Download Revenue Management: Multiple Choice Questions and Answers and more Exams Nursing in PDF only on Docsity!
Revenue Management Final Exam Question & Answers
Latest Update 2025
- 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
10)What is the formula used to calculate Average Daily Rate? - Correct answer Total Room's Revenue / Total Rooms Sold = Average Daily Rate 11)Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was Tashia's occupancy % last night? - Correct answer 70% 12)Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was Tashia's RevPAR last night? - Correct answer $140. 13)What is the industry term for the average revenue generated by each occupied guestroom during a defined period of time? - Correct answer RevPOR 14)What is the formula used to calculate GOPPAR? - Correct answer (Total Revenue - Management Controllable Expenses) / Rooms Available to Sell = GOPPAR 15)What is the industry term for a customer group which can be readily identified by one or more common characteristics? - Correct answer Market Segment 16)What is rack rate? - Correct answer The price of rooms when no discounts of any type are offered 17)What is: 18)Total period revenue 19)(Number of available seats) x (hours of seat availability) - Correct answer The formula for RevPASH 20)What is the term used to identify a management philosophy that places customer gain ahead of short-term revenue maximization in revenue management decision making? - Correct answer Customer-centric revenue management
30)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 31)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 32)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?
- Correct answer The new price (P2) would be lower than the previous price (P1) because supply would decrease 33)What concept is displayed by the intersecting point on a supply and demand curve? - Correct answer An estimate of the amount of a product that would be purchased at a known price and point in time 34)What must be true if a product producer is to continue creating and selling products? - Correct answer Revenues must exceed costs 35)What is the specialized branch of accounting that focuses on recording and analyzing the expenses incurred by an organization? - Correct answer Cost Accounting 36)What is the industry term for the point at which an organization's revenues exactly equal its costs? - Correct answer Break-even point 37)Which of the following foodservice costs is a variable cost? - Correct answer Food
38)Which of the following lodging costs is a fixed cost? - Correct answer Mortgage payments 39)In a hospitality industry break-even analysis graph the Total Revenues line starts at 0. Why does the Total Costs line always start farther up the y axis? - Correct answer Because fixed costs are incurred even if no guests are served or rooms are sold 40)Which of the following statements about unit costs in the hospitality industry is true? - Correct answer Unit costs will vary based upon how high or low an item is priced 41)Which of the following statements about the relationship between costs and pricing is true? - Correct answer An appropriate selling price for a product or service must dictate its allowable costs 42)If a Revenue Manager implements an organization's strategic pricing plan what personal characteristic of that Revenue Manager will be most important for ensuring the plan's success? - Correct answer An understanding of an organization's customers 43)Which formula represents a buyer's view of a sales transaction? - Correct answer Perceived Value - Selling Price = Personal Profit 44)What type of benefit is lacking in material qualities and is not able to be touched or seen but nonetheless can still be perceived? - Correct answer Intangible 45)What will be the typical case in an auction when the initial price bid for the item being sold is very low? - Correct answer The number of potential bidders will be high
52)If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? - Correct answer Perceived value will decrease 53)Which of the Four I's of service refers to the fact that the quality of service often depends upon the skill level of the individual who supplies it? - Correct answer Inconsistency 54)Which of the Four I's of service refers to the fact that services most often cannot be held, touched, or even seen before they are purchased? - Correct answer Intangibility 55)Ahmed is the sole waitperson on duty at the Athenian restaurant during the very slow 2:00 p.m. to 4:00 p.m. time period. Which of the Four I's of service refers to the fact that employees such as Ahmed must be scheduled to work anytime a service business is open and regardless of low volume levels? - Correct answer Inventory 56)Which of the Four I's of service refers to the tendency of consumers to equate the quality of service provided with the attitude of the person who actually provides the service? - Correct answer Inseperability 57)Which of the Four I's of service addresses the fact that a hotel room that goes unsold on a specific night cannot be discounted and offered for sale the next day? - Correct answer Inventory 58)Randall is the revenue manager for a franchisee who owns a five unit quick service restaurant company. Which feature would be the easiest for Randall to change if he sought to increase the value his company provides its customers? - Correct answer The quality of service offered
59)What is the most common guest complaint about hotel guest rooms? - Correct answer Service deficiencies 60)What is the most common guest complaint in the food service industry? - Correct answer Service Quality 61)Consider the formula: (A + B) - C = D 62)Where: A = Perceived tangible product benefit 63)B = Perceived intangible service benefit 64)C = Price 65)D = Value 66)If all other variables are held constant, which statement is also true? - Correct answer As C decreases, D increases 67)Which two factors do successful revenue managers employ when they devise and implement strategic pricing plans? - Correct answer Data management and insight 68)Which statement about revenue management in the hospitality industry is true? - Correct answer Quiz four Question one (??) 69)What is value-based pricing? - Correct answer A pricing system based upon a buyer's view of product or service value 70)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 71)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
80)The requirement that a buyer present a coupon at the time of purchase is an example of what type differential pricing strategy? - Correct answer Quiz four number 13 (??) 81)The premium prices charged for dinner served at the restaurant Le Jules Vernes on the second level of the Eifel Tower in Paris, France can be attributed, in part, to which type of differential pricing strategy? - Correct answer Pricing based on location 82)A business hotel's promotion targeting local area residence and designed to offer them significantly reduced room rates on Sunday nights is an example of which type of differential pricing strategy? - Correct answer Pricing based on time 83)Which statement about high volume buyers in the hospitality industry is true? - Correct answer The per-unit cost of selling to them is less than the cost associated with low volume buyers 84)Offering reduced room rates only to those room buyers willing to book their reservations via an internet website is an example of which type of differential pricing strategy? - Correct answer Pricing based on distribution channel 85)What is the formula revenue managers use to calculate Net ADR Yield? - Correct answer a. Net Room Rate/Standard ADR = Net ADR Yield 86)Offering guests the opportunity to purchase a sandwich, fries and a soft drink at a price lower than that which would be charged for those same items purchased separately is an example of which type of differential pricing strategy? - Correct answer Pricing based on bundling
87)Which statement about revenue management and revenue optimization is true? - Correct answer Revenue management seeks to maximize income while revenue 88)optimization seeks to maximize long-term profits 89)For revenue managers working in the lodging system the term "place" in the 4ps of the Marketing Mix refers to two items. One is the physical location of the hotel. What is the second? - Correct answer The property distribution channels 90)What is the industry term used to describe all of a hotels unique or distinct forms of guestroom products available for sale? - Correct answer Rooms inventory 91)What is a rate code? - Correct answer A property specific description used to identify a particular room product 92)Which of the following is not typically used by revenue managers to designate specific room products sold in their hotels? - Correct answer Price 93)What is the lodging term used to describe two independent data management systems that have been electronically connected? - Correct answer Interface 94)What would be the effect of an upon-arrival inventory management training program that resulted in a hotel significantly up selling a large percentage of its arriving guests? - Correct answer ADR and RevPar would increase and occupancy % would be unchanged 95)What are two synonymous lodging industry terms used to identify the difference between purchases a group pledges to make and the purchases it actually makes? - Correct answer Attrition and wash
- 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 days of Monday and Tuesday? - Correct answer $180.
- 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? - Correct answer 150
- What is the lodging industry term for a revenue management strategy that instructs reservationists to decline any room reservation request that does not equal or exceed the pre-determined minimum number of nights allowed? - Correct answer MLOS
- 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
- What was the original purpose of THISCO? - Correct answer To develop a single GDS connection for major hotel companies
- What is true about the calculations required to calculate the following Net ADR Yield formula?
- Net Room Rate/Standard ADR = Net ADR Yield - Correct answer Standard ADR (-) Distribution Channel Costs (=) Net Room Rate
- Lani is the revenue manager at the Aloha Inn. In which situation would Lani optimize the Inn's gross rooms revenues? - Correct answer High Standard ADR, high Net ADR Yield
- What is the industry term for a lower room rate that is offered when a potential rooms buyer exhibits initial price resistance? - Correct answer Fade rate
- What is true about a future room reservation booked for a guest whose original reservation was booked through expedia.com and who is presently checking out of the hotel? - Correct answer No IDS fees will be paid on the revenue the new reservation will generate
- Harold tracks his hotel guest check outs and the number of new reservations made at check out. Last week a total of 640 guests checked out of his hotel. In that same period, his front desk staff booked reservations for 32 future rooms nights from this group of check out guests. What is true at Harold's hotel? - Correct answer The reservation nights booked per check out for last week was.
- For which distribution channel type do hotels typically employ a shopper's service? - Correct answer Sales made via the telephone
- What is true about proprietary web sites administered by a hotel's franchisor? - Correct answer 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? - Correct answer $269.
- 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? - Correct answer Increased Net ADR Yield, increased GOPPOR
- What is true about rooms that are sold at prices below a hotel's variable operating costs? - Correct answer 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? - Correct answer RevPOR
- Which is considered a room-related occupancy cost? - Correct answer Complimentary breakfast costs
- At Rachel's hotel the CPOR is $40.00. Her Net ADR Yield averages 85% and her franchise fees average 5%. What is Rachel's average minimum ADR sales point? - Correct answer $50.
- What is the formula used to calculate flow-through for an accounting period? - Correct answer (GOP This Period - GOP Last Period) / (Total Revenues This Period - Total Revenues Last Period)
- Last month Carl's hotel ran a 55% occupancy. His comp. set had 50, room nights available for sale and sold 25,000 rooms. What was Carl's occupancy index last month? - Correct answer 110%
- Last month Carl's hotel had an ADR of $150.00. The ADR of his comp. set was $200.00. What was Carl's ADR index last month? - Correct answer 75%
- Last year Carl's hotel had an occupancy index of 120%. From that information, what can be said about Carl's hotel? - Correct answer It achieved a higher average occupancy % than its comp. set
- Last month Carl's hotel had an ADR index of 125%. In the same month his RevPAR index was 100%. What can be said about Carl's hotel? - Correct answer HIs occupancy index is less than 100%
- Last month Carl's hotel had 10,000 available room nights and sold 6, room nights. Last month his comp set had an average occupancy of 80%. What was Carl's occupancy index last month? - Correct answer 75%
- Last month Carl's hotel had an ADR index of 105%. What is true about his hotel's ADR last month? - Correct answer It was somewhat higher than the ADR of his competitive set
