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REVENUE MANAGEMENT FINAL EXAM
ACTUAL EXAM 2024 | ALL 180
QUESTIONS AND CORRECT ANSWERS
| LATEST EDITION 2024
What is the term used to identify a management philosophy that places customer gain ahead of short-term revenue maximization in revenue management decision making? ------CORRECT ANSWER-------------- Customer-centric revenue management What is the term used to describe the potential customers to whom a business's marketing activities and messages are directed? ------ CORRECT ANSWER--------------The target market What is the term used to describe efforts undertaken to encourage travel and tourism to a specific geographic area or attraction? ------CORRECT ANSWER--------------Destination Marketing What is the name for the value given up by a buyer and a seller in a business transaction? ------CORRECT ANSWER--------------Price Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what type of pricing? ------CORRECT ANSWER--------------Two-tiered pricing
What is the fundamental assumption upon which the concept of consumer rationality is based? ------CORRECT ANSWER--------------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? ------ CORRECT ANSWER--------------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? ------ CORRECT ANSWER--------------A value proposition Which one of the following terms is not one of the 4 Ps of the Marketing Mix? ------CORRECT ANSWER--------------Proposition Which of the following terms would be included in the Place portion of a hotel's marketing mix? ------CORRECT ANSWER--------------Distribution Channels What is the fundamental assumption upon which the Law of Supply is based? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER--------------The demand fort he product would exceed its supply
In a hospitality industry break-even analysis graph the Total Revenues line starts at 0. Why does the Total Costs line always start farther up the y axis? ------CORRECT ANSWER--------------Because fixed costs are incurred even if no guests are served or rooms are sold Which of the following statements about unit costs in the hospitality industry is true? ------CORRECT ANSWER--------------Unit costs will vary based upon how high or low an item is priced Which of the following statements about the relationship between costs and pricing is true? ------CORRECT ANSWER--------------An appropriate selling price for a product or service must dictate its allowable costs If a Revenue Manager implements an organization's strategic pricing plan what personal characteristic of that Revenue Manager will be most important for ensuring the plan's success? ------CORRECT ANSWER-------- ------An understanding of an organization's customers What is the industry term used to describe the sum of prices paid by a business's customers? ------CORRECT ANSWER--------------Total Revenues Historically, what concept have hospitality managers chiefly used to calculate their selling prices? ------CORRECT ANSWER--------------Costs
What is an algebraic equivalent of the formula: Sales = Costs + Profit? ------ CORRECT ANSWER--------------Profit = Sales - Costs What is the name for the net value achieved by both parties in a business transaction? ------CORRECT ANSWER--------------Profit What element is not present in a barter economy? ------CORRECT ANSWER--------------Money What is the formula used to calculate an owner's ROI? ------CORRECT ANSWER--------------Owner's Investment Return / Owner's Original Investment = Owner's Return on Investment Sandy has 100 hotel rooms to sell. This Saturday night has enough customers to sell 125 rooms so she will be refusing 25 requests for rooms. What is this an example of? ------CORRECT ANSWER-------------- Constrained Supply Which industry was the first to use Yield Management principles? ------ CORRECT ANSWER--------------Airline What is the industry term used to describe the selling of rooms which are not actually available for sale? ------CORRECT ANSWER-------------- Overbooking
What is: Total period revenue (Number of available seats) x (hours of seat availability) ------CORRECT ANSWER--------------The formula for RevPASH Which formula represents a buyer's view of a sales transaction? ------ CORRECT ANSWER--------------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? ------CORRECT ANSWER--------------Intangible What will be the typical case in an auction when the initial price bid for the item being sold is very low? ------CORRECT ANSWER--------------The number of potential bidders will be high Penny Larson is traveling to San Francisco for a personal vacation. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms she will need during her trip? ------CORRECT ANSWER--------------Spending her own money on herself Penny Larson is travelling to San Francisco on business. Her company will reimburse 100% of her travel expense. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms she will need during her trip? ------CORRECT ANSWER-------------- Spending someone else's money on herself
Penny Larson is buying a $100.00 restaurant gift card as a present for her niece who is graduating from hospitality management school. Which of economist Milton Friedman's buyer value formulas would apply to her purchase? ------CORRECT ANSWER--------------Spending her own money on someone else Penny Larson is a travel agent arranging a one-week San Francisco vacation for Mr. and Mrs. Rafael Ochoa. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms the Ochoa's will need during their trip? ------CORRECT ANSWER---- ----------Spending someone else's money on someone else What special challenge do buyers of hospitality products such as hotel guestrooms or restaurant meals face? ------CORRECT ANSWER-------------- Difficulty in quality evaluation prior to purchase If quantity and quality are held constant how will a reduction in price affect buyers' perceptions of value? ------CORRECT ANSWER-------------- Perceived value will increase If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? ------CORRECT ANSWER--------------Perceived value will decrease Which of the Four I's of service refers to the fact that the quality of service often depends upon the skill level of the individual who supplies it? ------ CORRECT ANSWER--------------Inconsistency
What is the most common guest complaint in the food service industry? ---- --CORRECT ANSWER--------------Service Quality 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? ------ CORRECT ANSWER--------------As C decreases, D increases Which two factors do successful revenue managers employ when they devise and implement strategic pricing plans? ------CORRECT ANSWER--- -----------Data management and insight Which statement about revenue management in the hospitality industry is true? ------CORRECT ANSWER--------------Quiz four Question one (??) What is value-based pricing? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER----------- ---Fixed pricing What is true for franchised hotel operations in the United States? ------ CORRECT ANSWER--------------Their prices are established by their franchisors 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? ------CORRECT ANSWER--------------Consumer surplus What is the relationship between differential pricing and consumer surplus? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER---------- ----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? ------CORRECT ANSWER-------------- Arbitrage
Which statement about high volume buyers in the hospitality industry is true? ------CORRECT ANSWER--------------The per-unit cost of selling to them is less than the cost associated with low volume buyers Offering reduced room rates only to those room buyers willing to book their reservations via an internet website is an example of which type of differential pricing strategy? ------CORRECT ANSWER--------------Pricing based on distribution channel What is the formula revenue managers use to calculate Net ADR Yield? ---- --CORRECT ANSWER--------------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? ------CORRECT ANSWER--------------Pricing based on bundling Which statement about revenue management and revenue optimization is true? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER--------- -----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? ------CORRECT ANSWER- -------------Rooms inventory What is a rate code? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER--------------Price What is the lodging term used to describe two independent data management systems that have been electronically connected? ------ CORRECT 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 guests? ------CORRECT ANSWER--------------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? ------CORRECT 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 accepts Tanika's
Which of the following is not a strategy typically used by revenue managers to optimize revenue during periods of high demand? ------CORRECT ANSWER--------------Implement rack rate discounts to maximize occupancy What is true about discounts offered on the selling price of hotel rooms? ---- --CORRECT ANSWER--------------They should be easily explainable and defensible In which situation would a customer-centric revenue manager likely implement a special event rate? ------CORRECT ANSWER-------------- 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? ------ CORRECT ANSWER--------------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? ------CORRECT ANSWER-------------- CTA To optimize revenues while enhancing property operations, which strategy pair should revenue managers seek to implement? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER-------------- Current Data In a limited service hotel, what is the incremental expense incurred in selling one guest room? ------CORRECT ANSWER--------------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? ------CORRECT ANSWER--------------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
Period - Total Sales Last Period ) / Total Sales Last Period = % Change in Sales What is the primary reason for forecasting future room demand? ------ CORRECT ANSWER--------------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? ------CORRECT ANSWER-------------- 360 In the lodging industry, when is a guest considered to be an over-stay? -----
- CORRECT ANSWER--------------When the guest checks out of the hotel after his or her originally scheduled check-out date When might a revenue manager at a lodging facility be pressured to establish a long-term forecast that is unrealistically low? ------CORRECT ANSWER--------------When a significant financial incentive exists for exceeding the forecast In the lodging industry what factors would be overinflated to produce an unrealistically high RevPAR forecast? ------CORRECT ANSWER-------------- 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? ------CORRECT ANSWER--------------Eliminate Discounts What is the most likely result of a revenue manager's decision to reduce rack room rates during periods of reduced demand? ------CORRECT ANSWER--------------Competitor's rates will also be reduced What is the most likely result of a revenue manager's decision to raise room rates during periods of very high demand? ------CORRECT ANSWER--------------RevPAR will be increased What is the most likely result of a revenue manager's decision to raise room rates during periods of moderate to low demand? ------CORRECT ANSWER--------------The number of potential buyers will decline What is one consistent characteristic of desirable rooms revenue? ------ CORRECT ANSWER--------------It leads to higher GOPPAR levels Which of the following is not a hotel intermediary? ------CORRECT ANSWER--------------Front desk agent Which travel industry-related business group developed the Global Distribution System? ------CORRECT ANSWER--------------The airline industry
