Unit 12:
Hospitality Operations


Unit code:

QCF level:

Credit value:

  • Aim
This unit enables learners to gain understanding of the operational and economic characteristics, product development, pricing and profitability concepts and gain skills to analyse and improve operational performance in hospitality.
  • Unit abstract
This unit is designed to introduce learners to the management principles of hospitality operations. It is intended for learners who aspire towards a career in general hospitality management.
Learners will focus on a wide range of operational and economic characteristics, including customer profiles and patterns of demand. This will lead to the consideration of product development and the opportunities and constraints that affect such development. Learners will also consider a range of pricing and profitability strategies, using ICT software to model different approaches.
Finally, the unit develops learners’ understanding of the appraisal process in relation to hospitality operations management and how different aspects inter-relate with each other.
  • Learning outcomes
On successful completion of this unit a learner will:
1     Understand the operational and economic characteristics of hospitality operations
  • Understand product development within hospitality environments
  • Understand pricing and profitability concepts within hospitality operations
  • Be able to use appraisal techniques to analyse and improve operational performance.
Unit content
  • Understand the operational and economic characteristics of hospitality operations
Nature of hospitality products and services: product and service areas eg food and beverages, rooms division, conference and banqueting; tangible and intangible elements; perishability; marketing and sales; plant; equipment; supplies and commodities
Patterns of demand: patterns eg opening hours, seasonality, time of day/week, sociological influences, healthy eating and drinking patterns, food and fashion trends, accommodation trends, cultural, regional and ethnic influences, pricing and economic factors, elasticity of demand
Customer profile: characteristics eg spending power, types of hospitality business, menu/accommodation range, pricing considerations, expectations and requirements, the meal experience
Management issues: issues eg integrated planning and resourcing, business and operational plans, staffing, finance, decision-making (gathering information and data, analysing and evaluating data, reaching decisions, forecasting), operating procedures and systems, control systems, technical and procedural standards, service standards, quality systems, team working and team leading, scheduling, training
  • Understand product development within hospitality environments
Stages in product development: stages to include market research, market segmentation, idea evaluation, concept development, product development, advertising objectives eg persuade, create desire, create awareness, sell, increase market share, develop brand loyalty, customer awareness
Opportunities and constraints: types eg brand image, nutrition and dietary requirements, disabled access and provision – accommodation facilities, restaurant access; availability of resources (human, financial, physical), standardisation, style of service, space utilisation
Hospitality advertising: businesses eg pubs, restaurants, hotels, conference centres; products, types of media
Merchandising objectives: objectives eg promote consumer/brand awareness, encourage consumer/brand loyalty, develop product image; support materials eg brochures, websites, posters, floor stands, tent cards, wall displays, table displays, menus, flyers, vouchers, promotions, clothing (tee-shirts, sweatshirts, baseball caps), free samples
  • Understand pricing and profitability concepts within hospitality operations
Methods of pricing: methods eg cost-oriented, market-oriented; additional pricing considerations eg service charge, cover charge, minimum charge
Factors affecting revenue generation: factors eg sales mix, customer turnover, average spending power (ASP)
Factors affecting profitability: factors eg labour intensity, shelf-life, elasticity of demand, standardisation, portion-control
  • Be able to use appraisal techniques to analyse and improve operational performance
Approaches to appraisal: techniques eg fundamentals of appraisal, basis for effective operational appraisal, use of budgets, industry norms, information analysis, developing qualitative and quantitative data, analysing and evaluating data
Appraising revenue, costs and profits: measures eg financial measurement techniques, price and volume data, interpreting calculations, price changes and inflation, comparing like-with-like and over time, identifying and measuring costs, apportioning costs, sales mix analysis, menu engineering, profitability measures, gross profit and gross profit percentages, net profit and operating profit, stakeholder interests
Appraising the operation: measures eg appraising the product, appraising operational performance measurement techniques, levels of consideration, when and how, quantitative, qualitative evaluation, external comparisons, quality management
Proposal for action: proposals eg forecasting future business requirements, levels of strategy, assessing organisational capability, strategic analysis and planning, implementation and managing change
Learning outcomes and assessment criteria

Learning outcomes
Assessment criteria for pass

On successful completion of
The learner can:

this unit a learner will:

LO1 Understand the operational

analyse the nature of different hospitality product and

and economic

service areas

characteristics of hospitality

evaluate the different influences affecting patterns of


demand within hospitality operations

compare customer profiles and their differing

expectations and requirements in respect of hospitality


analyse factors affecting average spending power in

hospitality businesses

LO2 Understand product

evaluate the key stages in product and service

development within

development applied within a hospitality operation

hospitality environments

analyse the features which contribute towards the

customers’ perception of products and services

assess the opportunities and constraints affecting

product and service development within a hospitality


evaluate different merchandising opportunities for

hospitality products and services

LO3 Understand pricing and

evaluate different methods of pricing taking into account

profitability concepts within

additional pricing considerations

hospitality operations

assess the factors which affect revenue generation and

profitability in hospitality operations

LO4 Be able to use appraisal

apply different performance measures and appraisal

techniques to analyse and

techniques to individual aspects of hospitality

improve operational

operations, the product and the whole operation


determine the effectiveness of different quantitative and

qualitative appraisal techniques and their application to

hospitality operations

apply approaches to business analysis, evaluation and

planning appropriate to hospitality operations, making

proposals for action

This unit can be linked successfully with: