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Revenue Management Exam 1 Study

Guide

Historically, what concept have hospitality managers chiefly used to calculate their selling prices? Ch. 1 - Question and answersCosts What is an algebraic equivalent of the formula: Sales= Costs+ Profit? Ch. 1 - Question and answersProfit = Sales - Costs What element is not present in a barter economy? Ch. 1 - Question and answersMoney What is the formula used to calculate GOPPAR? Ch. 1 - Question and answersTotal 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? Ch. 1 - Question and answersMarket Segment What is Value-based pricing? Ch. 4 - Question and answersA pricing system based upon a buyer's view of product or service value What is the term used to describe the pricing system in which all customers are charged the same price at all times? Ch. 4 - Question and answersFixed Pricing 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 the consumer would willingly pay for it? Ch. 4 - Question and answersConsumer Surplus What is the purpose of a price fence or barrier? Ch. 4 - Question and answersTo identify who is and who is not eligible for a special pricing offer 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? Ch. 4 - Question and answersPricing based on Location What is the name for the value given up by a buyer and seller in a business transaction? Ch. 2 - Question and answersPrice Charging guests for watching a Pay-Per-View movie in their hotel guestroom is an example of what type of pricing? Ch. 2 - Question and answersTwo-tiered Pricing What is the revenue management term used to describe the perceived benefit gained, MINUS the price paid, in a business transaction? Ch. 2 - Question and answersValue

Which one of the following terms is NOT one of the 4 P's of the Marketing Mix? Ch. 2 - Question and answersProposition 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? Ch. 2 - Question and answersBecause Fixed Costs are INCURRED even if NO guests are served or rooms are sold Hotel revenue managers face hard supply constraints. In which industry below are hard constraints also likely to be encountered? Ch. 5 - Question and answersHair Salons What two factors establish a restaurant's weekly customer capacity? Ch. 5 - Question and answersNumber 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? Ch. 5 - Question and answersAnti-TRUST Legislation What is true about the way buyers generally view variance in a seller's prices? Ch.5 - Question and answersDiscounts are viewed more favorably than surcharges What is the name of the hospitality management position responsible for the accounting functions in a hotel? Ch. 5 - Question and answersController What type of benefit is lacking in material qualities and is NOT able to be touched or seen, but nonetheless can still be perceived? Ch. 3 - Question and answersIntangible Penny Larson is traveling to San Francisco to do business. Her company will reimburse 100% of her travel expenses. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms she will need during her trip? Ch. 3 - Question and answersSpending someone else's 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? Ch. 3 - Question and answersInconsistency 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? Ch. 3 - Question and answersInseparability Consider the formula: (A + B) - C = D Where: A = Perceived tangible product benefit B = Perceived intangible service benefit

It is the average revenue generated by each available guest room during a specific period of time. - Question and answersRevPAR The two formulas yield identical results and are: ADR X Occupancy % OR Total Rev/Total Rooms Available for Sale - Question and answersRevPAR The average (mean) selling price of guest rooms during a specific time period, such as a day, week, month, or year. Total Revenue/Total Rooms Sold - Question and answersAverage Daily Rate

of Rooms Sold during a specific time period; expressed as a % of ALL Rooms

Available to sell during that same period. - Question and answersOccupancy % Total rooms sold/ total rooms available - Question and answersOccupancy % The condition that exists when sellers cannot readily increase the amount of products or services available for sale when consumer demand for them increases. - Question and answersConstrained Supply Selling Price - Costs= Organizational Profit (Tangible Benefit) Ch. 3 - Question and answersSeller's View of a Sale Perceived Value (An Intangible Benefit) - Selling Price= Personal Profit - Question and answersBuyer's View of a Sale the desire, ability, and willingness to buy a product is too low - Question and answersIn an auction, bidders will stop bidding when: Intangibility, Inconsistency, Inseparability, and Inventory - Question and answersFour I's of Service Quality, Service, and Price - Question and answersAll buyers making purchases evaluate these 3 factors: Buyers spend their own money on themselves - Question and answersFormula A Buyers spend their own money on someone else - Question and answersFormula B Buyers spend someone else's money on themselves (Corporate Expense Accounts) - Question and answersFormula C Buyers spend someone else's money on someone else (Meeting planners/travel agents) - Question and answersFormula D

Science and Insight - Question and answersEffective Revenue Management depends on: Service cannot be touched or seen before it is purchased. - Question and answersIntangibility Uneven performance results from variations between the skills of those who are actually delivering the service. - Question and answersInconsistency It is often impossible to make a distinction between the individual delivering the service and the service itself. - Question and answersInseparability Unsold inventory vanishes if not sold and the costs associated with idle production capacity can be high. - Question and answersInventory In the Hospitality Industry, ________ is perceived by most guests as more critical to value than product quality. - Question and answersService Quality Degree of excellence of something as measured against other similar things. - Question and answersQuality Intangible activities or benefits provided to buyers either alone or in conjunction with the purchase of a product. - Question and answersService A term applied to a variety of processes, often computerized, implemented by companies to handle their direct contact with customers. Ch. 5 - Question and answersCustomer Relations Management The price perceived by consumers to be the normal price for a product or a service. - Question and answersReference Price Laws and regulations aimed at preventing abusive business behavior or anti- competitive practices, including those related to unfair pricing. - Question and answersFederal Antitrust Legislation The increasing of prices, often in response to a natural disaster or emergency, beyond a level deemed reasonable by society. Most states PROHIBIT this.. - Question and answersPrice Gouging This outlaws all contracts and conspiracies that unreasonably restrain interstate trade. This expressly includes any agreements among competitors to fix prices, rig bids, or allocate customers. - Question and answersSherman Antitrust Act This created the Federal Trade Commission (FTC), which was established for the express purpose of enforcing the Sherman Antitrust Act. The FTC can prevent