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Revenue Management Final exam practice with 100% questionsand answers What is bigger in the tourism industry, fixed costs or variable costs? - >>>fixed costs are bigger -Think of an airplane: staffing, airport fees (fixed) - huge amount of the costs for airplanes come from fixed costs; food, fuel (variable) - not as easy to determine the variable costs We can reduce prices (even below total cost per room), as long as the reduced price covers, fixed cost per room or variable cost per room? - >>>We can reduce prices as long as the reduced price covers the variable cost per room -because we are going to have the fixed costs not matter if we have the person in the room or not High Value Customers tend to book early or last? - >>>last Do we sell "time blocks" or "physical products"? - >>>time blocks What implication do time blocks have? - >>>we cannot store it for tomorrow, it is gone once it is not sold for that day "I want my hotel to be the first to sell out in the market": Correct or incorrect? - >>>incorrect RM can be organized with different levels regarding the people involved. How many? Which ones? - >>>Property Level - Corporate Level - 3rd Party Services What does a booking curve represent? - >>>the expected number of bookings for each day until the arrival date -forecasted bookings What does a pace report track? - >>>The OTB reservations against the forescasted reservations Who attends the weekly RM meetings? - >>>-Revenue manager -General manager Sales manager -Rooms manager ***and sometimes -Food and Beverage management -Marketing -HR management How many internal performance indicators do we have? - >>>6: OR, ADR, RevPar, and the percent changes of each of them How many external performance indicators do we have? - >>>6: OR index, ADR index, RevPar index, and the percent changes of each of them What is the minimum number of hotels in a comp set? - >>>4 What is the threshold in the OR, ADR and RevPar indexes that determines the point we are outperforming the comp set? - >>>100 Price from a marketing standpoint includes both monetary and ________________costs - >>>non monetary‐ price - >>>The amount of money charged for a good or service. data? - >>>used when there a lot of variance in past data If there is a pattern / event, then we use larger or smaller n? - >>>smaller n For nonstationary data, what method is employed? - >>>Weighted Moving Average When doing the forecasting, do we match by day or by date? Are there any exceptions to this rule? - >>>by day -Calendar Holidays - Jan 1, July 4, Dec 25 Materialized Room Demand is defined as and formula - >>>the number of customers that actually occupy the room = number of reservations - cancellations - no shows Materialization rate - >>>= Materialized rooms (the number of rooms that actually have been occupied) / number of reservations What is a guaranteed reservation? - >>>prepaid reservation, already paid, so you can't cancel it What is the anticipated wash? - >>>is cancellation and no shows in the context of groups You can be more aggressive in terms of overbooking decisions if the city-wide demand is higher or lower? - >>>lower In an overbooking situation, where can we more easily identify and, therefore, protect key customers, in the airline industry or in the hotel industry? Why? - >>>1. Airline, easily identify because everyone is right there If your retail rate allocation is 540 and your materialization rate is 87%, how would you calculate the "reservations to accept"? - >>>Reservations to accept you would divide 540 / 0.87 = 621 (materialization rate is always dividing since it is the only way to get a bigger number than 540 since you know that only 87% of 621 will show up) materialization = divide reservations forecast to date = - >>>reservations forecast x value in the booking curve present = multiple Reservations forecast for Oct 31st is 100 Today is Oct 16th and the corresponding value in the booking curve is 0.60 In practical terms, what does it mean that the value in the booking curve is 0.60? - >>>We are forecasting 100 rooms for Oct 31st, so today on Oct 16th we should have 60 reservations Reservations forecast for Oct 31st is 100 Today is Oct 16th and the corresponding value in the booking curve is 0.60The hotel has 30 OTB reservations How many reservations should the hotel expect to receive on the arrival day Oct 31st? - >>>We should expect to receive 30 OTB reservations / 0.60 = 50 reservations by Oct 31 new overall reservation forecast = - >>>OTB reservations / value in the booking curve future = divide In condo hotels, is the disparity in quality of rooms higher or lower than in non-condo hotels? - >>>higher -because of the owner of the room is an individual upselling - >>>higher quality product at additional price -Additional products at additional price (room quality and supplementary products) upgrading - >>>higher quality product at the same price, allocated on a space available basis -The value of the "feeling valued" / "pleasant surprise" cross selling - >>>selling additional products or services to an existing customer -when you add in breakfast, dinner, etc In what stage can upselling actions be implemented? At booking? A few days before arrival? At arrival? - >>>Traditionally at arrival, but now can do more in advance In what sense have the groups been regarded as a "filler" market? - >>>Groups as a filler market during hotels down time to use it as a filler which is a traditionally view. Now, hotels implemented the group displacement analysis because they realize that groups may not spend as much so they want to see if they should accept them or not -Reason why we do the group displacement analysis Who books first, groups or transient? - >>>Groups book first, can be up to two years in advance In a group displacement analysis, what do you compare? - >>>The total value of the transient business that would be displaced if the group business were accepted. Extensions of Revenue Management - >>>Catering Restaurants Entertainment Attractions