Revenue Management Final Exam 100% VERIFIED ANSWERS 2024/2025 CORRECT, Study Guides, Projects, Research of Business Administration

Download Revenue Management Final Exam 100% VERIFIED ANSWERS 2024/2025 CORRECT and more Study Guides, Projects, Research Business Administration in PDF only on Docsity! Revenue Management Final Exam 100% VERIFIED ANSWERS 2024/2025 CORRECT What is the industry term used to describe the sum of prices paid by a business's customers? Total Revenues Historically, what concept have hospitality managers chiefly used to calculate their selling prices? Costs What is an algebraic equivalent of the formula: Sales = Costs + Profit? Profit = Sales - Costs What is the name for the net value achieved by both parties in a business transaction? Profit What element is not present in a barter economy? Money What is the formula used to calculate an owner's ROI? Owner's Investment Return / Owner's Original Investment = Owner's Return on Investment Sandy has 100 hotel rooms to sell. This Saturday night has enough customers to sell 125 rooms so she will be refusing 25 requests for rooms. What is this an example of? Constrained Supply Which industry was the first to use Yield Management principles? Airline What is the industry term used to describe the selling of rooms which are not actually available for sale? Overbooking What is the formula used to calculate Average Daily Rate? Total Room's Revenue / Total Rooms Sold = Average Daily Rate Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was Tashia's occupancy % last night? 70% Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was Tashia's RevPAR last night? $140.00 What is the industry term for the average revenue generated by each occupied guestroom during a defined period of time? RevPOR What is the formula used to calculate GOPPAR? The demand fort he 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 lower than the previous price (P1) because supply would decrease 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 traveling 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 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 their franchisors 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 consumer characteristic The requirement that a buyer present a coupon at the time of purchase is an example of what type differential pricing strategy? Quiz four number 13 (??) 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 time 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? a. 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 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 seeking to stay for three or more days. Which of the following revenue management control (restriction) strategies is she using? 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? CTA To optimize revenues while enhancing property operations, which strategy pair should revenue managers seek to implement? 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 providing product and/or service enhancements Donna is a hotel revenue manager preparing next year's rooms forecast. Donna knows that in November of next year a new hotel is opening near her own. As a result, she is considering reducing her rooms forecast for that month. If she does so, what data type will she be primarily using to make her decision? Future Data Donna is a hotel revenue manager. Donna knows that for tonight she has sold 175 of her 200 available rooms. As a result, is eliminating room discounts on her remaining 25 rooms. In doing so, what data type is she primarily using to make her decision? Current Data In a limited service hotel, what is the incremental expense incurred in selling one guest room? CPOR What is the lodging industry term for the situation that occurs when a hotel is unable to accommodate a guest's reservation preference due to the unavailability of the room or service at the price, or on the date, originally requested by the guest? Denied (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? $180.00 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 For which distribution channel type do hotels typically employ a shopper's service? Sales made via the telephone Which is most often true about room sales made by a hotel's group sales department? ADRs are lower than average and Net ADR Yield is higher than average How are most CVBs in the United States funded? By a combination of hotel occupancy taxes and membership dues Which statement does not accurately describe a non-electric distribution channel? 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 a single rack room rate Into which hotel industry distribution channel component would a brand's call center worker enter room reservations he or she has made? CRS Which components of the hotel industry's current reservation system currently offers its users the ability to simultaneously see comparative hotel rate information? The GDS and IDS Where on a hotel's statement of income and expense (income statement) does the 10th Edition of the Uniform System of Accounts for Lodging Industry (USALI) recommend travel agency commissions be recorded? The rooms expense portion Which common IDS room sales model is most dependent on selling price for its revenue generation? Opaque Model What is true about proprietary web sites administered by a hotel's franchisor? Content changes must be implemented by the brand's managers Lara's rack rate is $299.99. She has been asked to bid on 200 rooms nights needed by a travel agent seeking housing for a group of seniors touring the area by bus. The travel agency has requested Lara provide her a net (non- commissionable) rate. Lara's hotel typically pays a 10% travel agency fee. What would be Lara's per room night net non-commissionable bid for these rooms if she does not lower her rack rate? $269.99 What would be the result of a revenue manager's successful implementation of aggressive strategies designed to shift guests' future bookings from more expensive distribution channels to lesser expense channels? Increased Net ADR Yield, increased GOPPOR 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? $50.00 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) 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? 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%? $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%? 2.5 Which menu pricing system would utilize an operation's prime costs when calculating its selling prices? Product Cost: Plus In which menu pricing approach would Menu Engineering as proposed by Kasavana and Smith be utilized? 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 products For revenue managers seeking to optimize revenues in their foodservice operations, which statement about menu prices is true? 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? $7.98 Shaniqua's restaurant utilizes a contribution margin pricing system. She would like the selling price of a new menu item she is introducing to be $10.00. Her required contribution margin is $4.00. Her labor costs are 30%. What is the amount her kitchen staff can spend on product cost when making the item? $6.00 Why can foodservice operators sell a 20 year Scotch at a price higher than a one year old Scotch? The quality of a 20 year old Scotch is higher than a one year old Scotch Assume a food and beverage operator offers guests a 20-year old Scotch at a price five times the amount charged for one-year old Scotch. Assume also that the operator's customers very rarely purchase the more expensive Scotch. Which statement would explain why the 20 year old Scotch does not sell well? Customers do not accept this seller's price-value proposition Arthur's restaurant is extremely busy on Friday and Saturday. The manager of the operation offers reduced prices on quick-to-prepare and quick-to-serve menu items on those two nights. What revenue related factor is this restaurant manager seeking to positively influence? Capacity Poco Miller's restaurant has 130 seats. Last night Poco served 295 guests. What was is the formula Poco would use to calculate her table turns? 295/130 = Table turns Texas Roadhouse restaurants do not accept reservations. Guests who call ahead, however, can have their names added to the wait list prior to arriving at the restaurant. What revenue-related factor is this strategy designed to optimize? Capacity Why should revenue managers monitor their competitors' prices? To keep their own prices on the higher end of their competitors' 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? 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 Last night Lara's restaurant served 225 guests and achieved total revenue of $4,500. What was Lara's check average last night? $20.00 What foodservice value-related factor is most affected when a revenue manager successfully implements a price blending strategy? 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?