Revenue Management Final Exam | Latest 2023 with complete solution

Revenue Management Final Exam | Latest 2023 with complete solution What is the industry term used to describe the sum of prices paid by a business's customers? - Total Revenues Historically, what concept have hospitality managers chiefly used to calculate their selling prices? - Costs What is an algebraic equivalent of the formula: Sales = Costs + Profit? - Profit = Sales - Costs What is the name for the net value achieved by both parties in a business transaction? - Profit What element is not present in a barter economy? - Money What is the formula used to calculate an owner's ROI? - 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? - Constrained Supply Which industry was the first to use Yield Management principles? - Airline What is the industry term used to describe the selling of rooms which are not actually available for sale? - Overbooking What is the formula used to calculate Average Daily Rate? - Total Room's Revenue / Total Rooms Sold = Average Daily Rate 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? - 70% 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? - $140.00 What is the industry term for the average revenue generated by each occupied guestroom during a defined period of time? - RevPOR What is the formula used to calculate GOPPAR? - (Total Revenue - Management Controllable Expenses) / Rooms Available to Sell = GOPPAR What is the industry term for a customer group which can be readily identified by one or more common characteristics? - Market Segment What is rack rate? - The price of rooms when no discounts of any type are offered What is: Total period revenue (Number of available seats) x (hours of seat availability) - The formula for RevPASH 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? - 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? - The target market What is the term used to describe efforts undertaken to encourage travel and tourism to a specific geographic area or attraction? - Destination Marketing What is the name for the value given up by a buyer and a seller in a business transaction? - Price Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what type of pricing? - Two-tiered pricing What is the fundamental assumption upon which the concept of consumer rationality is based? - 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? - 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? - A value proposition Which one of the following terms is not one of the 4 Ps of the Marketing Mix? - Proposition Which of the following terms would be included in the Place portion of a hotel's marketing mix? - Distribution Channels What is the fundamental assumption upon which the Law of Supply is based? - 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? - The demand fort he product would exceed its supply 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? - The new price (P2) would be lower than the previous price (P1) because supply would decrease What concept is displayed by the intersecting point on a supply and demand curve? - An estimate of the amount of a product that would be purchased at a known price and point in time What must be true if a product producer is to continue creating and selling products? - Revenues must exceed costs What is the specialized branch of accounting that focuses on recording and analyzing the expenses incurred by an organization? - Cost Accounting What is the industry term for the point at which an organization's revenues exactly equal its costs? - Break-even point Which of the following foodservice costs is a variable cost? - Food Which of the following lodging costs is a fixed cost? - Mortgage payments 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? - 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? - 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? - 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? - An understanding of an organization's customers Which formula represents a buyer's view of a sales transaction? - 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? - Intangible What will be the typical case in an auction when the initial price bid for the item being sold is very low? - 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? - 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? - 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? - 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? - Spending someone else's money on someone else What special challenge do buyers of hospitality products such as hotel guestrooms or restaurant meals face? - 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? - Perceived value will increase If quantity and price are held constant how will reductions in product or service quality affect buyers' perceptions of value? - 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? - Inconsistency 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? - Intangibility 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? - Inventory 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? - Inseperability 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? - Inventory 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? - The quality of service offered What is the most common guest complaint about hotel guest rooms? - Service deficiencies What is the most common guest complaint in the food service industry? - Service Quality Consider the formula: (A + B) - C = D Where: A = Perceived tangible product benefit