatment hour= Treatment Revenue/ AvailableTreatment Room HoursTotal treatment revenue: 5500.50 CHFWorking days: 18 daysAvailable Treatment room: 4 roomsAvailable Treatment Hours per Day: 4 hoursAvailable Treatment Room Hours: 18*4*4= 288 hours550

21、0.50/288= 19.10 CHFREVPATH shows the Revenue Per Available Treatment Hour, it is calculated by the total revenue dividing the the number of treatment room hours, which can be also calculated by treatment rooms multiplying numbers of hours opened.The REVPATH results helps to get an overview of trend

22、of day in the week and time in the day. It is useful to enable managers to develop suitable strategy and make full use of the rooms so as to get a promotion of the total revenue even during a low demand time.2.1.5. Utilization of treatment rooms hours (%)Time Frame: from 06, Feb to 06, MarCalculatio

23、n: Utilization of treatment rooms hours (%)= No. of Treatment RoomsHours Occupied/ Available Treatment Room Hours* 100%Treatment RoomOccupied hoursAvailable hoursUtilizationof treatment rooms ours(%)Fire17.757222%Metal13.57217%Wood(hair)21.427227%Wood(nail)323.087229%Earth3.75725%Total79.536022.08%T

24、he utilization ration of the spa determines the time and space that have been used. From this could know that how much profit space can be able to utilize to achieve the maximized utilization.2.1.6. Utilization of therapists hours (%)Time Frame: from 06, Feb to 06, MarCalculation: Utilization of the

25、rapists hours (%)= Occupied Therapist Hours/Available Therapist Hours* 100%TherapistOccupied hoursAvailable hoursUtilizationof treatment therapists ours(%)Regina21.082487Jeff14.371689Alex6.351253Crista10.551288Total52.356482Total(with Corali)79.510476These results show that who is the most popular t

26、herapist in Beleza Spa and who is the least popular therapist and for this, we could make some measure to help the least popular therapist to increasing business and also enhance the business of the most popular one.2.2 The problemsBased on the analysis results, we can see there are three main probl

27、ems of the Beleza Spa.2.2.1 The lack of customers The occupancy ratio of treatment rooms is low during opening hours. Moreover, the total revenue of the spa is low. Another key index, the Utilization of treatment rooms hours also indicates that the average utilization of treatment room is noly 22.08

28、%, which stays in a very low level. If it can be increased to 60%, the total revenue will increase suddenly. The only reason that can explain the scene is the lack of customers. After the TAC, it is concluded that the lack of customers is the most serious problem. To find the production of the probl

29、em, the author tries to analyze the market of the spa. The Beleza spa is located in Leysin, Swithzerland, where is the wonder destination for tourist who like winter sport and the nature scene. However, the local market is limited because there is a limitation of the total population. Moreover, the

30、author finds that most of the visitors come from staffs, faculty and students of SHMS campus. The group may be the target of the market.2.2.2 a poor performance of retail sales in Beleza Spa There is few retail sale based on the TAC. However, in the spa industry, the retails incomes account for more

31、 than 20% of the total income. Thus, the Beleza spa provides a really poor service for the retail prodect. As the research of the market of the student and staff, most of the people will buy retail product during the spa service period. Thus, the production structure is not reasonable.2.2.3 The payr

32、oll of Beleza Spa is not rationalThe payroll of Beleza Spa is not rational. In the study of the situation of the spa, it shows that the therapists could gain 80% commission of the treatment while the Beleza spa can only get the last 20%. Moreover, as the spa always need to provide special offer discount for the costumers, which means the spa will suffer more loss, finally, the spa will ge