HOSPITALITY REVENUE MANAGEMENT FINAL EXAM , Exams of Nursing

Download HOSPITALITY REVENUE MANAGEMENT FINAL EXAM and more Exams Nursing in PDF only on Docsity! HOSPITALITY REVENUE MANAGEMENT FINAL EXAM 2024 ACTUAL EXAMS WITH CORRECT QUESTIONS AND VERIFIED DETAILED RATIONALES ANSWERS GRADED A+ 100% GUARANTEED PASS LATEST UPDATE 2024 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 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? Pricing based on distribution channel What is the formula revenue managers use to calculate Net ADR Yield? 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? pricing based on bundling Which statement about revenue management and revenue optimization is true? 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? 5200 Hotel revenue managers face hard supply constraints. In which industry below are hard constraints also likely to be encountered? 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? 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? 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? last room availability Francisco is the revenue manager at the 1500 room BayShore hotel. Tonight he forecasts 750 stay-overs and 750 arrivals. Assume he is accurate in forecasting a 6% no-show rate. How many additional reservations could Angelina accept before she would be required to walk an arriving guest? 90 What is true about a revenue manager's rooms demand forecast? It is based on customer demand at an established price In the airline industry, airline companies establish ticket prices. In the lodging industry, who is responsible for establishing room selling prices for hotels that are part of a lodging company? hotel owners or their designees in the lodging industry, what is a rack rate? A room's selling price when no discounts of any type are offered What is true about discounts offered on the selling price of hotel rooms? they should be easily explainable and defensable In which situation would a customer-centric revenue manager likely implement a special event rate? 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 % An income statement is also commonly referred to as a(n) P&L An operation's year-end income statement shows before tax profits of $210,000. Revenues for the year were $1,850,000. What were this operation's expenses for the year? $1,640,000 An operation's income statement shows total expenses of $45,500 for a specific month. Before tax $48,750 Why are a business's vendors interested in information contained in that business's income statement? 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? 20% What is an example of a controllable cost? marketing What is an example of a fixed cost? licenses and permits What is the formula for prime cost? 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 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? historical performance What business segment best describes a company that is engaged primarily in the sale of intangible goods? service (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 Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what type of pricing? 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 What is the revenue management term used to describe the perceived benefit gained, minus the price paid, in a business transaction? 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? value proposition Which of the following terms would be included in the Place portion of a hotel's marketing mix? distribution channels What is the fundamental assumption upon which the Law of Supply is based? 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? 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? The new price (P2) would be higher than the previous price (P1) and supply would increase What concept is displayed by the intersecting point on a supply and demand curve? An estimate of the amount of a product that would be purchased at a known price and point in time What must be true if a product producer is to continue creating and selling products? Revenues must exceed costs What is the specialized branch of accounting that focuses on recording and analyzing the expenses incurred by an organization? cost accounting What is the industry term for the point at which an organization's revenues exactly equal its costs? break-even point Which of the following foodservice costs is a variable cost? food Which of the following lodging costs is a fixed cost? 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 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 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 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? an understanding of an organization's customers Which formula represents a buyer's view of a sales transaction? 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 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 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 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? 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? 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 low fixed costs and high variable costs To interpret measures of a hotel's performance, managers often compare those measures with: industry or sector averages, the budget for the period, and historical figures from comparable earlier periods at the hotel. Which of the following statements about hotel revenue management is FALSE? Revenue management is new, as are all of the strategies that are employed to maximize profit. Revenue Management includes a multidisciplinary management techniques applied to several sub- sectors of the hospitality. Which of the following is NOT one discipline within Revenue Management? Logistics Management Identify which of these is not a positive of using revenue management strategies and tactics: Motivate employees If a 300-room hotel achieves 70 percent occupancy for April at an ADR of $153 per room, what will room revenue equal? $963,900 What is the main reason that travelers today have more clout than ever before? They have information on virtually everything at their fingertips. Revenue management can be defined as A set of strategies and techniques used to sell the right product, to the right customer, at the right time and at the right prices. When might a revenue manager choose without questions to accept a less profitable group booking over more profitable transient business? The group is a regular customer of the hotel or a key account group from your comp set. What information is needed to calculate a net room rate? room rate, variable costs, and all costs and fees that apply to the booking An individual traveling, dining, attending a game or performance, or staying alone is usually referred to as a ______________. This type of guest may be also be defined as an individual hospitality customer. Think of a single person purchasing an airline seat, a meal, a ticket, or a hotel room; in RM we call this type of customer a: Transient Displacement Analysis can determine the quantifiable benefits of different options. However it needs to have the right circumstances. When is it appropriated? When a reliable forecast indicates that there's more demand than our capacity, it will be a period of high demand Displacement analysis is a RM decision making and comparative scenarios tool with four step process: (1.) ________________________________; (2.) Establish the net Food and Beverage revenue differential; (3.) Determine other revenue; (4.) Summarize. Following the computation of the Transients displaced costs and the group reservation revenues, what do we do in step 1.? Establish net room revenue differential Why does Gabor Forgacs (your RM book's author) mentions in regards to displacement analysis that "the numeric results of the (displacement) analysis should not be the only criteria for the decision" p.57? Because rather than a quick tactical interpretation of the numbers, one should consider other critical (and eventully strategic) information e.g. Existing competitor key account A displacement analysis should be conducted: when accepting a group booking will mean turning other business away. Which of the following is a step in the displacement analysis process? Establish net room revenue differential In displacement analysis, if a possible group reservation will bring $3,850 in rooms revenue but, according to your accurate forecast, you would expect to impact your future availability by displacing 33 transient demand rooms sold at $100 room/night, would you be inclined to accept or to deny this group reservation? Based only on these numbers and taking into consideration nothing more, I would accept this current group booking request. Which of the following hotels would be most likely to need and benefit from displacement analysis? an urban hotel during its busy season When might a revenue manager choose without questions to accept a less profitable group booking over more profitable transient business? The group is a regular customer of the hotel or a key account group from your comp set. Displacement Analysis can determine the quantifiable benefits of different options. However it needs to have the right circumstances. When is it appropriated? When a reliable forecast indicates that there's more demand than our capacity, it will be a period of high demand What information is needed to calculate a net room rate? room rate, variable costs, and all costs and fees that apply to the booking In a property forecasted high period of demand period, if the RM displacement analysis shows that by accepting a certain group the overall net revenue gain is positive (more revenues than the costs of displacement transient demand in the future), increasing profitability, than its Sales or Reservations departments should be inclined to Accept the group reservation When might a revenue manager choose without questions to accept a less profitable group booking over more profitable transient business? The group is a regular customer of the hotel or a key account group from your comp set. What type of traditional market segmentation is often identified by postal code? geographic What is the elasticity of a hotel that sees a 10 percent increase in occupancy when it lowers its room rate from $100 to $80? 10 ÷ 20 = 0.5 .5 To maximize profitability by allocating sufficient inventory to the most important segments is the objective of what? Market Mix Management Which of the following statements is FALSE? Repositioning is a common alternative to rebranding. Hotels location as a competitive advantage can change over time. What is NOT an appropriated example? Hotels in the heart of Paris (France) Which of the following statements is FALSE? Repositioning is a common alternative to rebranding. Which of the following is NOT a question that any Customer Relationship Management (CRM) system helps to answer of interest to a revenue manager? How do I forecast the best customers? What is a successful positioning strategy based on? a set of competitive advantages In Strategic Revenue Management as in Strategic Marketing, not everyone is a potential customer. Why? Due to... Hotels target markets Market segments are: groups that share commons needs and buying habits