Hospitality Revenue Management Final Exam Questions and Answers, Exams of Financial Management

Download Hospitality Revenue Management Final Exam Questions and Answers and more Exams Financial Management in PDF only on Docsity! HOSPITALITY REVENUE MANAGEMENT FINAL EXAM ACTUAL EXAM QUESTIONS AND CORRECT ANSWERS | ALREADY GRADED A+ | LATEST EDITION 2024 What will be the typical case in an auction when the initial price bid for the item being sold is very low? ------CORRECT ANSWER---------------the number of potential bidders will be high Penny Larson is travelling to San Francisco for a personal vacation. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms she will need during her trip? ------CORRECT ANSWER---------------spending her own money on herself Penny Larson is travelling to San Francisco on business. Her company will reimburse 100% of her travel expense. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms she will need during her trip? -- ----CORRECT ANSWER---------------spending someone else's money on herself 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? ------CORRECT ANSWER------------- --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? -- ----CORRECT ANSWER---------------spending someone else's money on someone else What special challenge do buyers of hospitality products such as hotel guestrooms or restaurant meals face? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------perceived value will increase If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER------ ---------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? ------CORRECT ANSWER--------------- 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? ------CORRECT ANSWER---------------inseparability What is the formula used to calculate an owner's ROI? ------CORRECT ANSWER--------- ------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? --- ---CORRECT ANSWER---------------constrained supply Which industry was the first to use Yield Management principles? ------CORRECT ANSWER---------------airline What is the industry term used to describe the selling of rooms which are not actually available for sale? ------CORRECT ANSWER---------------overbooking What is the formula used to calculate Average Daily Rate? ------CORRECT ANSWER--- ------------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? ------CORRECT ANSWER------------- --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? ------CORRECT ANSWER--------------- $140 What is the industry term for the average revenue generated by each occupied guestroom during a defined period of time? ------CORRECT ANSWER--------------- RevPOR What is the formula used to calculate GOPPAR? ------CORRECT ANSWER--------------- (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? ------CORRECT ANSWER---------------market segment What is a rack rate? ------CORRECT ANSWER---------------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) ------CORRECT ANSWER------- --------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? -- ----CORRECT ANSWER---------------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? ------CORRECT ANSWER--------------- target market What is the term used to describe efforts undertaken to encourage travel and tourism to a specific geographic area or attraction? ------CORRECT ANSWER--------------- destination marketing What is the name for the value given up by a buyer and a seller in a business transaction? ------CORRECT ANSWER---------------price Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what type of pricing? ------CORRECT ANSWER---------------two-tiered pricing What is the fundamental assumption upon which the concept of consumer rationality is based? ------CORRECT ANSWER---------------Buyers act in ways that are of personal benefit to them What is the revenue management term used to describe the perceived benefit gained, minus the price paid, in a business transaction? ------CORRECT ANSWER--------------- value What is created when a seller communicates to a buyer a description of a product to be sold and the price at which that product will be sold? ------CORRECT ANSWER----------- ----value proposition Which of the following terms would be included in the Place portion of a hotel's marketing mix? ------CORRECT ANSWER---------------distribution channels What is the fundamental assumption upon which the Law of Supply is based? ------ CORRECT ANSWER---------------The higher the demand for a product the more of it will be produced by sellers According to Alfred Marshall's work, if the price of a product is lower than the natural, or equilibrium price, what will happen? ------CORRECT ANSWER---------------The demand for the product would exceed its supply Assume an equilibrium price (P1) is in place for a product. What would the law of supply and demand predict as an outcome if demand for that product increased? ------ CORRECT ANSWER---------------The new price (P2) would be higher than the previous price (P1) and supply would increase has purchased to interested individuals who visit the Hotticket website. What is the name of the activity Hottickets.com is engaging in? ------CORRECT ANSWER------------- --arbitrage What is the purpose of a price fence or barrier? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------pricing based on location Which statement about high volume buyers in the hospitality industry is true? ------ CORRECT ANSWER---------------The per-unit cost of selling to them is less than the cost associated with low-volume buyers Offering reduced room rates only to those room buyers willing to book their reservations via an internet website is an example of which type of differential pricing strategy? ------ CORRECT ANSWER---------------Pricing based on distribution channel What is the formula revenue managers use to calculate Net ADR Yield? ------CORRECT ANSWER---------------Net Room Rate Standard ADR = Net ADR Yield Offering guests the opportunity to purchase a sandwich, fries and a soft drink at a price lower than that which would be charged for those same items purchased separately is an example of which type of differential pricing strategy? ------CORRECT ANSWER------ ---------pricing based on bundling Which statement about revenue management and revenue optimization is true? ------ CORRECT ANSWER---------------Revenue management seeks to maximize income while revenue optimization seeks to maximize long-term profits Alice is the revenue manager at the Granger hotel. A large volume customer wants a price quote from Alice on 50 rooms per week for the next 52 weeks. Each room would be rented for two days at a time. How many room nights will Alice be quoting on? ------ CORRECT ANSWER---------------5200 Hotel revenue managers face hard supply constraints. In which industry below are hard constraints also likely to be encountered? ------CORRECT ANSWER---------------hair salons Lisa is the revenue manager of a 500 room hotel property. Next week-end demand for her rooms will exceed the number of rooms she has available for sale. Which high demand pricing strategy will optimize revenue for her property? ------CORRECT ANSWER---------------Implement a differential pricing strategy and allocate the limited supply to those market segments who value the rooms most highly What two factors establish a restaurant's weekly customer capacity? ------CORRECT ANSWER---------------Number of seats and number of hours open per week What is the name for the laws and regulations aimed at preventing abusive business behavior or anti-competitive practices? ------CORRECT ANSWER---------------anti-trust legislation What is the name used to describe a consortium of independent organizations formed to limit competition by controlling the production, distribution and pricing of a product or service? ------CORRECT ANSWER---------------cartel What is the name of the US legislation that outlawed all contracts and conspiracies that unreasonably restrain interstate trade? ------CORRECT ANSWER---------------sherman antitrust act What is the name of the US legislation that prohibits competing hospitality managers from meeting to agree upon the room prices that will be charged for upcoming events or charged to specific groups of customers? ------CORRECT ANSWER--------------- sherman antitrust act What is the name of the US legislation that prohibits illegal discrimination in pricing? ----- -CORRECT ANSWER---------------clayton act Which US law would be violated if a hotel charged different room rates based upon a room buyer's race, religion or ethnic background? ------CORRECT ANSWER--------------- civil rights act block that begins a three-day stay on that day. What is Peggy's current rooms available for sale for next Friday? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER------- --------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? ------ CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------ CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------360 In the lodging industry, when is a guest considered to be an over-stay? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------ CORRECT ANSWER---------------eliminate discounts What is the most likely result of a revenue manager's decision to reduce rack room rates during periods of reduced demand? ------CORRECT ANSWER--------------- 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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER--------------- number of potential buyers will decline What is one consistent characteristic of desirable rooms revenue? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------rooms inventory What is a rate code? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------price What is the lodging term used to describe two independent data management systems that have been electronically connected? ------CORRECT ANSWER---------------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? ------ CORRECT ANSWER---------------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? ------ CORRECT ANSWER---------------attrition and wash Tanika is the revenue manager at the Holiday House Hotel. Southeast airlines has requested that Tanika quote them a rate for the use of 20 rooms per night for a period of one year. If Southeast accepts Tanika's quote for both price and availability, what type of room rate will the hotel and airline agreed upon? ------CORRECT ANSWER------------- --contract rate What is true about the calculations required to calculate the following Net ADR Yield formula? Net Room Rate Standard ADR = Net ADR Yield ------CORRECT ANSWER---------------Standard ADR (-) Distribution Channel Costs (=) Net Room Rate Lani is the revenue manager at the Aloha Inn. In which situation would Lani optimize the Inn's gross rooms revenues? ------CORRECT ANSWER---------------High Standard ADR, high Net ADR Yield What is the industry term for a lower room rate that is offered when a potential rooms buyer exhibits initial price resistance? ------CORRECT ANSWER---------------fade rate Harold tracks his hotel guest check outs and the number of new reservations made at check out. Last week a total of 640 guests checked out of his hotel. In that same period, his front desk staff booked reservations for 32 future rooms nights from this group of check out guests. What is true at Harold's hotel? ------CORRECT ANSWER--------------- 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? ------ CORRECT ANSWER---------------Sales made via the telephone Which is most often true about room sales made by a hotel's group sales department? - -----CORRECT ANSWER---------------ADRs are lower than average and Net ADR Yield is higher than average How are most CVBs in the United States funded? ------CORRECT ANSWER--------------- 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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------- -----CRS Which components of the hotel industry's current reservation system currently offers its users the ability to simultaneously see comparative hotel rate information? ------ CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------the rooms expense portion Which common IDS room sales model is most dependent on selling price for its revenue generation? ------CORRECT ANSWER---------------opaque model What is true about proprietary web sites administered by a hotel's franchisor? ------ CORRECT ANSWER---------------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? ------ CORRECT ANSWER---------------269.99 What is true about rooms that are sold at prices below a hotel's variable operating costs? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER---------------RevPOR Which is considered a room-related occupancy cost? ------CORRECT ANSWER---------- -----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? ------ CORRECT ANSWER---------------$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? ------CORRECT ANSWER---------------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? ------CORRECT ANSWER--------------- 75% Last year Carl's hotel had an occupancy index of 120%. From that information, what can be said about Carl's hotel? ------CORRECT ANSWER---------------It achieved a higher average occupancy % than its comp. set An operation's income statement shows total expenses of $45,500 for a specific month. Before tax ------CORRECT ANSWER---------------$48,750 Why are a business's vendors interested in information contained in that business's income statement? ------CORRECT ANSWER---------------So they can make decisions about payment terms that should be offered A manager's total revenue for an accounting period is $150,000. Revenue from one of the operation's three revenue sources is $30,000. What was the sales percentage of that revenue source? ------CORRECT ANSWER---------------20% What is an example of a controllable cost? ------CORRECT ANSWER--------------- marketing What is an example of a fixed cost? ------CORRECT ANSWER---------------licenses and permits What is the formula for prime cost? ------CORRECT ANSWER---------------Total cost of sales + Total labor = Prime cost A manager's operation had an income before income taxes of $2,000 in a month. Total expenses were $18,000 in that month. What was the operation's total sales amount in that month? ------CORRECT ANSWER---------------$20,000 A manager compares the revenue results for a 28-day P&L period to the results of the 28-day P&L report from the previous 28-day period. What source of information is the manager using to analyze the revenue portion of the current P&L statement? ------ CORRECT ANSWER---------------historical performance What business segment best describes a company that is engaged primarily in the sale of intangible goods? ------CORRECT ANSWER---------------service Tammy owns a tanning salon. Her salon has five tanning beds; thus she faces supply constraints based on capacity. In her business what additional factor acts to constrain supply? ------CORRECT ANSWER---------------time Revenue optimization strategies can make the most impact on inventory management in industries with which kind of cost structures? ------CORRECT ANSWER--------------- low variable costs and high fixed costs Selling season tickets to sporting events such as professional baseball or basketball games at a price per game that is lower than the cost of individual tickets to all of the games is an example of what revenue optimization activity? ------CORRECT ANSWER-- -------------product versioning Which of the following would not be considered highly perishable inventory? ------ CORRECT ANSWER---------------french champagne What is the business term used to describe the application of statistical formulas to past events for the purpose of predicting future events? ------CORRECT ANSWER-------------- -probabilistic modeling It is Saturday night at 7:30 p.m. and Alexander's restaurant is slower than expected. Only 50% of its seats are filled. Gene, the manager, wants to increase revenue by offering a two-for-one special between 8:00 p.m. and 9:00 p.m. this same night. What will be Gene's greatest challenge in implementing this revenue optimization strategy? --- ---CORRECT ANSWER---------------ability to communicate efforts In the past 20 years what has been the trend regarding the number of hospitality- related business owners choosing to affiliate with franchisors? ------CORRECT ANSWER---------------their numbers are increasing Larissa is the corporate revenue manager for Sandstone hotels. She oversees 10 of her company's franchised properties. Which of the following is an example of Larissa's internal customers? ------CORRECT ANSWER---------------sandstone's company controller Raymond is a revenue manager working for a franchisor. Raymond is assigned to brand partner support. What would be Raymond's role in this company? ------CORRECT ANSWER---------------Working with business entities chosen by his company to achieve the goals of its brands Which of the following revenue management activities would not be included in the typical job description of a revenue manager employed by a CVB? ------CORRECT ANSWER---------------product pricing what is the industry term used to describe the sum of prices paid by a business's customers? -daily receipts -profit -profits less expenses -total revenues --------CORRECT ANSWER--------------total revenues historically, what concept have hospitality managers chiefly used to calculate their selling prices? -income -revenue -costs -profits --------CORRECT ANSWER--------------costs -owner's investment/occupancy rate=average daily rate -rooms available for sale/occupancy rate=average daily rate -total rooms sold/total room's revenue=average daily rate -total room's revenue/total rooms sold=average daily rate --------CORRECT ANSWER--- ----------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? -87.5% -70% -114.3% -80% --------CORRECT ANSWER-------------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? -$140.00 -$35.00 -$125.00 -$160.00 --------CORRECT ANSWER-------------$140.00 what is the industry term for the average revenue generated by each occupied guestroom during a defined period of time? -REVPOR -REVPASH -REVPAR -REVAVE --------CORRECT ANSWER-------------REVPOR what is the formula used to calculate GOPPAR? -(total revenue - management controllable expenses) / rooms sold -rooms available to sell / (total revenue - management controllable expenses) -rooms available to sell / total management controllable expenses -(total revenue - management controllable expenses) / rooms available to sell -------- CORRECT ANSWER-------------(total revenue - management controllable expenses) / rooms available to sell what is the industry term for a customer group which can be readily identified by one or more common characteristics? -comp set -STR group -market segment -revenue group --------CORRECT ANSWER-------------market segment what is a rack rate? -the price of rooms when nonrefundable advance purchases are made -the price of rooms when no discounts of any type are offered -the price of rooms when 0-10% discounts are offered -the price for the most expensive room in a hotel --------CORRECT ANSWER------------- 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) -the formula for REVPASH -the formula for check average -the formula for contribution margin (CM) -the formula for REVPAR --------CORRECT ANSWER-------------the formula for REVPASH 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? -revenue enhancement management -yield management -profit yield management -customer-centric revenue management --------CORRECT ANSWER------------- 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? -the yield market -the comp set -the target market -the centric market --------CORRECT ANSWER-------------the target market what is the term used to describe efforts undertaken to encourage travel and tourism to a specific geographic area or attraction? -goal management -destination marketing -yield intention marketing -repairs and maintenance --------CORRECT ANSWER-------------licenses and permits what is the formula for prime cost? -total cost of sales - total labor = prime cost -total cost of sales + total labor = prime cost -total cost of sales - controllable income = prime cost -total cost of sales + controllable income = prime cost --------CORRECT ANSWER-------- -----total cost of sales + total labor = prime cost a manager's operation had an income before income taxes of $2,000 in a month. Total expenses were $18,000 in that month. What was the operation's total sales amount in that month? -$20,000 -$25,000 -$30,000 -$35,000 --------CORRECT ANSWER-------------$20,000 a manager compares the revenue results for a 28-day P&L period to the results of the 28-day P&L report from the previous 28-day period. What source of information is that manager using to analyze the revenue portion of the current P&L statement? -budget -chain standard -industry standard -historical performance --------CORRECT ANSWER-------------historical performance what is the name for the value given up by a buyer and a seller in a business transaction? -expense -price -cost -profit --------CORRECT ANSWER-------------price Charging guests for watching a Pay-Per-View movie in their hotel guestroom is an example of what type of pricing? -value based pricing -differential pricing -two-tiered pricing -demand based pricing --------CORRECT ANSWER-------------two-tiered pricing what is the fundamental assumption upon which the concept of consumer rationality is based? -buyers act in ways that are of personal benefit to them -buyers will pay the lowest price possible for any product or service -buyers never act in ways that can be predicted -buyers usually act in ways that cannot be predicted --------CORRECT ANSWER---------- ---buyers act in ways that are of personal benefit to them what is the revenue management term used to describe the perceived benefit gained, minus the price paid, in a business transaction? -profit -cost -sale -value --------CORRECT ANSWER-------------value what is created when a seller communicates to a buyer a description of a product to be sold and the price at which the product will be sold? -a cost-based offer -a demand-based price -a two-tiered proposition -a value proposition --------CORRECT ANSWER-------------a value proposition which one of the following terms is not one of the 4 Ps of the marketing mix? -proposition -price -product -place --------CORRECT ANSWER-------------proposition which of the following terms would be included in the place portion of a hotel's marketing mix? -advertising -product enhancements -distribution channels -promotions --------CORRECT ANSWER-------------distribution channels what is the fundamental assumption upon which the law of supply is based? -equilibrium point -equal capacity point --------CORRECT ANSWER-------------break-even point which of the following food service costs is a variable cost? -food -equipment rental -insurance -interest on debt --------CORRECT ANSWER-------------food which of the following lodging costs is a fixed cost? -room supplies -franchiser reservation fees -mortgage payments -housekeeper wages --------CORRECT ANSWER-------------mortgage payments in a hospitality industry break-even analysis graph the total revenues line starts at 0. Why does the total costs line always start farther up the y axis? -because variable costs are incurred even if no guests are served or rooms are sold -because fixed costs are always higher than variable costs -because fixed costs less variable costs must always be greater than 0 -because fixed costs are incurred even if no guests are served or rooms are sold -------- CORRECT ANSWER-------------because fixed costs are incurred even if no guests are served or rooms are sold which of the following statements about unit costs in the hospitality industry is true? -unit costs are unaffected by an item's selling price -unit costs will vary based upon how high or low an item is priced -selling prices must equal unit costs -unit costs cannot be lower than the unit's selling price --------CORRECT ANSWER------- ------unit costs will vary based upon how high or low an item is priced which of the following statements about the relationship between costs and pricing is true? -an appropriate selling price for a product or service must be dictated by its total costs -an appropriate selling price for a product or service must dictate its allowable costs -allowable costs must be determined before an appropriate selling price is established -an increase in a product's cost must dictate an equal or greater increase in that product's selling price --------CORRECT ANSWER-------------an appropriate selling price for a product or service must dictate its allowable costs If a Revenue Manager implements an organization s strategic pricing plan what personal characteristic of that Revenue Manager will be most important for ensuring the plan s success? -training in accounting -experience in marketing -an understanding of algebraic formulas -an understanding of an organization's customers --------CORRECT ANSWER------------- an understanding of an organization's customers Which formula represents a buyer's view of a sales transaction? Costs - Selling price = Personal Profit Selling Price - Perceived Value = Personal Profit Selling Price - Costs = Personal Profit Perceived Value - Selling Price = Personal Profit --------CORRECT ANSWER------------- perceived value - selling price = personal profit What type of benefit is lacking in material qualities and is not able to be touched or seen but nonetheless can still be perceived? Intangible Fringe Tangible Material --------CORRECT ANSWER-------------intangible What will be the typical case in an auction when the initial price bid for the item being sold is very low? The number of potential bidders will be low The number of potential bidders will be high The number of potential bidders will increase as price increases The number of potential bidders will decline --------CORRECT ANSWER-------------the number of potential bidders will be high Penny Larson is travelling to San Francisco for a personal vacation. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms she will need during her trip? Spending someone else's money on herself Spending her own money on someone else Spending her own money on herself 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? Intangibility Inseparability Inventory Inconsistency --------CORRECT ANSWER-------------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 Inseparability Inventory Inconsistency --------CORRECT ANSWER-------------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? Intangibility Inseparability Inventory Inconsistency --------CORRECT ANSWER-------------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? Intangibility Inseparability Inventory Inconsistency --------CORRECT ANSWER-------------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? Intangibility Inseparability Inventory Inconsistency --------CORRECT ANSWER-------------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? The quality of food products offered for sale The quality of service offered The quality of beverage products offered for sale The customer seating capacity available --------CORRECT ANSWER-------------the quality of service offered What is the most common guest complaint about hotel guest rooms? Service deficiencies Excessive age Room size deficiencies Room locations --------CORRECT ANSWER-------------service deficiencies What is the most common guest complaint in the food service industry? Food and/or beverage quality Seating location Service quality Menu prices --------CORRECT ANSWER-------------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 A increases, D decreases As B decreases, D increases As A and B increase, D decreases As C decreases, D increases --------CORRECT ANSWER-------------as C decreases, D increases Which two factors do successful revenue managers employ when they devise and implement strategic pricing plans? Intuition and insight Probability theory and basic calculus Data management and probability theory Data management and insight --------CORRECT ANSWER-------------data management and insight Differential pricing is a strategy used by sellers to minimize consumer surplus -------- CORRECT ANSWER-------------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? Consumer surplus is maximized The majority of any consumer surplus is captured by intermediaries The majority of any consumer surplus is captured by the business The majority of any consumer surplus is retained by the business's customers. -------- CORRECT ANSWER-------------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 Commoditization Consumer surplus staging Articles of trade --------CORRECT ANSWER-------------arbitrage What is the purpose of a price fence or barrier? To determine the optimum price at which to sell a product or service To minimize the sale of low priced products or services To establish the actual amount of available product inventory To identify who is and who is not eligible for a special pricing offer --------CORRECT ANSWER-------------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 age of the buyer Pricing based on the occupation of the buyer Pricing based on the ethnicity of the buyer Pricing based upon the location at which the buyer makes a purchase --------CORRECT ANSWER-------------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 distribution channel Pricing based on customer characteristic Pricing based on product versioning Pricing based on payment terms --------CORRECT ANSWER-------------pricing based on customer characterstic 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 distribution channel Pricing based on customer characteristic Pricing based on product versioning Pricing based on payment terms --------CORRECT ANSWER-------------pricing based on customer characteristic The premium prices charged for dinner served at the restaurant Le Jules Vernes on the second level of the Eiffel Tower in Paris, France can be attributed, in part, to which type of differential pricing strategy? Pricing based on location Pricing based on time Pricing based on product versioning Pricing based on bundling --------CORRECT ANSWER-------------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 Pricing based on bundling Pricing based on product versioning Pricing based on time --------CORRECT ANSWER-------------pricing based on time Which statement about high volume buyers in the hospitality industry is true? The costs of selling and servicing their accounts increase proportionately with the volume of purchases made They expect to pay more per unit purchased because they buy in large quantity The per-unit cost of selling to them is less than the cost associated with low volume buyers It is easier to win their business than to win the business of low volume buyers -------- CORRECT ANSWER-------------the per-unit cost of selling to them is less than the cost associated with low volume buyers Lisa is the revenue manager of a 500 room hotel property. Next week-end demand for her rooms will exceed the number of rooms she has available for sale. Which high demand pricing strategy will optimize revenue for her property? A. Establish one fixed price, then sell to customers on a first come-first served basis until all rooms have been sold B. Implement a differential pricing strategy and allocate the limited supply to those market segments who value the rooms most highly C. Allocate the rooms to selected customers who meet established criteria; (i.e. they are volume buyers, repeat buyers, or they hold other favored buyer Status) D. Raise prices until the available supply of rooms exceeds demand --------CORRECT ANSWER-------------implement a differential pricing strategy and allocate the limited supply to those market segments who value the rooms most highly What two factors establish a restaurant's weekly customer capacity? A. Number of seats and number of hours open per week B. Number of servers and number of hours open per week C. Daily revenue and number of seats D. Check average and number of hours open per week --------CORRECT ANSWER----- --------number of seats and number of hours open per week What is the name for the laws and regulations aimed at preventing abusive business behavior or anti-competitive practices? A. Anti-trust legislation B. Anti-competition legislation C. Protection legislation D. Consumer rights legislation --------CORRECT ANSWER-------------anti-trust legistlation What is the name used to describe a consortium of independent organizations formed to limit competition by controlling the production, distribution and pricing of a product or service? A. League B. Cartel C. Lobby D. Union --------CORRECT ANSWER-------------cartel What is the name of the US legislation that outlawed all contracts and conspiracies that unreasonably restrain interstate trade? A. Clayton Act B. Federal Trade Commission Act C. Sherman Antitrust Act D. Robinson-Patman Act --------CORRECT ANSWER-------------Sherman antitrust act What is the name of the US legislation that prohibits competing hospitality managers from meeting to agree upon the room prices that will be charged for upcoming events or charged to specific groups of customers? A. Civil Rights Act B. Clayton Act C. Robinson-Patman Act D. Sherman Antitrust Act --------CORRECT ANSWER-------------Sherman antitrust act What is the name of the US legislation that prohibits illegal discrimination in pricing? A. Federal Trade Commission Act B. Clayton Act C. Robinson-Patman Act D. Sherman Antitrust Act --------CORRECT ANSWER-------------Clayton act Which US law would be violated if a hotel charged different room rates based upon a room buyer's race, religion or ethnic background? A. Sherman Antitrust Act B. Civil Rights Act C. Clayton Act D. Consumer Protection Act --------CORRECT ANSWER-------------civil rights act What is the name for the price perceived by consumers to be the normal or standard price for a product or a service? A. Recurring price B. Required price C. Reference price D. Recommended price --------CORRECT ANSWER-------------reference price What is true about the way buyers generally view variance in a seller's prices? A. Price increases justified by supply shortages are likely to be viewed favorably B. Surcharges are viewed more favorably then discounts C. Discounts are viewed more favorably then surcharges D. Price increases justified by escalated consumer demand are likely to be viewed favorably --------CORRECT ANSWER-------------discounts are viewed more favorably than surcharges D. Regular web postings --------CORRECT ANSWER-------------regular strategy meetings Who should lead the revenue management efforts of a lodging or food service organization? A. A qualified revenue manager B. A qualified operations manager C. A qualified marketing director D. A qualified director of finance and accounting --------CORRECT ANSWER-------------a qualified revenue manager 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 amenity package the property chain affiliation the property advertising program the property distribution channels --------CORRECT ANSWER-------------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 rooms revenue room rates CPOR --------CORRECT ANSWER-------------rooms inventory What is a rate code? the identification number for a specific guest reservation the room number of a specific guest room A property specific description used to identify a particular room product a symbol used to identify the housekeeping status of a specific room --------CORRECT ANSWER-------------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? location price bed configuration room size --------CORRECT ANSWER-------------price What is the lodging term used to describe two independent data management systems that have been electronically connected? interface inverse connection bond one-way connect --------CORRECT ANSWER-------------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 Occupancy would increase and Revpar would be unchanged RevPar and Occupancy would increase and ADR would be unchanged ADR and RevPar would increase and occupancy % would be unchanged ADR and REvpar would increase and occupancy % would increase --------CORRECT ANSWER-------------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? Attrition and Dry Attrition and Wash Fade and Dry Fade and wash --------CORRECT ANSWER-------------attrition and wash Tanika is the revenue manager at the Holiday House Hotel. Southeast airlines has requested that Tanika quote them a rate for the use of 20 rooms per night for a period of one year. If Southeast accepts Tanika's quote for both price and availability, what type of room rate will the hotel and airline agreed upon? Negotiated rate group rate volume rate contract rate --------CORRECT ANSWER-------------contract rate Expedia.com wants Jesse, the revenue manager at the Hilton, to agree to contract terms that would require Jessie's hotel to apply the agreed upon Expedia rate to any room type (except suites) available at the time one of Expedia's customers wants to make a reservation. What is the industry term for Expedia.com's contract request? Run of the house Hanna is the revenue manger at the Waterford hotel. For a Saturday in the future she has determined her hotel will accept reservation only for those guests seeking to stay for three or more days. Which of the following revenue management control (restriction) strategies is she using? MLOS Attrition CVB CTA --------CORRECT ANSWER-------------MLOS Bob is the revenue manger at the Waterfront hotel. For the third week in December next year he has determined the hotel will accept reservations for guests seeking to arrive on Dec 21st. Dec 22nd. or Dec 23rd; but not on Dec 24th or Dec 25th. Which of the following revenue management control (restriction) strategies is she using? MLOS Attrition CVB CTA --------CORRECT ANSWER-------------CTA Which of the following is not a strategy typically used by revenue managers to optimize revenue during periods of high demand? Implement rack rate discounts to maximize occupancy Implement a length-of-stay restriction to maximize occupancy Implement a payment restriction to maximize revenue collections Control allowable arrival dates to maximize occupancy --------CORRECT ANSWER------ -------maximization of room codes, minimization of rate codes What strategy should be put into action when revenue managers implement special event rates and expect a sell out? Enhance guest value by implementing rack rate discounts Enhance guest value by removing stay restrictions and stay controls Enhance guest value by providing product and/or service enhancements Enhance guest value by eliminating aggressive upon-arrival up sell programs -------- CORRECT ANSWER-------------enhance guest value by providing product and/or service enhancements To optimize revenues while enhancing property operations, which strategy pair should revenue managers seek to implement? Minimization of room codes, minimization of rate codes Maximization of room codes, minimization of rate codes Minimization of room codes, maximization of rate codes Maximization of room codes, maximization of rate codes --------CORRECT ANSWER--- ----------maximization of room codes, minimization of rate codes 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? Historical data Current data Future data Financial data --------CORRECT ANSWER-------------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? Historical data Financial data Future data Current data --------CORRECT ANSWER-------------current data In a limited service hotel, what is the incremental expense incurred in selling one guest room? GOPPAR RevPAR GOPPOR CPOR --------CORRECT ANSWER-------------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? Blocked (reservation) Denied (reservation) Fenced (reservation) Tracked (reservation) --------CORRECT ANSWER-------------denied (reservation) 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? $ 150.00 To make capacity-expansion decisions To up-date Pace reports --------CORRECT ANSWER-------------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? 370 360 350 340 --------CORRECT ANSWER-------------360 In the lodging industry, when is a guest considered to be an over-stay? When the guest is not scheduled to depart and thus will be using his or her room for at least one more day When the guest has not yet paid his or her bill When the guest checks out of the hotel before his or her originally scheduled check-out date When the guest checks out of the hotel after his or her originally scheduled check-out date --------CORRECT ANSWER-------------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 the owner's goal is to encourage local government investment in a property When the property is for sale When a significant financial incentive exists for exceeding the forecast When a significant financial incentive exists for not exceeding the forecast -------- CORRECT ANSWER-------------when a significant financial incentive exists for exceeding the forecast In the lodging industry what factors would be over-inflated to produce an unrealistically high RevPAR forecast? ADR and/or Occupancy % GOP and/or GOPPAR CPOR and/or GOPPAR MLOS and/or CTA --------CORRECT ANSWER-------------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 Implement discounts Raise rack room rates Reduce rack room rates --------CORRECT ANSWER-------------eliminate discounts What is the most likely result of a revenue manager's decision to reduce rack room rates during periods of reduced demand? GOPPAR will be increased Competitor's rates will also be reduced Incremental room demand will be stimulated Occupancy rates will also be reduced --------CORRECT ANSWER------------- 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? The number of potential buyers will increase RevPAR will be increased RevPAR will decline ADR will decline --------CORRECT ANSWER-------------REVPAR will 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? Occupancy rates will increase The number of potential buyers will decline The number of potential buyers will remain constant ADR will decline --------CORRECT ANSWER-------------the number of potential buyers will decline What is one consistent characteristic of desirable rooms revenue? It leads to higher CPOR levels It leads to lower GOPPAR levels It leads to higher GOPPAR levels It leads to lower GOPPOR levels --------CORRECT ANSWER-------------it leads to higher GOPPAR levels Which of the following is not a hotel intermediary? The buyer's room rate must be discounted to optimize RevPAR --------CORRECT ANSWER-------------no IDS fees will be paid on the revenue the new reservation will generate Harold tracks his hotel guest check outs and the number of new reservations made at check out. Last week a total of 640 guests checked out of his hotel. In that same period, his front desk staff booked 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 .02 The reservation nights booked per check out for last week was .20 The reservation nights booked per check out for last week was .05 The reservation nights booked per check out for last week was .50 --------CORRECT ANSWER-------------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 GDS Sales made via the IDS Group sales Sales made via the telephone --------CORRECT ANSWER-------------sales made via the telephone Which is most often true about room sales made by a hotel's group sales department? ADRs are higher than average and Net ADR Yield is lower than average ADRs are lower than average and Net ADR Yield is lower than average ADRs are higher than average and Net ADR Yield is higher than average ADRs are lower than average and Net ADR Yield is higher than average -------- CORRECT ANSWER-------------ADRs are lower than average and net ADR yield is higher than average How are most CVBs in the United States funded? By a tax imposed by the US Travel and Tourism agency By a combination of state income taxes and membership dues By a combination of hotel occupancy taxes and membership dues By the applicable state-level agency responsible for the state's travel and tourism promotion --------CORRECT ANSWER-------------by a combination of hotel occupancy taxes and membership dues Which statement does not accurately describe a non-electric distribution channel? Non-electric distribution channel tend to have a higher ADRs CVB is a non-electric distribution channel CRS is a non-electric distribution channel A non-electric distribution channel tends to have lower costs in terms of fees assessed --------CORRECT ANSWER-------------CRS is a non-electric distribution channel 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 its telephone number Participation on a web site that lists only a hotel's name and expanded definitions of its room codes Participation on a web site that lists only a hotel's name and its location Participation on a web site that lists only a hotel's name and a single rack room rate ---- ----CORRECT ANSWER-------------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 IDS PMS GDS --------CORRECT ANSWER-------------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 PMS and GDS The GDS and IDS The GDS and CRS The IDS and CRS --------CORRECT ANSWER-------------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 administrative and general (A&G) expense portion The undistributed operating expense portion The marketing expense portion The rooms expense portion --------CORRECT ANSWER-------------the rooms expense portion Which common IDS room sales model is most dependent on selling price for its revenue generation? Merchant model Costs associated with operating the hotel's website --------CORRECT ANSWER---------- ---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? $ 20.00 $ 34.00 $ 50.00 $ 80.00 --------CORRECT ANSWER-------------$50.00 What is the formula used to calculate flow-through for an accounting period? GOP This Period - GOP Last Period/ Total Revenues This Period - Total Revenues Last Period GOP This Period + GOP Last Period/ Total Revenues Last Period - Total Revenues This Period GOP This Period - GOP Last Period/ Total Revenues This Period + Total Revenues Last Period GOP This Period - GOP Last Period/ Total Revenues Last Period - Total Revenues This Period --------CORRECT ANSWER-- -----------GOP this period - GOP last period/ total revenues this period - total revenues last period 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? 100% 110% 120% 130% --------CORRECT ANSWER-------------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? 133% 100% 75% 30% --------CORRECT ANSWER-------------75% Last year Carl's hotel had an occupancy index of 120%. From that information, what can be said about Carl's hotel? It generated more revenue than its comp. set It had a higher RevPAR than its comp. set Its GOPPOR was higher than the comp set. It achieved a higher average occupancy % than its comp. set --------CORRECT ANSWER-------------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? His occupancy index is greater than 100% His ADR is decreasing His occupancy index is less than 100% His ADR is increasing --------CORRECT ANSWER-------------his 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? 60% 75% 80% 85% --------CORRECT ANSWER-------------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 It was somewhat lower than the ADR of his competitive set It was exactly the same as the ADR of his competitive set It was $105.00 --------CORRECT ANSWER-------------it was somewhat higher than the ADR index of 105%. What is true about his hotel's ADR last month? 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 88.9% It will be 112.5% It will be greater than 110% It will be less than 110% --------CORRECT ANSWER-------------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. Rooms sold and Net ADR Yield ADR and Net ADR Yield STAR occupancy index and ADR --------CORRECT ANSWER-------------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 % Reduced RevPAR and reduced flow-thru % Increased ADR and increased flow-thru % Reduced ADR and increased flow-thru % --------CORRECT ANSWER------------- increased REVPAR and reduced flow-thru% Which of the following statements about restaurant pricing methods is true? The menu pricing methods used by restaurateurs have changed radically in the past two decades In most cases the task of pricing menu items is assigned to a revenue management specialist Discounting for quantity purchase is one of the primary pricing methodologies used by restaurateurs Restaurant industry pricing methods are very different from hotel industry pricing methods --------CORRECT ANSWER-------------restaurant industry pricing methods are very different from hotel industry pricing methods Shaniqua's restaurant utilizes a product cost percentage pricing system. What should be the selling price for a steak dinner she sells if her total plate cost for the dinner is $7.00 and her desired product cost is 25%? $ 35.71 $ 28.00 $ 3.57 $ 10.00 --------CORRECT ANSWER-------------$28.00 Shaniqua's restaurant utilizes a product cost percentage pricing system. She would like to apply pricing factors to make pricing her menus easier. What would be the pricing factor she would use when her desired product cost percentage for an item is 40%? 250 25 2.5 .25 --------CORRECT ANSWER-------------2.5 Which menu pricing system would utilize an operation's prime costs when calculating its selling prices? Product Cost: Plus Product Cost Percentage Contribution Margin Differential Pricing --------CORRECT ANSWER-------------product cost: plus In which menu pricing approach would Menu Engineering as proposed by Kasavana and Smith be utilized? Product Cost: Plus Pricing Contribution Margin Pricing Product Cost Percentage Pricing Plate Cost Pricing --------CORRECT ANSWER-------------contribution margin pricing What is the common feature in the Product Cost: Plus Pricing, the Contribution Margin Pricing and the Product Cost Percentage Pricing systems? The amount paid for prime costs The amount paid for labor The amount paid for products The amount paid for labor and products --------CORRECT ANSWER-------------the amount paid for products For revenue managers seeking to optimize revenues in their food service operations, which statement about menu prices is true? An appropriate menu price should dictate an item's cost An item's cost should dictate its menu price An item's prime costs should dictate its menu price An increase in an item's cost dictates an increase in its menu price --------CORRECT ANSWER-------------an appropriate menu price should dictate an item's cost Shaniqua's restaurant utilizes a product cost percentage pricing system. She would like to sell an item for $19.95. Her targeted product cost is 40%. With a 40% product cost, what is the amount her kitchen staff can spend on product cost when making this item? $ 0.80 $ 4.99 $ 4.00 $ 7.98 --------CORRECT ANSWER-------------$7.98 To keep their own prices on the higher end of their competitors' price ranges. To keep their own prices in the middle of their competitors' price ranges. To keep their own prices well below those of their competitors. --------CORRECT ANSWER-------------to keep their own prices on the higher end of their competitor's price ranges Which value-related factor does a revenue manager seek to impact if prices for carry-out menu items in a restaurant are 10% less than the price of the same items when they are consumed in that restaurant's dining room? Competition Portion size Meal period Service level --------CORRECT ANSWER-------------service level Offering the same menu item in a variety of portion sizes is an example of what type of differential pricing strategy? Product versioning Time Customer characteristic Bundling --------CORRECT ANSWER-------------product versioning Last night Lara's restaurant served 225 guests and achieved total revenue of $4,500. What was Lara's check average last night? $ 50.00 $ 20.00 $ 101.25 $ 10.13 --------CORRECT ANSWER-------------$20.00 What foodservice value-related factor is most affected when a revenue manager successfully implements a price blending strategy? Image Portion size Service level Menu mix --------CORRECT ANSWER-------------menu mix At Lauren's restaurant the check average is always higher on Saturday night than on any other night. What is the most likely cause of the check average variance she experiences? The number of guests served A variation in service levels The sales mix A variation in product costs --------CORRECT ANSWER-------------the sales mix Which factor has historically provided the basis for a foodservice manager's assessment of revenue generation efficiency? number of guests served RevpASH Check average menu items sold --------CORRECT ANSWER-------------menu items sold For analysis purposes Jay considers his restaurant to have three revenue centers. These are the dining room, the bar and off-site catering. Last month Jay's total revenue was $50,000. Off site catering revenue was $20,000. What percent of Jay's total revenue was contributed by off site catering? 40% 30% 20% 10% --------CORRECT ANSWER-------------40% For analysis purposes, Jay considers his restaurant to have three revenue centers. These are the dining room, the bar and off-site catering. Last month Jay's bar revenue was 15% of total revenue and off site catering revenue was $20,000. Total revenue was $50,000. What was the amount of revenue generated in Jay's dining room last month? $15000 $22500 $15500 $21500 --------CORRECT ANSWER-------------$22,500 For analysis purposes Jenny considers her restaurant to have three day parts. These three are breakfast, lunch and dinner. Last month Jenny's breakfast sales were $44,000. Total sales were $176,000. What percent of sales were contributed by breakfast? 32% 40% 25% -$3000 +3000 -$5000 +5000 --------CORRECT ANSWER-------------+3,000 When comparing operating results in one accounting period to the same accounting period of the previous year which of the following would result in decreased foodservice revenues? Served the same number of guests at a 5% lower check average Served 5% more guests at the same check average Served 5% more guests at a 5% higher check average Served 5% fewer guests at a check average that is 10% higher than the previous accounting period --------CORRECT ANSWER-------------served 5% fewer guests at a check average that is 10% higher than the previous accounting period Alice's restaurant is located in a shopping mall. Her store occupies 950 square feet. Last month Alice's revenues were $28,500. What was the revenue per square foot achieved by Alice's restaurant last month? $333.33 $33.33 $300.00 $30.00 --------CORRECT ANSWER-------------$30 Last month revenue in Sofia's take out pizza shop was $50,000. Sofia used 1250 labor hours to generate the revenue and she pays her employees an average of $10.00 per hour. 5000 guests were served in the month. What was Sofia's Labor Cost % for the month? 25% 10% 40% 12.5% --------CORRECT ANSWER-------------25% Last month, revenue in Sofia's take out pizza shop was $50,000. Sofia used 1250 labor hours to generate the revenue and she pays her employees an average of $10.00 per hour. 5000 guests were served in the month. What was Sofia's Labor Dollars Per Guest Served for the month? $0.25 $10.00 $2.50 $40.00 --------CORRECT ANSWER-------------$2.50 Last month, revenue in Sofia's take out pizza shop was $50,000. Sofia used 1250 labor hours to generate the revenue and she pays her employees an average of $10.00 per hour. 5000 guests were served in the month. What was Sofia's Guests Served Per Labor Hour for the month? 2.5 guests 5.0 guests 40.0 guests 4.0 guests --------CORRECT ANSWER-------------4.0 guests The Busy Bee restaurant has 100 seats. Between 5:00 p.m. and 6 p.m. yesterday the Busy Bee served 75 guests. Revenues during that time period were $3,700. What was The RevPASH achieved by the Busy Bee yesterday between 5:00 p.m. and 6 p.m.? $49.33 $37.00 $133.33 $20.27 --------CORRECT ANSWER-------------$37.00 What would be the seating efficiency % of a restaurant on a day that it had 100 available seats, was open for six hours and served 450 people? 45% 75% 22.2% 133% --------CORRECT ANSWER-------------75% What would be the typical impact on RevPASH of an increase in guest duration? RevPASH would not change if check average did not change RevPASH would increase if check average did not change RevPASH would decrease if check average did not change RevPASH would increase if check average decreased --------CORRECT ANSWER------ -------REVPASH would decrease if check average did not change What formula can revenue managers use to calculate RevPASH?