Test 1 Study Guide - Hospitality Revenue Management | HTM 4454, Study notes of Tourism Economics and management

Download Test 1 Study Guide - Hospitality Revenue Management | HTM 4454 and more Study notes Tourism Economics and management in PDF only on Docsity! HTM 4454, Test 1 Study Guide Carefully read chapters 1, 2 & 6. In addition please review all homework assignments, in-class activities and the forecasting topics covered in class. Go over the questions below and make sure you know the correct answers (and why these are the correct answers). I. Know your formulas: a. ADR (average daily rate) i. Total room revenue / total rooms sold = ADR b. ROI (return on investment) i. Owners investment return / owners original investment = ROI c. RevPAR (revenue per available room) i. ADR X Occupancy % = RevPAR ii. Total revenue / total rooms available for Sale = RevPAR d. RevPASH (Revenue Per Available Seat Hour) i. Total period revenue / (# available seats X Hours seat available) = RevPASH e. GOPPAR (Gross operating Profit Per Available Room) i. (Total Revue – Mgmt Controllable Expenses) / total rooms avail for sale = GOPPAR f. % Change in Sales i. (Total sales this period – Total sales last period) / Total sales last period II. What is: a. Compset? i. Competitive set – a group of similar and directly competing lodging properties to which an individual hotels operating performance is compared. b. A value proposition? i. A statement describing the good or service to be received and the price to be paid for it. c. Consumer rationality? i. The tendency to make buying decisions based on the belief that the act is of personal benefit d. Consumer surplus? i. e. Overbooking? i. To accept reservations for more rooms than a hotel has available or in inventory f. Revenue management? i. Pricing and allocation on units and policy designation to optimize profits of service firms with perishable products g. Breakeven point? i. The point at which a forms revenues exactly equals its expenses ii. Break even (0) = Revenues – Expenses h. Rack rate? i. The price of the rooms when no discount of any type is offered to guest purchasing the room i. Target market i. The potential customers to whom a business marketing activities and messages are directed j. Market segments? i. A subset of a consumer group that can be readily identified by one or more common but individual characteristic k. Hotel distribution channels? i. A vehicle used to communicate with a source of customers l. Constrained supply? i. The condition that exists when sellers cannot readily increase the amount of products or services available for sale when consumers demand for them increase. m. Cost accounting, i. The specialized branch of accounting that focuses on recording and analyzing the expenses incurred by an organization n. Variable cost i. An expense that generally increases as sales volume increases ii. Example – Food or Beverage Costs o. fixed costs i. an expense that remains constant despite increase or decrease in volume p. Pace report i. A summary report describing the amount of future demand for a lodging properties room or other services and the rate at which that business is being captured. III. What criteria are used to evaluate hospitality forecasts?  Assumption i. There is an identifiable pattern ? ii. Is the pattern stable?  Various Evaluation Criteria i. Structure 1. Specified (Black Box) – not good 2. Plausible ii. Parsimony – the least complicated – the simpler the better iii. Explanatory power iv. Robustness (not too sensitive to outliers) v. Cost (development, data, maintenance) vi. Acceptability (learning, confidence etc.)