CRME- CERTIFIED REVENUE MANAGEMENT
(2025) comprehensive questions and
verified answers ( detailed & elaborated)
ACTUAL EXAM 2025 TEST!!
revenue management
A set of multidisciplinary revenue maximization strategies and tactics meant to improve the
profitability of certain businesses. In hotels, revenue management is used to examine how
many room nights are sold (occupancy), at what rate (discounting), what else is sold (sales mix),
to whom (market segmentation), and through what channel (distribution channel
management). All these are examined and managed with the objective of optimizing income
under constantly changing supply and demand conditions.
average daily rate (ADR)
Expresses the average room rate realized from the sale of rooms in a given period; calculated by
dividing the room revenue by the number of room nights sold.
competitive (comp) set
An identified group of hotels considered to be a certain hotel's competitors.
contribution margin
The amount of sales revenue left over to contribute to covering fixed costs and, once fixed costs
are paid, profit; calculated by subtracting the variable cost by the room rate. Also known as net
room revenue.
contribution margin at any rate
A calculation that may occur during periods of significant market pressure that considers any
room rate higher than the variable cost would generate a contribution margin, and any
contribution margin is better than none.
fair share
The idea that, all things being equal, each hotel will get a portion of the total market that equals
its capacity market share.
,gross operating profit per available room (GOPPAR)
A calculation that compares gross operating profit for a period to rooms available for that
period; calculated by dividing the gross operating profit for a period by the available rooms
during that period.
marginal cost
The additional cost incurred from selling one more product unit; another name for a single
unit's variable cost.
marginal revenue
The additional revenue gained from selling one more product unit.
occupancy percentage
Expresses the proportion of rooms sold to total rooms; calculated by dividing the number of
room nights sold in a period by the number of room nights available in that same period and
multiplying the results by 100.
penetration index
Measures chosen indicators in relation to the market averages of the same indicators.
revenue
The amount of ales, measured in the appropriate currency, generated from sale of goods and
services.
revenue per available customer (RevPAC)
A calculation used to analyze revenue performance that relates revenue to the number of hotel
guests during a given period.
revenue per available room (RevPAR)
A way of evaluating management's success in realizing the business potential of a hotel in a
given period by combining occupancy percentage and ADR into a single statistic; calculated by
dividing the room revenue for a period by the total rooms available for that period or by
multiplying the ADR with the occupancy percentage.
total revenue per available room (TRevPAR)
A calculation similar to RevPAR, but instead of using only room revenue, TRevPAR uses the total
revenue from all revenue centers.
, best available rate (BAR)
a newer term for the hurdle rate, but a BAR can be quickly and easily adjusted if dynamic
market conditions justify the change.
constrained demand
When demand levels rise above the hotel's capacity to meet it fully.
corporate rate
A rate that changes based on the volume of room nights for a corporation.
demand-based pricing
A principle the applies dynamic pricing that means in low-demand periods, lower rates are
offered, and as demand increases, lower rate categories are closed and higher rates are quoted.
denial
In reservation terminology, a potential guest turned away because of a lack of available space.
displacement analysis
A four-step process that can determine the quantifiable benefits of different options
dynamic pricing
When a hotel changes its room rates daily or even within a day if up-to-the-minute market
information reveals the need for adjustments.
granular
Information that is broken down into clusters (for example by market segment, price category,
duration of stay, reservation channels, and/or reservation methods).
hurdle rate
The lowest rate a hotel is willing to offer on a given day or week; see best available rate (BAR).
lifetime total value
Broad-based strategic approach that considers the value of a guest or client organization as a
whole, not just the price point of a given room on a given day.
overbooking
Accepting more bookings for a given day than the hotel has the capacity to meet (such as a 400-
room hotel accepting 405 bookings).
(2025) comprehensive questions and
verified answers ( detailed & elaborated)
ACTUAL EXAM 2025 TEST!!
revenue management
A set of multidisciplinary revenue maximization strategies and tactics meant to improve the
profitability of certain businesses. In hotels, revenue management is used to examine how
many room nights are sold (occupancy), at what rate (discounting), what else is sold (sales mix),
to whom (market segmentation), and through what channel (distribution channel
management). All these are examined and managed with the objective of optimizing income
under constantly changing supply and demand conditions.
average daily rate (ADR)
Expresses the average room rate realized from the sale of rooms in a given period; calculated by
dividing the room revenue by the number of room nights sold.
competitive (comp) set
An identified group of hotels considered to be a certain hotel's competitors.
contribution margin
The amount of sales revenue left over to contribute to covering fixed costs and, once fixed costs
are paid, profit; calculated by subtracting the variable cost by the room rate. Also known as net
room revenue.
contribution margin at any rate
A calculation that may occur during periods of significant market pressure that considers any
room rate higher than the variable cost would generate a contribution margin, and any
contribution margin is better than none.
fair share
The idea that, all things being equal, each hotel will get a portion of the total market that equals
its capacity market share.
,gross operating profit per available room (GOPPAR)
A calculation that compares gross operating profit for a period to rooms available for that
period; calculated by dividing the gross operating profit for a period by the available rooms
during that period.
marginal cost
The additional cost incurred from selling one more product unit; another name for a single
unit's variable cost.
marginal revenue
The additional revenue gained from selling one more product unit.
occupancy percentage
Expresses the proportion of rooms sold to total rooms; calculated by dividing the number of
room nights sold in a period by the number of room nights available in that same period and
multiplying the results by 100.
penetration index
Measures chosen indicators in relation to the market averages of the same indicators.
revenue
The amount of ales, measured in the appropriate currency, generated from sale of goods and
services.
revenue per available customer (RevPAC)
A calculation used to analyze revenue performance that relates revenue to the number of hotel
guests during a given period.
revenue per available room (RevPAR)
A way of evaluating management's success in realizing the business potential of a hotel in a
given period by combining occupancy percentage and ADR into a single statistic; calculated by
dividing the room revenue for a period by the total rooms available for that period or by
multiplying the ADR with the occupancy percentage.
total revenue per available room (TRevPAR)
A calculation similar to RevPAR, but instead of using only room revenue, TRevPAR uses the total
revenue from all revenue centers.
, best available rate (BAR)
a newer term for the hurdle rate, but a BAR can be quickly and easily adjusted if dynamic
market conditions justify the change.
constrained demand
When demand levels rise above the hotel's capacity to meet it fully.
corporate rate
A rate that changes based on the volume of room nights for a corporation.
demand-based pricing
A principle the applies dynamic pricing that means in low-demand periods, lower rates are
offered, and as demand increases, lower rate categories are closed and higher rates are quoted.
denial
In reservation terminology, a potential guest turned away because of a lack of available space.
displacement analysis
A four-step process that can determine the quantifiable benefits of different options
dynamic pricing
When a hotel changes its room rates daily or even within a day if up-to-the-minute market
information reveals the need for adjustments.
granular
Information that is broken down into clusters (for example by market segment, price category,
duration of stay, reservation channels, and/or reservation methods).
hurdle rate
The lowest rate a hotel is willing to offer on a given day or week; see best available rate (BAR).
lifetime total value
Broad-based strategic approach that considers the value of a guest or client organization as a
whole, not just the price point of a given room on a given day.
overbooking
Accepting more bookings for a given day than the hotel has the capacity to meet (such as a 400-
room hotel accepting 405 bookings).
