Download Revenue Management Final Exam Question & Answers 2022/2023 and more Exams Public Health in PDF only on Docsity! Revenue Management Final Exam Question & Answers 2022/2023 1) What is the industry term used to describe the sum of prices paid by a business's customers? - Correct answer Total Revenues 2) Historically, what concept have hospitality managers chiefly used to calculate their selling prices? - Correct answer Costs 3) What is an algebraic equivalent of the formula: Sales = Costs + Profit? - Correct answer Profit = Sales - Costs 4) What is the name for the net value achieved by both parties in a business transaction? - Correct answer Profit 5) What element is not present in a barter economy? - Correct answer Money 6) What is the formula used to calculate an owner's ROI? - Correct answer Owner's Investment Return / Owner's Original Investment = Owner's Return on Investment 7) 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? - Correct answer Constrained Supply 8) Which industry was the first to use Yield Management principles? - Correct answer Airline 9) What is the industry term used to describe the selling of rooms which are not actually available for sale? - Correct answer Overbooking 10)What is the formula used to calculate Average Daily Rate? - Correct answer Total Room's Revenue / Total Rooms Sold = Average Daily Rate 11)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? - Correct answer 70% 12)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? - Correct answer $140.00 13)What is the industry term for the average revenue generated by each occupied guestroom during a defined period of time? - Correct answer RevPOR 14)What is the formula used to calculate GOPPAR? - Correct answer (Total Revenue - Management Controllable Expenses) / Rooms Available to Sell = GOPPAR 15)What is the industry term for a customer group which can be readily identified by one or more common characteristics? - Correct answer Market Segment 16)What is rack rate? - Correct answer The price of rooms when no discounts of any type are offered 17)What is: 18)Total period revenue 19)(Number of available seats) x (hours of seat availability) - Correct answer The formula for RevPASH 20)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? - Correct answer Customer-centric revenue management 38)Which of the following lodging costs is a fixed cost? - Correct answer Mortgage payments 39)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? - Correct answer Because fixed costs are incurred even if no guests are served or rooms are sold 40)Which of the following statements about unit costs in the hospitality industry is true? - Correct answer Unit costs will vary based upon how high or low an item is priced 41)Which of the following statements about the relationship between costs and pricing is true? - Correct answer An appropriate selling price for a product or service must dictate its allowable costs 42)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? - Correct answer An understanding of an organization's customers 43)Which formula represents a buyer's view of a sales transaction? - Correct answer Perceived Value - Selling Price = Personal Profit 44)What type of benefit is lacking in material qualities and is not able to be touched or seen but nonetheless can still be perceived? - Correct answer Intangible 45)What will be the typical case in an auction when the initial price bid for the item being sold is very low? - Correct answer The number of potential bidders will be high 46)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? - Correct answer Spending her own money on herself 47)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? - Correct answer Spending someone else's money on herself 48)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? - Correct answer Spending her own money on someone else 49)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? - Correct answer Spending someone else's money on someone else 50)What special challenge do buyers of hospitality products such as hotel guestrooms or restaurant meals face? - Correct answer Difficulty in quality evaluation prior to purchase 51)If quantity and quality are held constant how will a reduction in price affect buyers' perceptions of value? - Correct answer Perceived value will increase 52)If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? - Correct answer Perceived value will decrease 53)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? - Correct answer Inconsistency 54)Which of the Four I's of service refers to the fact that services most often cannot be held, touched, or even seen before they are purchased? - Correct answer Intangibility 55)Ahmed is the sole waitperson on duty at the Athenian restaurant during the very slow 2:00 p.m. to 4:00 p.m. time period. Which of the Four I's of service refers to the fact that employees such as Ahmed must be scheduled to work anytime a service business is open and regardless of low volume levels? - Correct answer Inventory 56)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? - Correct answer Inseperability 57)Which of the Four I's of service addresses the fact that a hotel room that goes unsold on a specific night cannot be discounted and offered for sale the next day? - Correct answer Inventory 58)Randall is the revenue manager for a franchisee who owns a five unit quick service restaurant company. Which feature would be the easiest for Randall to change if he sought to increase the value his company provides its customers? - Correct answer The quality of service offered 80)The requirement that a buyer present a coupon at the time of purchase is an example of what type differential pricing strategy? - Correct answer Quiz four number 13 (??) 81)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? - Correct answer Pricing based on location 82)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? - Correct answer Pricing based on time 83)Which statement about high volume buyers in the hospitality industry is true? - Correct answer The per-unit cost of selling to them is less than the cost associated with low volume buyers 84)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? - Correct answer Pricing based on distribution channel 85)What is the formula revenue managers use to calculate Net ADR Yield? - Correct answer a. Net Room Rate/Standard ADR = Net ADR Yield 86)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? - Correct answer Pricing based on bundling 87)Which statement about revenue management and revenue optimization is true? - Correct answer Revenue management seeks to maximize income while revenue 88)optimization seeks to maximize long-term profits 89)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? - Correct answer The property distribution channels 90)What is the industry term used to describe all of a hotels unique or distinct forms of guestroom products available for sale? - Correct answer Rooms inventory 91)What is a rate code? - Correct answer A property specific description used to identify a particular room product 92)Which of the following is not typically used by revenue managers to designate specific room products sold in their hotels? - Correct answer Price 93)What is the lodging term used to describe two independent data management systems that have been electronically connected? - Correct answer Interface 94)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? - Correct answer ADR and RevPar would increase and occupancy % would be unchanged 95)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? - Correct answer Attrition and wash 96)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? - Correct answer Contract rate 97)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? - Correct answer Last room availability 98)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? - Correct answer 90 99)What is true about a revenue manager's rooms demand forecast? - Correct answer It is based on customer demand at an established price 100) 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? - Correct answer Hotel owners or their designees 101) In the lodging industry, what is a rack rate? - Correct answer A room's selling price when no discounts of any type are offered 102) Which of the following is not a strategy typically used by revenue managers to optimize revenue during periods of high demand? - Correct answer Implement rack rate discounts to maximize occupancy needed by the association for their annual conference. What would Amanda call this inquiry? - Correct answer RFP 117) 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? - Correct answer Pace report 118) 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? - Correct answer (Total Sales This Period - Total Sales Last Period ) / Total Sales Last Period = % Change in Sales 119) What is the primary reason for forecasting future room demand? - Correct answer To make pricing-related decisions 120) 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? - Correct answer 360 121) In the lodging industry, when is a guest considered to be an over-stay? - Correct answer When the guest checks out of the hotel after his or her originally scheduled check-out date 122) When might a revenue manager at a lodging facility be pressured to establish a long-term forecast that is unrealistically low? - Correct answer When a significant financial incentive exists for exceeding the forecast 123) In the lodging industry what factors would be overinflated to produce an unrealistically high RevPAR forecast? - Correct answer ADR and/or Occupancy % 124) 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? - Correct answer Eliminate Discounts 125) What is the most likely result of a revenue manager's decision to reduce rack room rates during periods of reduced demand? - Correct answer Competitor's rates will also be reduced 126) What is the most likely result of a revenue manager's decision to raise room rates during periods of very high demand? - Correct answer RevPAR will be increased 127) What is the most likely result of a revenue manager's decision to raise room rates during periods of moderate to low demand? - Correct answer The number of potential buyers will decline 128) What is one consistent characteristic of desirable rooms revenue? - Correct answer It leads to higher GOPPAR levels 129) Which of the following is not a hotel intermediary? - Correct answer Front desk agent 130) Which travel industry-related business group developed the Global Distribution System? - Correct answer The airline industry 131) What was the original purpose of THISCO? - Correct answer To develop a single GDS connection for major hotel companies 132) What is true about the calculations required to calculate the following Net ADR Yield formula? 133) Net Room Rate/Standard ADR = Net ADR Yield - Correct answer Standard ADR (-) Distribution Channel Costs (=) Net Room Rate 134) Lani is the revenue manager at the Aloha Inn. In which situation would Lani optimize the Inn's gross rooms revenues? - Correct answer High Standard ADR, high Net ADR Yield 135) What is the industry term for a lower room rate that is offered when a potential rooms buyer exhibits initial price resistance? - Correct answer Fade rate 136) What is true about a future room reservation booked for a guest whose original reservation was booked through expedia.com and who is presently checking out of the hotel? - Correct answer No IDS fees will be paid on the revenue the new reservation will generate 137) Harold tracks his hotel guest check outs and the number of new reservations made at check out. Last week a total of 640 guests checked out of his hotel. In that same period, his front desk staff booked reservations for 32 future rooms nights from this group of check out guests. What is true at Harold's hotel? - Correct answer The reservation nights booked per check out for last week was .05 138) For which distribution channel type do hotels typically employ a shopper's service? - Correct answer Sales made via the telephone 156) 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? - Correct answer $50.00 157) What is the formula used to calculate flow-through for an accounting period? - Correct answer (GOP This Period - GOP Last Period) / (Total Revenues This Period - Total Revenues Last Period) 158) 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? - Correct answer 110% 159) 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? - Correct answer 75% 160) Last year Carl's hotel had an occupancy index of 120%. From that information, what can be said about Carl's hotel? - Correct answer It achieved a higher average occupancy % than its comp. set 161) 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? - Correct answer HIs occupancy index is less than 100% 162) 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? - Correct answer 75% 163) Last month Carl's hotel had an ADR index of 105%. What is true about his hotel's ADR last month? - Correct answer It was somewhat higher than the ADR of his competitive set 164) 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? - Correct answer It will be less than 110% 165) 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%? - Correct answer Carefully increase rack rates to optimize GOPPAR 166) 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? - Correct answer His GOPPAR is not optimized because it is low relative to the RevPAR index 167) 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? - Correct answer 96.0% 168) 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? - Correct answer His ADR or occupancy index will exceed 100% 169) 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? - Correct answer 20% 170) 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? - Correct answer Its rates are low relative to the comp. set's and the hotel has an occupancy index above 100%. 171) What metrics are best used to assess the relative merits of a specific lodging industry distribution channel's contribution to a single hotel? - Correct answer Rooms sold and Net ADR Yield 172) 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? - Correct answer Increased RevPAR and reduced flow-thru % 1. Which of the following statements about restaurant pricing methods is true? - Correct answer Restaurant industry pricing methods are very different from hotel industry pricing methods 173) 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%? - Correct answer $28.00 174) 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%? - Correct answer 2.5 175) Which menu pricing system would utilize an operation's prime costs when calculating its selling prices? - Correct answer Product Cost: Plus