HOSPITALITY REVENUE MANAGEMENT FINAL EXAM 2024 WITH 100% DETAILED VERIFIED ANSWERS, Exams of Business Administration

Download HOSPITALITY REVENUE MANAGEMENT FINAL EXAM 2024 WITH 100% DETAILED VERIFIED ANSWERS and more Exams Business Administration in PDF only on Docsity! HOSPITALITY REVENUE MANAGEMENT FINAL EXAM 2024 WITH 100% DETAILED VERIFIED ANSWERS What is the industry term used to describe the sum of prices paid by a business's customers? total revenues Historically, what concept have hospitality managers chiefly used to calculate their selling prices? costs What is an algebraic equivalent of the formula: Sales = Costs + Profit? profit=sales-costs What is the name for the net value achieved by both parties in a business transaction? profit What element is not present in a barter economy? money What is the formula used to calculate an owner's ROI? Owner's Investment Return / Owner's Original Investment = Owner's Return on Investment Sandy has 100 hotel rooms to sell. This Saturday night has enough customers to sell 125 rooms so she will be refusing 25 requests for rooms. What is this an example of? constrained supply Which industry was the first to use Yield Management principles? airline What is the industry term used to describe the selling of rooms which are not actually available for sale? overbooking What is the formula used to calculate Average Daily Rate? Total Room's Revenue / Total Rooms Sold = Average Daily Rate Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was Tashia's occupancy % last night? 70% Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was Tashia's RevPAR last night? $140 What is the industry term for the average revenue generated by each occupied guestroom during a defined period of time? RevPOR What is the formula used to calculate GOPPAR? (Total Revenue - Management Controllable Expenses) / Rooms Available to Sell = GOPPAR What is the industry term for a customer group which can be readily identified by one or more common characteristics? market segment What is a rack rate? The price of rooms when no discounts of any type are offered What is: Total period revenue (Number of available seats) x (hours of seat availability) RevPASH formula What is the term used to identify a management philosophy that places customer gain ahead of short- term revenue maximization in revenue management decision making? Customer-centric revenue management What is the term used to describe the potential customers to whom a business's marketing activities and messages are directed? target market What is the term used to describe efforts undertaken to encourage travel and tourism to a specific geographic area or attraction? destination marketing What is the name for the value given up by a buyer and a seller in a business transaction? price Penny Larson is buying a $100.00 restaurant gift card as a present for her niece who is graduating from hospitality management school. Which of economist Milton Friedman's buyer value formulas would apply to her purchase? spending her own money on someone else Penny Larson is a travel agent arranging a one-week San Francisco vacation for Mr. and Mrs. Rafael Ochoa. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms the Ochoa's will need during their trip? spending someone else's money on someone else What special challenge do buyers of hospitality products such as hotel guestrooms or restaurant meals face? difficulty in quality evaluation prior to purchase If quantity and quality are held constant how will a reduction in price affect buyers' perceptions of value? perceived value will increase If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? perceived value will decrease Which of the Four I's of service refers to the fact that the quality of service often depends upon the skill level of the individual who supplies it? inconsistency Which of the Four I's of service refers to the fact that services most often cannot be held, touched, or even seen before they are purchased? intangibility Ahmed is the sole waitperson on duty at the Athenian restaurant during the very slow 2:00 p.m. to 4:00 p.m. time period. Which of the Four I's of service refers to the fact that employees such as Ahmed must be scheduled to work anytime a service business is open and regardless of low volume levels? inventory Which of the Four I's of service refers to the tendency of consumers to equate the quality of service provided with the attitude of the person who actually provides the service? inseparability Which of the Four I's of service addresses the fact that a hotel room that goes unsold on a specific night cannot be discounted and offered for sale the next day? inventory Randall is the revenue manager for a franchisee who owns a five unit quick service restaurant company. Which feature would be the easiest for Randall to change if he sought to increase the value his company provides its customers? quality of service offered What is the most common guest complaint about hotel guest rooms? service deficiencies What is the most common guest complaint in the food service industry? service quality Consider the formula: (A + B) - C = D Where: A = Perceived tangible product benefit B = Perceived intangible service benefit C = Price D = Value If all other variables are held constant, which statement is also true? as C decreases, D increases Which two factors do successful revenue managers employ when they devise and implement strategic pricing plans? data management and insight Which statement about revenue management in the hospitality industry is true? It is best understood by experienced hospitality managers What is value-based pricing? A pricing system based upon a buyer's view of product or service value All except one of the following pricing systems are marketing-based. Which one is not an example of marketing-based pricing? Return on Investment (ROI) pricing What is the term used to describe a pricing system in which all customers are charged the same price at all times? fixed pricing What is true for franchised hotel operations in the United States? Their prices are established by the hotel owners What is the economic term used to describe the difference between what a consumer is charged for a product or service and the price that consumer would willingly pay for it? consumer surplus What is the relationship between differential pricing and consumer surplus? Differential pricing is a strategy used by sellers to minimize consumer surplus Which course of action would be most beneficial to the profit generating ability of a revenue manager's business? The majority of any consumer surplus is captured by the business Hottickets.com is a web-based business that buys popular concert tickets in bulk. It buys the tickets at a low price because it qualifies for group ticket discounts offered by concert promoters. Hotticket.com then marks up and immediately resells the tickets it has purchased to interested individuals who visit the Hotticket website. What is the name of the activity Hottickets.com is engaging in? arbitrage What is the purpose of a price fence or barrier? To identify who is and who is not eligible for a special pricing offer Which differential pricing strategy would in most cases be illegal or unethical if implemented? Pricing based on the ethnicity of the buyer The use of a formal customer rewards program is an example of what type of differential pricing strategy? Pricing based on customer characteristic The requirement that a buyer present a coupon at the time of purchase is an example of what type differential pricing strategy? Pricing based on customer characteristic The premium prices charged for dinner served at the restaurant Le Jules Vernes on the second level of the Eifel Tower in Paris, France can be attributed, in part, to which type of differential pricing strategy? pricing based on location A business hotel's promotion targeting local area residence and designed to offer them significantly reduced room rates on Sunday nights is an example of which type of differential pricing strategy? pricing based on location Which statement about high volume buyers in the hospitality industry is true? The per-unit cost of selling to them is less than the cost associated with low-volume buyers their hotel's general manager Which group of employees is most responsible for implementing the revenue optimization strategies and tactics developed by a revenue management team? line-level employees What vehicle do effective revenue managers use to best develop and evaluate their organizations' pricing and revenue management strategies and tactics? regular strategy meetings Who should lead the revenue management efforts of a lodging or foodservice organization? a qualified revenue manager Donna is a hotel revenue manager preparing next year's rooms forecast. Donna knows that in November of next year a new hotel is opening near her own. As a result, she is considering reducing her rooms forecast for that month. If she does so, what data type will she be primarily using to make her decision? future data Donna is a hotel revenue manager. Donna knows that for tonight she has sold 175 of her 200 available rooms. As a result, is eliminating room discounts on her remaining 25 rooms. In doing so, what data type is she primarily using to make her decision? current data In a limited service hotel, what is the incremental expense incurred in selling one guest room? CPOR What is the lodging industry term for the situation that occurs when a hotel is unable to accommodate a guest's reservation preference due to the unavailability of the room or service at the price, or on the date, originally requested by the guest? denied Ray sold 100 rooms on Monday at an ADR of $150.00. He sold 150 rooms on Tuesday at an ADR of $200.00. What was his ADR for the combined days of Monday and Tuesday? $180 Peggy is the revenue manager at a 1500 room hotel. For next Friday Peggy's PMS shows 300 check- outs, 900 stayovers, 250 transient arrivals and a 200-room group block that begins a three-day stay on that day. What is Peggy's current rooms available for sale for next Friday? 150 What is the lodging industry term for a revenue management strategy that instructs reservationists to decline any room reservation request that does not equal or exceed the pre-determined minimum number of nights allowed? MLOS Amanda is the revenue manager of a hotel. When she opened her e-mail last Friday she found a message from the Executive Director of the state dental association asking Amanda for a formal price quote on rooms and meeting space needed by the association for their annual conference. What would Amanda call this inquiry? RFP What is the name for the rooms-related report that would identify the number of group rooms currently on the books as well as the rate or speed at which group rooms are currently being sold? pace report What is the formula revenue managers use to calculate the percentage change in sales which has occurred from the last accounting period to the present period? Total Sales This Period - Total Sales Last Period Total Sales Last Period = % Change in Sales What is the primary reason for forecasting future room demand? to make pricing-related decisions Scott is a revenue manger in a 600 room hotel. For tomorrow he forecasts that 10 rooms will be OOO and that there will be 80 stayovers with 300 arrivals. He also forecasts 30 no-shows, 10 early departures and 20 over-stays. What is Scott's forecast for the number of rooms occupied tomorrow? 360 In the lodging industry, when is a guest considered to be an over-stay? When the guest checks out of the hotel after his or her originally scheduled check-out date When might a revenue manager at a lodging facility be pressured to establish a long-term forecast that is unrealistically low? When a significant financial incentive exists for exceeding the forecast In the lodging industry what factors would be overinflated to produce an unrealistically high RevPAR forecast? ADR and/or occupancy % What is the most customer-centric strategy for revenue managers to employ if they seek to optimize ADR and RevPAR in periods of temporarily heightened demand? eliminate discounts What is the most likely result of a revenue manager's decision to reduce rack room rates during periods of reduced demand? competitor's rates will also be reduced What is the most likely result of a revenue manager's decision to raise room rates during periods of very high demand? RevPAR will also be increased What is the most likely result of a revenue manager's decision to raise room rates during periods of moderate to low demand? number of potential buyers will decline What is one consistent characteristic of desirable rooms revenue? leads to higher GOPPAR values For revenue managers working in the lodging system the term "place" in the 4ps of the Marketing Mix refers to two items. One is the physical location of the hotel. What is the second? the property distribution channels What is the industry term used to describe all of a hotels unique or distinct forms of guestroom products available for sale? rooms inventory What is a rate code? A property specific description used to identify a particular room product Which of the following is not typically used by revenue managers to designate specific room products sold in their hotels? price What is the lodging term used to describe two independent data management systems that have been electronically connected? interface what would be the effect of an upon-arrival inventory management training program that resulted in a hotel significantly up selling a large percentage of its arriving guests? ADR and RevPar would increase and occupancy % would be unchanged What are two synonymous lodging industry terms used to identify the difference between purchases a group pledges to make and the purchases it actually makes? reservations for 32 future rooms nights from this group of check out guests. What is true at Harold's hotel? The reservation nights booked per check out for last week was .05 For which distribution channel type do hotels typically employ a shopper's service? Sales made via the telephone Which is most often true about room sales made by a hotel's group sales department? ADRs are lower than average and Net ADR Yield is higher than average How are most CVBs in the United States funded? By a combination of hotel occupancy taxes and membership dues Which of the following rooms marketing strategies would contribute to the commoditization of hotel rooms? Participation on a web site that lists only a hotel's name and a single rack room rate Into which hotel industry distribution channel component would a brand's call center worker enter room reservations he or she has made? CRS Which components of the hotel industry's current reservation system currently offers its users the ability to simultaneously see comparative hotel rate information? The GDS and IDS Where on a hotel's statement of income and expense (income statement) does the 10th Edition of the Uniform System of Accounts for Lodging Industry (USALI) recommend travel agency commissions be recorded? the rooms expense portion Which common IDS room sales model is most dependent on selling price for its revenue generation? opaque model What is true about proprietary web sites administered by a hotel's franchisor? Content changes must be implemented by the brand's managers Lara's rack rate is $299.99. She has been asked to bid on 200 rooms nights needed by a travel agent seeking housing for a group of seniors touring the area by bus. The travel agency has requested Lara provide her a net (non-commissionable) rate. Lara's hotel typically pays a 10% travel agency fee. What would be Lara's per room night net non-commissionable bid for these rooms if she does not lower her rack rate? 269.99 What is true about rooms that are sold at prices below a hotel's variable operating costs? they will cause an increase in RevPAR Scott is a revenue manager who calculates the following for his hotel: Total (rooms + non-rooms) revenue Total occupied rooms What is the result of Scott's calculation? RevPOR Which is considered a room-related occupancy cost? complimentary breakfast costs At Rachel's hotel the CPOR is $40.00. Her Net ADR Yield averages 85% and her franchise fees average 5%. What is Rachel's average minimum ADR sales point? $50 Last month Carl's hotel ran a 55% occupancy. His comp. set had 50,000 room nights available for sale and sold 25,000 rooms. What was Carl's occupancy index last month? 110% Last month Carl's hotel had an ADR of $150.00. The ADR of his comp. set was $200.00. What was Carl's ADR index last month? 75% Last year Carl's hotel had an occupancy index of 120%. From that information, what can be said about Carl's hotel? It achieved a higher average occupancy % than its comp. set Last month Carl's hotel had an ADR index of 125%. In the same month his RevPAR index was 100%. What can be said about Carl's hotel? occupancy index is less than 100 Last month Carl's hotel had 10,000 available room nights and sold 6,000 room nights. Last month his comp set had an average occupancy of 80%. What was Carl's occupancy index last month? 75% Last month Carl's hotel had an ADR index of 105%. What is true about his hotel's ADR last month? It was somewhat higher than the ADR of his competitive set Last month Carl's hotel had an ADR of $200.00. The ADR for his comp. set for the same month was $225.00. Prior to last month, Carl's Year-To-Date ADR index was 110%. What will always be true about his Year-To-Date ADR index when last month's operating results are included in the Year-To-Date data? it will be less than 110% This Year-To-Date, Carl's hotel is averaging an ADR of $125.00. The ADR of his comp. set for the same period is $125.00. Assume Carl's comp. set is an appropriate one. What would you recommend Carl do if his occupancy index for the same period is 140%? Carefully increase rack rates to optimize GOPPAR Last month Carl's hotel had a RevPAR index of 100. His occupancy index was 132.5 and his ADR index was 75.5. What is true about his hotel's performance last month? His GOPPAR is not optimized because it is low relative to the RevPAR index Last month Carl's hotel had an ADR index of 80.0% and an occupancy index of 120%. What was Carl's RevPAR index for last month? 96% Last month Carl's hotel had a RevPAR index of 133.0%. Based on that information alone; what does Carl know for sure about his hotel's performance last month? His ADR or occupancy index will exceed 100% Last month Carl's 500-room hotel had a comp. set that included five additional hotels offering a total of 2000 rooms. What was Carl's supply share % last month? 20% Last month Carl's hotel supplied 10.8% of the rooms in his comp set. It attracted 11.6% of all the rooms sold (demand) and generated 9.1% of the total revenue achieved by the comp set. What is true about Carl's hotel? Its rates are low relative to the comp. set's and the hotel has an occupancy index above 100%. What metrics are best used to assess the relative merits of a specific lodging industry distribution channel's contribution to a single hotel? Rooms sold and Net ADR Yield It is near the end of the month and Tamrika is a revenue manager considering the impact of selling 200 room nights, for use this month, but at a room rate far below her hotel's average room rate. What would be the impact on her hotel's operating statistics if she makes this sale? Increased RevPAR and reduced flow-thru %