REVENUE MANAGEMENT FINAL EXAM, Exams of Nursing

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REVENUE MANAGEMENT FINAL EXAM ,STUDY GUIDE AND PRACTICE EXAMS WITH ACTUAL CORRECT QUESTIONS AND VERIFIED DETAILED RATIONALES ANSWERS LATEST UPDATE 2024 ALREADY GRADED A+ 100% GUARANTEED PASS!! which of the following terms would be included in the place portion of a hotel's marketing mix? -advertising -product enhancements -distribution channels -promotions distribution channels what is the fundamental assumption upon which the law of supply is based? -the higher the demand for a product the less of it will be produced by sellers -the higher the demand for a product the more of it will be produced by sellers -the lower the demand for a product the more of it will be produced by sellers -the demand for a product does not affect its supply the higher the demand for a product the more of it will be produced by sellers according to Alfred Marshall's work, if the price of a product is lower than the natural, or equilibrium price, what will happen? -a surplus will occur -the demand for the product would exceed its supply -the supply of the product would exceed its demand -excess capacity would create constrained supply the demand for the 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 higher than the previous price (P1) and supply would decrease -the new price (P2) would be lower than the previous price (P1) because supply would decrease -the new price (P2) would be higher than the previous price (P1) and supply would increase -the new price (P2) would be lower than the previous price (P1) because supply would increase the new price (P2) would be higher than the previous price (P1) and supply would increase what concept is displayed by the intersecting point on a supply and demand curve? -the maximum price that should be charged for a product at a specific point in time -an estimate of the price an average customer is willing to pay for a product -an estimate of the amount of a product that would be purchased at a known price and point in time -the maximum price customers would willingly pay for a product if there were no shortage of it 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 -costs must exceed profits -profit must exceed costs -costs must exceed revenue revenues must exceed costs what is the specialized branch of accounting that focuses on recording and analyzing the expenses incurred by an organization? -tax accounting -financial accounting -managerial accounting -cost accounting Selling Price - Costs = Personal Profit Perceived Value - Selling Price = Personal Profit 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 Fringe Tangible Material 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 low The number of potential bidders will be high The number of potential bidders will increase as price increases The number of potential bidders will decline the number of potential bidders will be high Penny Larson is travelling 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 someone else's money on herself Spending her own money on someone else Spending her own money on herself Spending someone else's money on someone else 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 Spending her own money on someone else Spending her own money on herself Spending someone else's money on someone else 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 someone else's money on someone else Spending her own money on herself Spending her own money on someone else Spending someone else's money on herself 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 Spending her own money on herself Spending her own money on someone else Spending someone else's money on herself 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 price determination prior to purchase Difficulty in quantity selection prior to purchase Difficulty in payment terms determination prior to purchase Difficulty in quality evaluation prior to purchase 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 decrease Perceived value will increase Perceived value will not change Perceived value will decrease in the short run but rise in the long run perceived value will increase If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? Perceived value will increase Perceived value will decrease Perceived value will not change Perceived value will decrease in the short run but rise in the long run perceived value will decrease 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? Intangibility Inseparability Inventory Inconsistency inconsistency 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? Intangibility As A increases, D decreases As B decreases, D increases As A and B increase, D decreases As C decreases, D increases as C decreases, D increases Which two factors do successful revenue managers employ when they devise and implement strategic pricing plans? Intuition and insight Probability theory and basic calculus Data management and probability theory Data management and insight data management and insight Which statement about revenue management in the hospitality industry is true? Its focus should be on costs, not customers Those who implement it must have advanced training in statistical analysis It is best understood by experienced hospitality managers Its effective implementation requires intuition rather than data analysis it is best understood by experienced hospitality managers What is value-based pricing? A pricing system based upon a seller's view of product or service value A pricing system based upon a buyer's view of product or service value A pricing system based upon the value of the sum of costs incurred by a seller A pricing system based upon the total amount of profit needed to maintain an ongoing business a pricing system based upon a buyer's view of product or service value 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 Penetration pricing Loss leader pricing Competitive 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? Demand-based pricing Value-based pricing Segmented pricing Fixed pricing fixed pricing What is true for franchised hotel operations in the United States? Their prices are established by the hotel's brand managers Their prices are established by the hotel owners Their prices are established by their franchisers Their prices are established by their franchiser advisory committees their prices are established by the hotel's brand managers 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 Consumer rationality Buyer's remorse Value consumer surplus What is the relationship between differential pricing and consumer surplus? Differential pricing is a strategy used by sellers to maximize consumer surplus Consumer surplus prevents the effective use of differential pricing Consumer surplus mandates the use of differential pricing Differential pricing is a strategy used by sellers to minimize 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? Consumer surplus is maximized The majority of any consumer surplus is captured by intermediaries The majority of any consumer surplus is captured by the business The majority of any consumer surplus is retained by the business's customers. 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 Commoditization Consumer surplus staging Articles of trade arbitrage What is the purpose of a price fence or barrier? To determine the optimum price at which to sell a product or service Pricing based on product versioning Pricing based on distribution channel pricing based on distribution channel What is the formula revenue managers use to calculate Net ADR Yield? Standard ADR/ Net Room Rate = Net ADR Yield Net Room Rate/ Standard ADR = Net ADR Yield Standard ADR - Distribution Channel Costs = Net ADR Yield Occupancy % / Standard ADR = Net ADR Yield 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 Pricing based on quantity Pricing based on time Pricing based on payment terms pricing based on bundling Which statement about revenue management and revenue optimization is true? Revenue optimization seeks to maximize income while revenue management seeks to maximize long-term profits Revenue management seeks to maximize income while revenue optimization seeks to minimize income Revenue management seeks to maximize income while revenue optimization seeks to maximize long-term profits Revenue optimization seeks to minimize revenue while revenue management seeks to maximize RevPAR revenue management seeks to maximize income while revenue optimization seeks to maximize long- term profits 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? A. 100 B. 204 C. 2600 D. 5200 5200 Hotel revenue managers face hard supply constraints. In which industry below are hard constraints also likely to be encountered? A. Cereal manufacturing B. Banking C. Hair salons D. Insurance sales hair salons 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? A. Establish one fixed price, then sell to customers on a first come-first served basis until all rooms have been sold B. Implement a differential pricing strategy and allocate the limited supply to those market segments who value the rooms most highly C. Allocate the rooms to selected customers who meet established criteria; (i.e. they are volume buyers, repeat buyers, or they hold other favored buyer Status) D. Raise prices until the available supply of rooms exceeds demand 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? A. Number of seats and number of hours open per week B. Number of servers and number of hours open per week C. Daily revenue and number of seats D. Check average and number of hours open per week 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? A. Anti-trust legislation B. Anti-competition legislation C. Protection legislation D. Consumer rights legislation anti-trust legistlation 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? A. League B. Cartel C. Lobby D. Union cartel What is the name of the US legislation that outlawed all contracts and conspiracies that unreasonably restrain interstate trade? A. Clayton Act B. Federal Trade Commission Act rooms manager What is the name of the hospitality management position responsible for the accounting functions in a hotel? A. Controller B. DOSM C. FOM D. Rooms manager controller To whom would a Revenue Manager likely report if consistency across multiple properties was of most importance? A. A corporate level executive B. A property level DOSM C. Their hotel's general manager D. The revenue management team a corporate level executive According to the most recent Hospitality Sales & Marketing Association International (HSMAI) survey, to whom do the largest percentage of hotel revenue managers report? A. A corporate level executive B. Their property level DOSM C. A property level controller D. Their hotel's general manager their hotel's general manager Which group of employees is most responsible for implementing the revenue optimization strategies and tactics developed by a revenue management team? A. Part-time employees B. DOSMs C. Line-level employees D. FOMs line-level employees What vehicle do effective revenue managers use to best develop and evaluate their organizations' pricing and revenue management strategies and tactics? A. Regular e-mails B. Regular strategy meetings C. Regular drafting and issuance of memos D. Regular web postings regular strategy meetings Who should lead the revenue management efforts of a lodging or food service organization? A. A qualified revenue manager B. A qualified operations manager C. A qualified marketing director D. A qualified director of finance and accounting a qualified revenue manager 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 amenity package the property chain affiliation the property advertising program the property distribution channels 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 rooms revenue room rates CPOR rooms inventory What is a rate code? the identification number for a specific guest reservation the room number of a specific guest room A property specific description used to identify a particular room product a symbol used to identify the housekeeping status of a specific room a property specific description used to identify a particular room product Which of the following is not typically used by revenue managers to designate specific room products sold in their hotels? location price bed configuration room size price What is the lodging term used to describe two independent data management systems that have been electronically connected? interface inverse connection bond one-way connect Hotel owners or their designees hotel owners or their designees In the lodging industry, what is a rack rate? A room's highest legally allowable selling price A room's selling price when no discounts of any type are offered The selling price of a hotel's lowest cost rooms A room's selling price after its distribution channel costs are subtracted 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? They should be offered only during high demand periods They should be granted only to long term stay guests They should be provided only to group rooms buyers They should be easily explainable and defensible they should be easily explainable and defensible In which situation would a customer-centric revenue manager likely implement a special event rate? During a major weather-related event such as a hurricane or flood During implantation of a new room coding system During a local festival that would fill all of the area hotels During periods of very low room demand during a local festival that would fill all of the area hotels Hanna is the revenue manger at the Waterford hotel. For a Saturday in the future she has determined her hotel will accept reservation only for those guests seeking to stay for three or more days. Which of the following revenue management control (restriction) strategies is she using? MLOS Attrition CVB CTA 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? MLOS Attrition CVB CTA CTA Which of the following is not a strategy typically used by revenue managers to optimize revenue during periods of high demand? Implement rack rate discounts to maximize occupancy Implement a length-of-stay restriction to maximize occupancy Implement a payment restriction to maximize revenue collections Control allowable arrival dates to maximize occupancy 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 implementing rack rate discounts Enhance guest value by removing stay restrictions and stay controls Enhance guest value by providing product and/or service enhancements Enhance guest value by eliminating aggressive upon-arrival up sell programs enhance guest value by providing product and/or service enhancements To optimize revenues while enhancing property operations, which strategy pair should revenue managers seek to implement? Minimization of room codes, minimization of rate codes Maximization of room codes, minimization of rate codes Minimization of room codes, maximization of rate codes Maximization of room codes, maximization of rate codes maximization of room codes, minimization of rate codes 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? Historical data Current data Future data Financial data 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? Historical data Financial data Future data Current data current data In a limited service hotel, what is the incremental expense incurred in selling one guest room? GOPPAR RevPAR Total Sales This Period - Total Sales Last Period / Total Sales Last Period = % Change in Sales Total Sales This Period - Total Sales Last Period / Total Sales This Period = % Change in Sales Total Sales Last Period - Total Sales This Period / Total Sales This Period = % Change in Sales 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 calculate RevPAR To make pricing-related decisions To make capacity-expansion decisions To up-date Pace reports 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? 370 360 350 340 360 In the lodging industry, when is a guest considered to be an over-stay? When the guest is not scheduled to depart and thus will be using his or her room for at least one more day When the guest has not yet paid his or her bill When the guest checks out of the hotel before his or her originally scheduled check-out date When the guest checks out of the hotel after his or her originally scheduled check-out date 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 the owner's goal is to encourage local government investment in a property When the property is for sale When a significant financial incentive exists for exceeding the forecast When a significant financial incentive exists for not exceeding the forecast when a significant financial incentive exists for exceeding the forecast In the lodging industry what factors would be over-inflated to produce an unrealistically high RevPAR forecast? ADR and/or Occupancy % GOP and/or GOPPAR CPOR and/or GOPPAR MLOS and/or CTA ADR and/or occupancy % 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? Eliminate discounts Implement discounts Raise rack room rates Reduce rack room rates eliminate discounts What is the most likely result of a revenue manager's decision to reduce rack room rates during periods of reduced demand? GOPPAR will be increased Competitor's rates will also be reduced Incremental room demand will be stimulated Occupancy rates will also be reduced competitor's rates will also be reduced What is the most likely result of a revenue manager's decision to raise room rates during periods of very high demand? The number of potential buyers will increase RevPAR will be increased RevPAR will decline ADR will decline REVPAR will be increased What is the most likely result of a revenue manager's decision to raise room rates during periods of moderate to low demand? Occupancy rates will increase The number of potential buyers will decline The number of potential buyers will remain constant ADR will decline the number of potential buyers will decline What is one consistent characteristic of desirable rooms revenue? It leads to higher CPOR levels It leads to lower GOPPAR levels It leads to higher GOPPAR levels It leads to lower GOPPOR levels The reservation nights booked per check out for last week was .02 The reservation nights booked per check out for last week was .20 The reservation nights booked per check out for last week was .05 The reservation nights booked per check out for last week was .50 the reservation nights booked per check out for last week was .05 For which distribution channel type do hotels typically employ a shopper's service? Sales made via the GDS Sales made via the IDS Group sales Sales made via the telephone sales made via the telephone Which is most often true about room sales made by a hotel's group sales department? ADRs are higher than average and Net ADR Yield is lower than average ADRs are lower than average and Net ADR Yield is lower than average ADRs are higher than average and Net ADR Yield is higher than average ADRs are lower than average and Net ADR Yield is higher than average ADRs are lower than average and net ADR yield is higher than average How are most CVBs in the United States funded? By a tax imposed by the US Travel and Tourism agency By a combination of state income taxes and membership dues By a combination of hotel occupancy taxes and membership dues By the applicable state-level agency responsible for the state's travel and tourism promotion by a combination of hotel occupancy taxes and membership dues Which statement does not accurately describe a non-electric distribution channel? Non-electric distribution channel tend to have a higher ADRs CVB is a non-electric distribution channel CRS is a non-electric distribution channel A non-electric distribution channel tends to have lower costs in terms of fees assessed 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 its telephone number Participation on a web site that lists only a hotel's name and expanded definitions of its room codes Participation on a web site that lists only a hotel's name and its location Participation on a web site that lists only a hotel's name and a single rack room rate 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 IDS PMS GDS 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 PMS and GDS The GDS and IDS The GDS and CRS The IDS and CRS 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 administrative and general (A&G) expense portion The undistributed operating expense portion The marketing expense portion The rooms expense portion the rooms expense portion Which common IDS room sales model is most dependent on selling price for its revenue generation? Merchant model Arbitrage model Agency model Opaque model 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 They are not interfaced with the brand's CRS Hotels must pay an agency fee for all room nights booked on these sites They are operated as merchant model sites content managers 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 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? 100% 110% 120% 130% 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? 133% 100% 75% 30% 75% Last year Carl's hotel had an occupancy index of 120%. From that information, what can be said about Carl's hotel? It generated more revenue than its comp. set It had a higher RevPAR than its comp. set Its GOPPOR was higher than the comp set. It achieved a higher average occupancy % than its comp. set 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? His occupancy index is greater than 100% His ADR is decreasing His occupancy index is less than 100% His ADR is increasing 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? 60% 75% 80% 85% 75% Last month Carl's hotel had an ADR index of 105%. What is true about his hotel's ADR last month? It was somewhat higher than the ADR of his competitive set It was somewhat lower than the ADR of his competitive set It was exactly the same as the ADR of his competitive set It was $105.00 it was somewhat higher than the ADR index of 105%. What is true about his hotel's ADR last month? 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? It will be 88.9% It will be 112.5% It will be greater than 110% It will be less than 110% it will be less than 110% 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%? Carefully decrease rack rates to maximize rooms sold Carefully increase discounts on rack rates to maximize RevPAR Carefully decrease rack rates to optimize GOPPAR Carefully increase rack rates to optimize GOPPAR 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? His revenue per available room is lower than that of his comp. set His GOPPAR is not optimized because it is low relative to the RevPAR index His GOPPAR is not optimized because it is high relative to the RevPAR index His revenue per available room is higher than that of his comp. set 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? 96.0 % 150 % 66.6 % 100 % 96.0% 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? His occupancy index will exceed 100% His ADR index will exceed 100% 25 2.5 .25 2.5 Which menu pricing system would utilize an operation's prime costs when calculating its selling prices? Product Cost: Plus Product Cost Percentage Contribution Margin Differential Pricing product cost: plus In which menu pricing approach would Menu Engineering as proposed by Kasavana and Smith be utilized? Product Cost: Plus Pricing Contribution Margin Pricing Product Cost Percentage Pricing Plate Cost Pricing 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 prime costs The amount paid for labor The amount paid for products The amount paid for labor and products the amount paid for products For revenue managers seeking to optimize revenues in their food service operations, which statement about menu prices is true? An appropriate menu price should dictate an item's cost An item's cost should dictate its menu price An item's prime costs should dictate its menu price An increase in an item's cost dictates an increase in its menu price 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? $ 0.80 $ 4.99 $ 4.00 $ 7.98 $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? $ 3.00 $ 7.00 $ 2.50 $ 6.00 $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 The cost to the operator of a 20 year old Scotch is higher than a one year old Scotch Customers prefer to pay high prices One year old Scotch is not popular 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? The quality of the 20-year old Scotch is too low compared to the one-year old Scotch The cost to the operator of the 20-year old Scotch is too high Customers do not accept this seller's price-value proposition The 20-year old Scotch is priced too low 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? Costs Capacity Check average Contribution margin 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? 130/295 = Table turns 130 (x) 295 = Table turns 295/130 = Table turns 295 (x) 130 = Table turns number of guests served RevpASH Check average menu items sold menu items sold For analysis purposes Jay considers his restaurant to have three revenue centers. These are the dining room, the bar and off-site catering. Last month Jay's total revenue was $50,000. Off site catering revenue was $20,000. What percent of Jay's total revenue was contributed by off site catering? 40% 30% 20% 10% 40% For analysis purposes, Jay considers his restaurant to have three revenue centers. These are the dining room, the bar and off-site catering. Last month Jay's bar revenue was 15% of total revenue and off site catering revenue was $20,000. Total revenue was $50,000. What was the amount of revenue generated in Jay's dining room last month? $15000 $22500 $15500 $21500 $22,500 For analysis purposes Jenny considers her restaurant to have three day parts. These three are breakfast, lunch and dinner. Last month Jenny's breakfast sales were $44,000. Total sales were $176,000. What percent of sales were contributed by breakfast? 32% 40% 25% 77.4% 25% For analysis purposes Jenny considers her restaurant to have three day parts. These three are breakfast, lunch and dinner. Last month Jenny's breakfast sales were $ 20,000. Lunch sales were 40% of total sales. Total sales were $200,000. What was the amount of sales contributed by the dinner day part? $180,000 $140,000 $100,000 $80,000 $100,000 October's sales at Raja's restaurant this year were $60,000. That was an increase of 20% over the revenue achieved in October of last year. What was the amount of revenue achieved in Raja's restaurant during October of last year? $40000 $45000 $50000 $55000 $50,000 April's sales at Raja's restaurant this year were $80,000. That was a decrease of 20% compared to the revenue achieved in April of last year. What was the amount of revenue achieved in Raja's restaurant during April of last year? $86,000 $90,000 $96,000 $100,000 $100,000 Sales at Peggy's restaurant this year were $1,650,000. Last year's sales were $1,500,000. What was the percentage change in revenue Peggy achieved this year when compared to last year? +10% +9.1% +19.1% +20% +10% Karl operates two restaurants. This year's sales at the first operation were $440,000. That was an increase of 10% from the prior year. This year's sales at the second restaurant were $660,000. That was an increase of 20.0% from the prior year. What was the percent change in the combined revenue achieved by both restaurants this year compared to last year? +15.0% +15.8% +13.0% +13.6% +15.80% $49.33 $37.00 $133.33 $20.27 $37.00 What would be the seating efficiency % of a restaurant on a day that it had 100 available seats, was open for six hours and served 450 people? 45% 75% 22.2% 133% 75% What would be the typical impact on RevPASH of an increase in guest duration? RevPASH would not change if check average did not change RevPASH would increase if check average did not change RevPASH would decrease if check average did not change RevPASH would increase if check average decreased REVPASH would decrease if check average did not change What formula can revenue managers use to calculate RevPASH? Seat Utilization % (X) Check Average= RevPASH Number of Guests Served (X) Check Average = RevPASH Number of Seats Available (X) Check Average = RevPASH Seat Utilization % (X) Total Revenue = RevPASH seat utilization % (x) check average = REVPASH What is the name for the accounting device used by foodservice operators to divide their operating year into 13 equal time periods? 31-day accounting period 30-day accounting period 29-day accounting period 28-day accounting period 28-day accounting period What business segment best describes a company that is engaged primarily in the sale of intangible goods? Agriculture Manufacturing Construction Service service Tammy owns a tanning salon. Her salon has five tanning beds; thus she faces supply constraints based on capacity. In her business what additional factor acts to constrain supply? Price Advertising Location Time time Revenue optimization strategies can make the most impact on inventory management in industries with which kind of cost structures? Low variable costs and high fixed costs High variable costs and low fixed costs High variable costs and high fixed costs Low variable costs and low fixed costs low variable costs and high fixed costs Nearly every ski resort in the Upper Northeastern part of the US generates the majority of its annual income during the winter months. What is the cause of this? Constrained supply Variable demand Product versioning High fixed costs constrained supply Selling season tickets to sporting events such as professional baseball or basketball games at a price per game that is lower than the cost of individual tickets to all of the games is an example of what revenue optimization activity? Constrained demand management Communications selection Product versioning Variable demand management product versioning Which of the following would not be considered highly perishable inventory? Golf tee times Concert seats Hotel rooms French champagne french champagne Raymond is a revenue manager working for a franchisor. Raymond is assigned to brand partner support. What would be Raymond's role in this company? Designing on-property revenue management programs Developing supportive partnerships with competitive set hotels Working with business entities chosen by his company to achieve the goals of its brands Supporting the financial reporting efforts of the company's Controller working with business entities chosen by his company to achieve the goals of its brands In the hospitality industry what is the financial basis used for calculating the franchise fees or royalties that are paid to franchisors? An operation's Total Revenue An operation's Gross Operating Profit (GOP) An operation's Pre-tax profits An operation's Net Operating Income (NOI) an operation's total revenue Who are the customers of a hotel or restaurant franchisor? Hotel guests and/or restaurant customers Brand partners Destination marketing professionals Franchisees franchisees What is the hospitality term used to describe the accumulated value of a brand's image or identity as perceived by consumers? Brand proliferation Brand equity Brand justice Brand partnering brand equity In the US what is the dominate vehicle used by governmental authorities to fund local area destination marketing efforts? A special tax on the sale of hotel rooms Local property taxes A special tax on the sale of restaurant meals Income taxes a special tax on the sale of hotel rooms Which of the following statements best describe the structure of a typical CVB? A stockholder owned corporation A wholly owned corporate subsidiary A quasi governmental agency A limited liability company (LLC) a quasi governmental agency Which of the following revenue management activities would not be included in the typical job description of a revenue manager employed by a CVB? Promotion Publicity Product pricing Advertising product pricing What is typically true about those who seek to champion new ideas in an organization? Other decision makers follow them automatically because they are innovative Their efforts are readily accepted as greatly over-due They can expect to be perceived as being efficient in utilizing resources They do not have it easy because their ideas are often met with skepticism they do not have it easy because their ideas are often met with skepticism What is the industry term for the individual or department with primary accountability for a defined task? Ownership of responsibility Leadership Financial management Revenue optimization ownership of responsibility What is the area within an organization with primary accountability for the customer relationships developed by that organization? Marketing Sales Distribution Revenue Management sales What is the area within an organization with primary accountability for the management of data related to revenue optimization? Marketing Sales Accounting Distribution accounting What is the area within an organization with primary accountability for the management of the electronic and non-electronic channels related to revenue optimization? the pipeline What is leverage? The methods used to strategically price products and services The use of borrowed money to purchase business assets The interest rate paid for mortgage loans The process of reducing expenses to improve profitability the use of borrowed money to purchase business assets Nikki has 50 rooms left to sell tomorrow night. Her forecast indicates she would sell 20 of them at her rack rate of $100.00. A group would now like to buy all 50 of the available rooms for $75.00 each. Assume her forecast is accurate. What is the amount of incremental revenue Nikki would achieve if she decided to sell all 50 of her available rooms to the group? $3,750 $2,000 $1,750 $5,750 $1,750 Randy is the FOM at the 1000-room Greenbranch Hotel. On average; Randy employs 80 full-time front desk staff. Last year a total of 140 different individual staff members held these 80 positions at some point during the year. What was Randy's front desk staff turnover rate last year? 80% 60% 140% 75% 75% Which feature would not be analyzed as part of a revenue manager's SWOT analysis? Strengths Weaknesses Opportunities Timetables timetables Which of the following would be an undistributable hotel expense? Guest room linens Cleaning supplies Advertising Employee uniforms advertising What is the most common response by consumers when a product or service is heavily discounted for the purpose of maintaining organizational sales levels in a distressed market? Belief that the product or service was previously overpriced Belief that the product or service is very popular Belief that the quality of the product or service is being improved Belief that the product or service is being discontinued in the near future belief that the product or service was previously overpriced Which factor do meeting planners consider to be of most importance when choosing a hotel facility for a meeting or convention? Facility price Facility amenities Facility reputation Facility location facility location Assume a hotel is seeking to maintain the integrity of its rate fences by explaining all restrictions (e.g. MLOS, qualifications, or availability dates) applicable to the quoted rates. At what point in the reservation process should the guest be fully informed of the applicable fences? Before the reservation is made After the reservation has been confirmed 3-7 days prior to guest arrival At guest check-in before the reservation is made what is the industry term used to describe the sum of prices paid by a business's customers? -daily receipts -profit -profits less expenses -total revenues -total revenues historically, what concept have hospitality managers chiefly used to calculate their selling prices? -income -revenue -costs -profits -costs Brainpower Read More what is an algebraic equivalent of the formula: sales=costs+profit? -profit=sales-costs -costs=sales+profits -costs=profit-sales -114.3% -80% 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 -$35.00 -$125.00 -$160.00 $140.00 what is the industry term for the average revenue generated by each occupied guestroom during a defined period of time? -REVPOR -REVPASH -REVPAR -REVAVE REVPOR what is the formula used to calculate GOPPAR? -(total revenue - management controllable expenses) / rooms sold -rooms available to sell / (total revenue - management controllable expenses) -rooms available to sell / total management controllable expenses -(total revenue - management controllable expenses) / rooms available to sell (total 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? -comp set -STR group -market segment -revenue group market segment what is a rack rate? -the price of rooms when nonrefundable advance purchases are made -the price of rooms when no discounts of any type are offered -the price of rooms when 0-10% discounts are offered -the price for the most expensive room in a hotel the price of rooms when no discounts of any type are offered what is: total period revenue/ (number of available seats x hours of seat availability) -the formula for REVPASH -the formula for check average -the formula for contribution margin (CM) -the formula for REVPAR the formula for REVPASH 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? -revenue enhancement management -yield management -profit yield management -customer-centric revenue management customer-centric revenue management what is the term used to describe the potential customers to whom a business's marketing activities and messages are directed? -the yield market -the comp set -the target market -the centric market the target market what is the term used to describe efforts undertaken to encourage travel and tourism to a specific geographic area or attraction? -goal management -destination marketing -yield intention marketing -objective marketing destination marketing an income statement is also commonly referred to as a(n) -P&L -budget -cash flow -expense classification P&L an operation's year-end income statement shows before tax profits of $210,000. Revenues for the year were $1,850,000. What were this operation's expenses for the year? -$1,430,000 -$1,640,000 -$2,060,000 -chain standard -industry standard -historical performance historical performance what is the name for the value given up by a buyer and a seller in a business transaction? -expense -price -cost -profit price Charging guests for watching a Pay-Per-View movie in their hotel guestroom is an example of what type of pricing? -value based pricing -differential pricing -two-tiered pricing -demand based pricing two-tiered pricing what is the fundamental assumption upon which the concept of consumer rationality is based? -buyers act in ways that are of personal benefit to them -buyers will pay the lowest price possible for any product or service -buyers never act in ways that can be predicted -buyers usually act in ways that cannot be predicted buyers act in ways that are of personal benefit to them what is the revenue management term used to describe the perceived benefit gained, minus the price paid, in a business transaction? -profit -cost -sale -value value what is created when a seller communicates to a buyer a description of a product to be sold and the price at which the product will be sold? -a cost-based offer -a demand-based price -a two-tiered proposition -a value proposition a value proposition which one of the following terms is not one of the 4 Ps of the marketing mix? -proposition -price -product -place proposition 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 Brainpower Read More 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 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 What does RPASH stand for? Revenue per Available Seat Hour What is a "dessert room"? implicates that you will spend more money on dessert and alcohol, and creates higher turnover because you are making a new table available by moving them to a different room An example of a conflict between market segments? skiing forbid snowboarding -because they didn't want the snowboarders to mess up the snow for the skiers they just want to ski and that snowboarders tend to be more aggressive Which two models can we find within the indirect distribution channels? Agent model vs Merchant model what is the difference between Agent model vs Merchant model? Commission vs margin -Agent model there is the price of the room and there is a 10% commission -Merchant model is the one that buys the room and then sells it for an added margin According to the Phocuswright Report (2018), more than half (52%) of all U.S. travel was booked online or offline? offline In what types of tourism products is the offline system predominant? Packages and Cruises What's the proportion of offline business in these two types of tourism products? Two thirds On average, what is the comission OTAs charge to branded and independent hotels? From 10% (branded hotels) to 30% (independent hotels) Marriott strongly depends on OTAs: 88% of its bookings come through OTAs. True or False? False: it is the other way around. Which industry is more fragmented and atomized: the airline or the hotel industry? What is the term used to describe efforts undertaken to encourage travel and tourism to a specific geographic area or attraction? Destination Marketing What is the name for the value given up by a buyer and a seller in a business transaction? Price Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what type of pricing? Two-tiered pricing What is the fundamental assumption upon which the concept of consumer rationality is based? Buyers act in ways that are of personal benefit to them What is the revenue management term used to describe the perceived benefit gained, minus the price paid, in a business transaction? Value 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? A value proposition Which one of the following terms is not one of the 4 Ps of the Marketing Mix? Proposition Which of the following terms would be included in the Place portion of a hotel's marketing mix? Distribution Channels What is the fundamental assumption upon which the Law of Supply is based? The higher the demand for a product the more of it will be produced by sellers According to Alfred Marshall's work, if the price of a product is lower than the natural, or equilibrium price, what will happen? 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 If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? Perceived value will decrease 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? Inconsistency 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? Intangibility 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? Inventory 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? Inseperability 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 Which of the following is not typically used by revenue managers to designate specific room products sold in their hotels? Price What is the lodging term used to describe two independent data management systems that have been electronically connected? 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 guests? ADR and RevPar would increase and occupancy % would be unchanged 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? 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 accepts Tanika's quote for both price and availability, what type of room rate will the hotel and airline agreed upon? Contract rate 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? Last room availability 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? 90 What is true about a revenue manager's rooms demand forecast? 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 for hotels that are part of a lodging company? Hotel owners or their designees In the lodging industry, what is a rack rate? A room's selling price when no discounts of any type are offered Which of the following is not a strategy typically used by revenue managers to optimize revenue during periods of high demand? Implement rack rate discounts to maximize occupancy What is true about discounts offered on the selling price of hotel rooms? They should be easily explainable and defensible In which situation would a customer-centric revenue manager likely implement a special event rate? During a local festival that would fill all of the area hotels Hanna is the revenue manger at the Waterford hotel. For a Saturday in the future she has determined her hotel will accept reservation only for those guests 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 reservations for 32 future rooms nights from this group of check out guests. What is true at Harold's hotel? The reservation nights booked per check out for last week was .05 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? 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? 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? 75% Last month Carl's hotel had an ADR index of 105%. What is true about his hotel's ADR last month? 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? It will be less than 110% 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%? 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? 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? 96.0% 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? 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? 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? Its rates are low relative to the comp. set's and the hotel has an occupancy index above 100%.