Revenue Management 100% VERIFIED ANSWERS 2024/2025 CORRECT, Exams of Business Administration

Download Revenue Management 100% VERIFIED ANSWERS 2024/2025 CORRECT and more Exams Business Administration in PDF only on Docsity! Revenue Management 100% VERIFIED ANSWERS 2024/2025 CORRECT Reality Premises of the concept of price has an objective and a subjective sense. Time price has an initial sense and a final sense. Time The final price to be paid can be identical to the price initially offered (e.g., a fixed offer), but an initial price offer can also be (re)negotiated. Evaluation price represents a seller's (i.e., receive) as well as a buyer's (i.e., sacrifice) value perspective Content price contains both tangible (e.g., money) and intangible (e.g., search time cost) components Hedonic Price Theory starts from the idea of approaching goods and services as a bundle of objective attributes techniques Up-grades Up-selling Complimentary Rooms Cross-selling Down-selling PERCEIVED FAIRNESS Customers may perceive value-based pricing as an opportunistic behavior of the firm and then judge these practices as unfair. Rate shoppers tools that help hotels to analytically. Monitor in real-time their competitors' rate decisions in various reservation channels. VALUE BASED PRICING uses the clients' perceptions of value, their willingness to pay, and not the sellers' cost, as the way to decide to prices. VALUE BASED PRICING customer driven while cost-based pricing is product determined. VALUE BASED PRICING In a hotel this strategy generally includes a combination of segmented pricing and dynamic pricing. As a result, hotels set multiple prices for multiple segments, dynamically varying them according to expected changes in demand. COST BASED PRICING consists in setting prices mainly considering the costs for producing and selling the product plus a profit quota (markup). COST BASED PRICING Combined models are widely accepted to increase forecasting accuracy. to blend predictions from different methods to generate the final forecast. Exponential smoothing is a sophisticated weighted averaging method where the weights decay exponentially as observations get older. Moving averages are the simplest type of time series forecast and are useful for constant- pattern data with no clear trend or seasonality. Time series models It has leverage historical demand to infer future demand. These models use values from the previous day, week, or year to make predictions for the forecasted date Time series models General inclination is that historical patterns such as day of the week (business vs. leisure travelers) or seasonality (summer vs. winter) will replicate into the future. Multiplicative models It uses the historical average booking rate to estimate final demand Booking Curve The accumulation of these bookings as they are received Additive models It uses the historical average remaining demand to predict final demand. This is done by adding the average remaining reservations that are picked up over the remainder to the booking window to the current reservations. Advanced Booking Models Its goal is to estimate the remaining bookings to come over the remainder of the booking window Booking Window How far in advance the reservations are made prior to the date of stay Booking Curve The accumulation of these bookings as they are received Combined Models independent predictions from time series and advance booking models are weighted together to generate a forecast Time Series Models utilize a sequence of data points taken in time order such as the final number of rooms sold over a range of dates Advance Booking Models rely on reservations OT and patterns of reservation requests leading up to the date of stay Historical data the number of rooms sold on a date in the past (how many rooms did sellast week. or last year) Current data the number of reservations booked for a date in the future (the number of reservations booked for a date in the future) Exogenous Information Other data points that can be captured and utilized in the model. Qualitative forecasting It focuses on our intuition and experience. It generally serves as the best choice when there Is little to no data Quantitative torecasting It analyzes historical data to estimate trends and patterns using statistics and mathematics for prediction. FACTORS AFFECTING DEMAND The industry tends to experience seasonality where demand patterns fluctuate based on the time of the year MacroFactors Travel restrictions Economic conditions/ExchangeRates MicroFactors Marketing promotions Local events Competition (New Hotels) Accurate forecasts will be maintained so long as the basic supply and demand conditions remain unchanged. The number of producers in the market If additional producers enter the market, more products will be produced at the same price, moving the supply curve to the right. Expectation of future prices When suppliers expect the market price to go up in the future, they would have incentives to increase the supply quantity in order to maximize the revenue, moving the supply curve to the right. Resource prices The decrease of production cost will induce producers to increase supply quantity at given prices, moving the supply curve to the right. Technology It is used as a general term to refer to the know-hows or knowledge of producing products. Technological advances allow producers to supply a higher quantity at any given price, moving the supply curve to the right Supply is a schedule that shows the quantities of a product that producers are willing and able to offer for sale at various prices. Quantity supplied It is a specific quantity the supplier will produce for a given price on the supply curve. law of supply prescribes an upward sloping supply curve. Producers will supply a larger quantity at higher prices than at lower prices. Determinants of Demand 1. These are the "things" in all things being equal. 2. Income 3. Expectations about prices 4. Tastes and preferences 5. Price of related goods (Substitutes vs. complements) 6. The number of consumers in the market 7.How do we use these to increase hotel demand? Demand The relationship between prices and quantities demanded. A continues curve showing the quantities that consumers are willing and able to purchase at various prices during a given time period. law of demand the quantity demanded of a product is negatively related to its price, ceteris paribus. Income effect: When prices are lower consumers can afford more for a given income Substitution effect When prices rise, consumers will buy less costly alternatives The Sherman Anti Trust and Clayton Acts Designed to prevent hospitality operators from restraining trade through price fixing, manipulate bids for group contracts, or allocate customers to competitors for the purpose of discrimination. Robinson Patman Act A hospitality operator charging different prices for the same "product" or discriminating in the provision of "allowances" —may be violating the Robinson-Patman Act. Price discriminations are generally lawful, particularly if they reflect the different costs of dealing with different buyers or are the result of attempts to meet a competitor's offering. Demonstrate Professionalism 1. Demonstrate professionalism and composure during meetings with stakeholders. 2. Continuous development of skills and abilities in revenue optimization and data analysis. 3.Development of skills needed to 'tell the story' of recent operational performance. Analyze Trends 1. Interpret market trends as they relate to the hospitality operation. 2. Analyze and identify trends 3.Match group and transient market needs with hotel needs (displacement analysis) 4. Work closely with sales management to determine viability of long- and short-term bookings from a pricing and availability perspective Revenue Team Leadership 1. Establish order and consistency in revenue strategy 2. Determine strategic courses of action 3.Promote effective communication 4. Remain and follow up on project until completion Monitor Daily Activity