Revenue Management Final Exam Questions and Answers, Exams of Marketing Management

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REVENUE MANAGEMENT FINAL EXAM 2024- 2025 q Historically, what concept have hospitality managers chiefly used to calculate their selling prices? - ANSWER>>Cost The algebraic equivalent of the formula "Sales = Costs + Profit" is: - ANSWER>>Profit= Sales- Costs What is the fundamental assumption upon which the concept of consumer rationality is based? - ANSWER>>Buyers act in ways that are of personal benefit to them 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? - ANSWER>>Understanding customers What is the specialized branch of accounting that focuses on recording and analyzing the expenses incurred by an organization? - ANSWER>>Cost accounting What is created when a seller communicates to a buyer a description of a product to be sold and the price at which that product will be sold? - ANSWER>>Value Proposition What is the revenue management term used to describe the perceived benefit gained, minus the price paid, in a business transaction? - ANSWER>>Value What's not present in a barter economy? - ANSWER>>Money Formula for calculating GOPPAR - ANSWER>>Total revenue- Management Controllable Expenses)/ Total Available room What is the industry term for a customer group which can be readily identified by one or more common characteristics? - ANSWER>>Market Segment Which of the following terms would be included in the Place portion of a hotel's marketing mix? - ANSWER>>Distribution channels What is the name for the value given up by a buyer and a seller in a business transaction? - ANSWER>>Price Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what type of pricing? - ANSWER>>Two-tiered pricing What is the industry term for the point at which an organization's revenues exactly equal its costs? - ANSWER>>Break-even point 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? - ANSWER>>Customer centric revenue management What is the name for the net value achieved by both parties in a business transaction? - ANSWER>>Profit 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? - ANSWER>>140 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? - ANSWER>>the new price (P2) would be higher than the previous price (P1) and supply would increase. According to Alfred Marshall's work, if the price of a product is lower than the natural, or equilibrium price, what will happen? - ANSWER>>the demand for the product would exceed its supply. Which of the following lodging costs is a fixed cost? - ANSWER>>Mortgage payments Which of the following foodservice costs is a variable cost? - ANSWER>>Food What is the fundamental assumption upon which the Law of Supply is based? - ANSWER>>The higher the price of a product, the more of it will be produced by sellers Which of the following statements about unit costs in the hospitality industry is true? - ANSWER>>Unit costs will vary based upon how high or low an item is priced What special challenge do buyers of hospitality products such as hotel guestrooms or restaurant meals face? - ANSWER>>Difficulty in quality evaluation prior to purchase 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? - ANSWER>>Spending her own money on someone else What is the most common guest complaint in the food service industry? - ANSWER>>Service quality 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? - ANSWER>>Inventory If quantity and quality are held constant how will a reduction in price affect buyers' perceptions of value? - ANSWER>>Perceived value will increase Which formula represents a buyer's view of a sales transaction? - ANSWER>>Perceived value- selling price= Personal Profit 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? - ANSWER>>Spending someone else's money on someone else. What is the most common guest complaint about hotel guest rooms? - ANSWER>>Service deficiencies Which two factors do successful revenue managers employ when they devise and implement strategic pricing plans? - ANSWER>>Data management and insight 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? - ANSWER>>Inseparability Consider the formula: (A + B) - C=D Where: A = Perceived tangible product benefit B = Perceived intangible service benefit. C = Price. D = Value. If all other variables are held constant, which statement is also true? - ANSWER>>As C (Price) decreases, D (Value) increases. 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? - ANSWER>>Quality of service offered If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? - ANSWER>>Perceived value will decrease Alice is the revenue manager at the Granger hotel. A large volume customer wants a price quote from Alice on 50 rooms per week for the next 52 weeks. Each room would be rented for two days at a time. How many room nights will Alice be quoting on? - ANSWER>>5200 Hotel revenue managers face hard supply constraints. In which industry below are hard constraints also likely to be encountered? - ANSWER>>Hair Salon Lisa is the revenue manager of a 500 room hotel property. Next week-end demand for her rooms will exceed the number of rooms she has available for sale. Which high demand pricing strategy will optimize revenue for her property? - ANSWER>>Implement a differential pricing strategy and allocate the limited supply to those market segments who value the rooms most highly. What two factors establish a restaurant's weekly customer capacity? - ANSWER>>Number 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? - ANSWER>>Anti-trust legislation What is the name used to describe a consortium of independent organizations formed to limit competition by controlling the production, distribution and pricing of a product or service? - ANSWER>>Cartel What is the name of the US legislation that outlawed all contracts and conspiracies that unreasonably restrain interstate trade? - ANSWER>>Sherman Antitrust act What is the name of the US legislation that prohibits competing hospitality managers from meeting to agree upon the room prices that will be charged for upcoming events or charged to specific groups of customers? - ANSWER>>Sherman antitrust What is the name of the US legislation that prohibits illegal discrimination in pricing? - ANSWER>>Clayton act If a hotel charged different room rates based on a room buyer's race, religion, or ethnic background, it would violate: - ANSWER>>Civil rights act The price perceived by consumers to be the normal or standard price for a product or a service is known as: - ANSWER>>Reference price The statement that is true about the way buyers generally view variance in a seller's prices is: - ANSWER>>Discounts are viewed more favorably than surcharges In the revenue management field, the letters "STR" refer to: - ANSWER>>A company that specializes in helping hospitality managers evaluate their effectiveness The hospitality management position responsible for the housekeeping and front office areas of a hotel is: - ANSWER>>Rooms manager The hospitality management position responsible for the accounting functions in a hotel is: - ANSWER>>Controller If consistency across multiple properties was of most importance, a Revenue Manager would likely report to: - ANSWER>>A corporate level executive According to the most recent Hospitality Sales & Marketing Association International (HSMAI) survey, the largest percentage of hotel revenue managers report to: - ANSWER>>Their hotel's general manager The group of employees most responsible for implementing the revenue optimization strategies and tactics developed by a revenue management team is: - ANSWER>>FOM's What vehicle do effective revenue managers use to best develop and evaluate their organizations' pricing and revenue management strategies and tactics? - ANSWER>>regular strategy meetings What is the most likely result of a revenue manager's decision to raise room rates during periods of moderate to low demand? - ANSWER>>the number of potential buyers will decline What is one consistent characteristic of desirable rooms revenue? - ANSWER>>it leads to higher GOPPAR levels What is the industry term used to describe all of a hotel's unique or distinct forms of guestroom products available for sale? - ANSWER>>rooms inventory What is a room code? - ANSWER>>A property-specific description used to identify a particular room product Which of the following is not typically used by revenue mangers to designate specific room products sold in their hotels? - ANSWER>>Price What is the lodging industry term used to describe two independent data management systems that have been electronically connected? - ANSWER>>interface 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 guest? - ANSWER>>ADR and RevPAR would increase and occupancy % would be unchanged What are two synonymous lodging industry terms used to identify the difference between the purchases a group pledges to make and the purchases it actually makes? - ANSWER>>Attrition and wash 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 airlines accepts Tanika's quote for both price and availability, what type of room rate will the hotel and airline have agreed upon? - ANSWER>>Contract rate Expedia.com wants Jessie, the revenue manger 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? - ANSWER>>Last room available Angelina is the revenue manager at the 1000 room Bay hotel. Tonight she forecasts 600 stay- overs and 400 arrivals. Assume Angelina is accurate in forecasting a 5% no-show rate. How many additional reservations could Angelina accept before she would be required to walk an arriving guest? - ANSWER>>20 What is true about a revenue manager's rooms demand forecast? - ANSWER>>It is based on customer demand at an established price In the airline industry, airline companies establish ticket prices. In the lodging industry, who is responsible for establishing room selling prices? - ANSWER>>Hotel owners or their designees In the lodging industry, what is a rack rate? - ANSWER>>A room's selling price when no discounts of any type are offered What is true about discounts offered on the selling price of hotel rooms? - ANSWER>>they should be easily explainable and defensible In which situation would a customer-centric revenue manager likely implement a special event rate? - ANSWER>>During a local festival that would fill all of the area hotels Hanna is the revenue manger at the Waterford hotel. For the first week in July next year she has determined her hotel will accept reservations for guests seeking to arrive on July 1st July 2nd or July 3rd; but not on July 4th. Which of the following revenue management control (restriction) strategies is she using? - ANSWER>>CTA Which of the following is not a strategy typically used by revenue managers to optimize revenue during periods of high demand? - ANSWER>>Implement rack rate discounts to maximize occupancy To optimize revenues while enhancing property operations, which strategy pair should revenue managers seek to implement? - ANSWER>>Maximization of room codes, minimization of rate codes What strategy should be put into action when revenue managers implement special event rates? - ANSWER>>Enhance guest value by providing product and/or service enhancements which of the following is not a hotel intermediary? - ANSWER>>Front desk agents What was the original purpose of THISCO? - ANSWER>>To develop a single GDS connection for major hotel companies Lani is the revenue manager at the Aloha Inn. In which situation would Lani optimize the Inn's gross rooms revenues? - ANSWER>>High Standard ADR, high Net ADR Yield What is the industry term for a lower room rate that is offered when a potential rooms buyer exhibits initial price resistance? - ANSWER>>Fade Rate 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? - ANSWER>>No IDS fees will be paid on the revenue the new reservation will generate 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? - ANSWER>>The reservation nights booked per check out for last week was .05 What is true about the calculations required to calculate the following Net ADR Yield formula? - ANSWER>>Standard ADR (−) Distribution Channel Costs (=) Net Room Rate for which distribution channel type do hotels typically employ a shopper's service - ANSWER>>Sales made via the telephone Which is most often true about room sales made by a hotel's group sales department? - ANSWER>>ADRs are lower than average and Net ADR Yield is higher than average How are most CVBS in the United States funded? - ANSWER>>By a combination of hotel occupancy taxes and membership dues Which statement does not accurately describe a non-electric distribution channel? - ANSWER>>CRS is a non-electric distribution channel Which of the following rooms marketing strategies would contribute to the commoditization of hotel rooms? - ANSWER>>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? - ANSWER>>CRS 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? - ANSWER>>Pricing based on time Which statement about high volume buyers in the hospitality industry is true? - ANSWER>>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? - ANSWER>>Pricing based on distribution channel Net adr yield formula - ANSWER>>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? - ANSWER>>Pricing based on bundling Which statement about revenue management and revenue optimization is true? - ANSWER>>Revenue management seeks to maximize income while revenue optimization seeks to maximize long-term profits. What is true about rooms that are sold at prices below a hotel's variable operating costs? - ANSWER>>Decrease in Revpar Scott is a revenue manager who calculates the following for his hotel: total (rooms +non rooms) revenue/ total occupied rooms - ANSWER>>Revpor Which is considered a room-related occupancy cost? - ANSWER>>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? - ANSWER>>50 A formula to calculate flow-throw for an accounting period is - ANSWER>>GOP This period - gop last period / total rev this period - total rev 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? - ANSWER>>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? - ANSWER>>75% Last year Carl's hotel had an occupancy index of 120%. From that information, what can be said about Carl's hotel? - ANSWER>>It achieved a higher average occupancy % than its comp. set 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? - ANSWER>>His occupancy index is less than 100% 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? - ANSWER>>75% Last month Carl's hotel had an ADR index of 105%. What is true about his hotel's ADR last month? - ANSWER>>It was somewhat higher than the ADR of his competitive set 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? - ANSWER>>It will be less than 100 percent 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%? - ANSWER>>Carefully increase rack rates to optimize GOPPAR 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? - ANSWER>>His GOPPAR is not optimized because it is low relative to the RevPAR index 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? - ANSWER>>96% 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? - ANSWER>>His ADR or occupancy index will exceed 100% 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? - ANSWER>>20% 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? - ANSWER>>Its rates are low relative to the comp. set's and the hotel has an occupancy index above 100%. What metrics are best used to assess the relative merits of a specific lodging industry distribution channel's contribution to a single hotel? - ANSWER>>Rooms sold and Net ADR Yield 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? - ANSWER>>Increased RevPAR and reduced flow-thru % Which of the following statements about restaurant pricing methods is true? - ANSWER>>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%? - ANSWER>>$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%? - ANSWER>>2.5 Which menu pricing system would utilize an operation's prime costs when calculating its selling prices? - ANSWER>>Product Cost: Plus In which menu pricing approach would Menu Engineering as proposed by Kasavana and Smith be utilized? - ANSWER>>Contribution Margin Pricing