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REVENUE MANAGEMENT 100+
QUESTIONS WITH CORRECT ANSWERS
EXAM REVIEW
"Quantity and quality held constant. How will reduction as a price affect buyers’ perception of value -
CORRECT ANSWER=> Perceived value will increase"
"Which of the 4 I's of service often depends upon the skill level of the individual who supplies it -
CORRECT ANSWER=> Inconsistency"
"4 I's of service addressing the fact that a hotel goes unsold on a certain night - CORRECT ANSWER=>
Inventory" "Which two factors do successful revenue manages employ when the devise and implement strategic
pricing plans - CORRECT ANSWER=> Data management and insight"
"All except are marketing-based example of marketing pricing - CORRECT ANSWER=> Return on
Investment"
"True for franchised hotel operations in the US - CORRECT ANSWER=> Prices are established by Hotel
Owners"
"Consumer pricing difference from consumer surplus? - CORRECT ANSWER=> Differential pricing is a
strategy used by sellers to minimize consumer surplus.
- Consumer Surplus is the difference between the amount of a buyer would be willing to pay for a product or service and the amount they are charged.
- Consumer pricing is more focused on promoting the items they know customers like best"
"Customer rewards program - CORRECT ANSWER=> Customer characteristic
- formalized system of granting special pricing or other benefits for a company's best customer"
"Arbitrage - CORRECT ANSWER=> The nearly simultaneous purchase of a product at a low price and
reselling of it at a higher price with the intention of keeping the difference in price."
"Price Fence - CORRECT ANSWER=> The specific requirements that describes who is and not eligible
for a special pricing offer"
"offering reduced room rates for third parties - CORRECT ANSWER=> Distribution channel"
"Implement a differential pricing we supply when over sold - CORRECT ANSWER=> Cartel - 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"
"Price perceived by consumers be the normal or standard - CORRECT ANSWER=> Reference price"
"Corporate level executive - CORRECT ANSWER=> To whom would a revenue manager likely report if
consistency across multiple properties was of most importance?"
"Vehicle used to best develop revenue management - CORRECT ANSWER=> Regular strategy meetings"
"Meetings - CORRECT ANSWER=> Run once a week involving the GM, DOSM, Senior sales manager,
and front office"
"New hotel manager is eliminating room discounts - CORRECT ANSWER=> Current Data"
"Overstay - CORRECT ANSWER=> Staying after the duration of the visit"
"Rev par unrealistically high - CORRECT ANSWER=> ADR and Occupancy %"
"Customer centric strategy for revenue managers to seek and to optimize ADR and Revpar - CORRECT
ANSWER=> Eliminate Discounts"
"Most likely the result of revenue managers decision to raise the rate room during periods of high
demand - CORRECT ANSWER=> Rev Par will increase"
"Consistent characteristic of desirable room revenue? - CORRECT ANSWER=> Increase higher Goppar"
"Revenue management decision on high rates low demand - CORRECT ANSWER=> The number of
potential guests will decline"
"NOT typically used by revenue managers to designate specific room products sold in a hotel - CORRECT
ANSWER=> Price"
"Attrition and Wash - CORRECT ANSWER=> The difference between the purchases a group pledges to
make and purchases it actually makes"
"Pick up - CORRECT ANSWER=> Proportion of previously reserved rooms that are ultimately occupied
Ultimately occupied/ reserved rooms"
"Inseparability - CORRECT ANSWER=> It is often impossible to make a distinction between the
individual delivering the service and the service itself."
"Inventory - CORRECT ANSWER=> Unsold inventory vanishes if not sold and the costs associated with
idle capacity can be high"
"Check out Consumer Surplus Topic - CORRECT ANSWER=> "
"Difference between revenue management and revenue optimization - CORRECT ANSWER=>
Optimization- customer lifetime value benefit long term + customer centric. Management- focused on maximizing revenue"
"FOM - CORRECT ANSWER=> Front office manager"
"DOSM - CORRECT ANSWER=> Director of Sales and Marketing"
"Executive Housekeeper - CORRECT ANSWER=> The management professional responsible for
providing guests and employees a clean, safe, and healthy environment in all areas for which they are assigned accountability"
"Executive Comittee - CORRECT ANSWER=> Members of a hotels' administrative team charged with
the responsibility of achieving world wide goals"
"CPOR - CORRECT ANSWER=> "Cost per occupied room"
- The total incremental expense associated with the sale of one guest room"
"Global distribution system (GDS) - CORRECT ANSWER=> Group of companies that electronically
connect travel-related businesses such as airlines and hotels with those individuals and companies seeking to buy from them"
"CTA - CORRECT ANSWER=> Closed to Arrival
- A date on which guests are not permitted to begin their hotel stays"
"MLOS - CORRECT ANSWER=> Minimum length of stay"
"Upselling- does rev par increase or decrease - CORRECT ANSWER=> Selling the buyer a higher cost
item than that which was originally intended to be purchased or increasing the number of items purchased by the buyer
"Controller - CORRECT ANSWER=> Responsible for a hotel's on property accounting procedures"
"CVB's function - CORRECT ANSWER=> - Responsible for promoting travel and toirism in a specifically
designated geographic area membership non profit"
"Collusion - CORRECT ANSWER=> A secret agreement between people or firms to do something
illegal"
"Commodization - CORRECT ANSWER=> The process by which a product (or service) reaches a point in
its development where one brand has no features that differentiate it from other brands, and consumers buy based on price alone."
"Improvement on revenue optimization - CORRECT ANSWER=> Establish prices, forecast demand ,
manage inventory, manage distribution and evaluate results"
"ADR Index Calculated - CORRECT ANSWER=> A measure of the property's pricing performance in
relation to comp set
- 79% and below- rates significantly below the comp set
- 80%- 94% = Rates moderately below the comp set
- 95%- 104%= Rates in keeping the comp set
- 105%- 119%= Rates Moderately above the comp set
- 120% and above= Rates significantly above comp set"
"Marketing Mix - CORRECT ANSWER=> The relative proportion of revenue contributed by each of a
hotel's most important guest types"
"Predatory pricing - CORRECT ANSWER=> The practice of a firm harming consumers by selling its
products below costs or at a price developed with the intent of driving competitors out of the market, thus creating a monopoly and the ability to raise its own prices significantly in the future"
"Contribution Margin Pricing - CORRECT ANSWER=> Selling price - Product Cost"
"Turn (table) - CORRECT ANSWER=> # of times a table is used during the same dining period
of guests served / # of available seats"
"Trailing period - CORRECT ANSWER=> A data collection method characterized by the act of discarding
the oldest piece of data in a data set when the newest data are added.
- Calculates rolling average"
"Current Data - CORRECT ANSWER=> - Occupancy and Availability Reports
- Group rooms Pace report
- Non Revenue Pace reporting"
"ADR 4 days out - CORRECT ANSWER=> "
"Total Revenue formula - CORRECT ANSWER=> Selling Price * Number Sold"
"Two tiered pricing - CORRECT ANSWER=> A strategy in which the buyer must pay a price for the
ability to make additional purchases."
"differential pricing - CORRECT ANSWER=> The practice of a seller charging different prices to different
buyers for the same product or slightly different versions of the same product"
"variable pricing - CORRECT ANSWER=> Pricing that is not consistent and is subjected change when
needed"
"Price Management - CORRECT ANSWER=> The strategies and tactics employed by revenue managers
to best match rates or prices charged with prospective customers' willingness to pay"
"segmented pricing - CORRECT ANSWER=> prices may be greatly differentiated based on defined sub
segments of this larger market segment"
"Product cost pricing - CORRECT ANSWER=> pricing methods that consider product cost as well as one
or more additional cost"
"Principle of revenue management - CORRECT ANSWER=> 1. Businesses exist only to create wealth
(value) for their customers.
- Successful businesses are careful to focus externally; on their customers' needs, rather than on their own needs.
- Consumers make rational buying decisions based on their perceptions of the value they receive for the prices they pay.
- The true value of a product or service is equal to what a buyer will willingly pay for it.
- Product quality is important, but service quality is just as important when delivering value to buyers of hospitality products and services.
- Any change in product quality, service quality, or price will have a direct impact on buyers' perceptions of value.
- While it may be viewed simply as a number, a price is a very powerful message sent by sellers to buyers.
- Different buyers place different values on the same products or services, and as a result are willing to pay different prices for them.
- Strategic pricing is the application of data and insight to effectively match prices charged with buyers' perceptions of value and willingness to pay.
- Revenue managers are those individuals or teams directly responsible for optimizing a business's income and profits."
"Strategic pricing - CORRECT ANSWER=> the application of data and insight to effectively match prices
charged with buyer's perceptions of value."
"cost based - CORRECT ANSWER=> a pricing philosophy that involves summing product (or service)
costs incurred, with a desired profit, to arrive at an item's selling price. ( cost-plus pricing)"
"Cost-based formula - CORRECT ANSWER=> Expenses + Desired profit = Selling price"
"profit based pricing - CORRECT ANSWER=> pricing strategy involves setting prices for your products
that will guarantee you'll make money on each sale."
"value based pricing - CORRECT ANSWER=> The practice of establishing prices for a firm's products and
services based primarily on the buyer's perceived value of those products and services"
"Value - CORRECT ANSWER=> Buyers perception Perceived benefit- price"
"inventory- management - CORRECT ANSWER=> The process of allocating and modifying the number
of products available for sale at various prices and through various distribution channels"
"market management - CORRECT ANSWER=> "
"Demand Generator - CORRECT ANSWER=> Increase in revenue (events)"
"Demand drain - CORRECT ANSWER=> Circumstances that produces a significant decrease in business.
Example in a hotel catering businesspersons, holidays"
"With occupancy given + ADR given. Calculate Rev par - CORRECT ANSWER=> ADR * Occupancy %"
"Future Data - CORRECT ANSWER=> Forecast data"
"Supply share calculations (Market share) - CORRECT ANSWER=> Actual rooms sold/ overall hotel
rooms in the region
- The proportion of the market's rooms controlled by the subject hotel"
"Types of Constraint supply - CORRECT ANSWER=> Hard and soft constraint"
“What is the name for the net value achieved by both parties in a business transaction? - CORRECT
ANSWER=> Profit"
"RevPash - CORRECT ANSWER=> Total period revenue/ number of available seats * Hours of seat
availability" "According to the most recent Hospitality Sales & Marketing Association International(HSMAI) survey, to
whom do the largest percentage of hotel revenue managers report? - CORRECT ANSWER=> Hotel's
General Manager"
