Institute of Commercial Management | Qualification Subject

Economics & Hospitality

Main Topics of Study

The Approach to Economics

  • The definition and meaning of economics
  • Scarcity and choice
  • The importance of marginal analysis
  • Capital and income
  • The business firm
  • The financial features of businesses
  • Business perspectives

The Market

  • The market system
  • Market stability
  • Government controls
  • Change in the market
  • Changes in demand
  • Changes in supply
  • Market changes in practice
  • Short-term and long-term effects of change in demand
  • Short-term and long-term effects of change in supply
  • Elasticity and its application
  • Applying supply and demand
  • Implications for management

Economic Trends Affecting the Hospitality Industry

  • Defining the economy
  • Measuring the economy
  • Measuring changes in output
  • Trends in the economy
  • Economic growth
  • Reasons for economic growth
  • Structural change in the economy
  • Economic trends and the hospitality industry
  • Time, cost and economic change
  • Economic growth and household changes
  • Economic growth and the hospitality industry

Structural Change in the Accommodation, Food and Drink Sectors

  • A note on spending and income
  • The accommodation sector
  • The eating out sector
  • The drinks sector
  • Contract services

Macroeconomic Fluctuations and the Hospitality Industry

  • Boom follows slump follows boom: stages of the macroeconomic cycle
  • Aggregate demand and supply
  • Why fluctuations in output occur
  • Government macroeconomic policy
  • Views on macroeconomic policy
  • The impact of the macroeconomy on the hospitality industry
  • Predicting macroeconomic changes
  • Implications for management

The Hospitality Industry and the Local Economy

  • Tourism life cycle and local development
  • Multiplier analysis of the local impact of tourism
  • The multiplier process
  • Multiplier studies

Costs and Market Structure

  • Market structure
  • Economies of scale and scope and experience
  • Sources of economies of scale and scope
  • Economies of scale and scope in the hospitality industry

Market Structure and Market Control

  • Pricing for profit
  • Comparing monopoly and competition
  • Dominant firms and oligopolies
  • Market structure and social efficiency
  • Government control of monopolies

Strategic Product Development and Delivery

  • Goods and services
  • Costs of production
  • Planning the production of hospitality services
  • Production planning in a changing environment
  • Service quality

Business Operations

  • Efficient production
  • Use of labour
  • Investment decisions
  • Organising production: the economic role of firms

Business Development

  • Risks and financial requirements of a business during development
  • Vertical integration
  • Mergers
  • Franchising: solution for a dispersion market
  • Internationalization

Pricing and Product Development

  • Strategic development and pricing
  • Pricing methods for hospitality services
  • Differential pricing for demand management
  • Price discrimination
  • Load pricing
  • Application of differential pricing
  • Hotel occupancy and capacity utilisation
  • Pricing in special situations

Maintaining and Developing Your Economic Skills

  • An analytical framework
  • Planning reading
  • Reading the industry literature

Example Candidate Response Booklet

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Recommended Reading

Main Text:

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Economics for Hospitality Management – Peter Cullen (Thompson Business Press)

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