Hospitality Revenue Management Final Exam Review Questions With Answers

HOSPITALITY REVENUE MANAGEMENT FINAL EXAM
REVIEW QUESTIONS WITH ANSWERS


What is the industry term used to describe the sum of prices paid by a business's custom
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ers? - anstotal revenues
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Historically, what concept have hospitality managers chiefly used to calculate their selling
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prices? - anscosts
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What is an algebraic equivalent of the formula: Sales = Costs + Profit? - ansprofit=sales-
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costs

What is the name for the net value achieved by both parties in a business transaction? -
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ansprofit
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What element is not present in a barter economy? - ansmoney
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What is the formula used to calculate an owner's ROI? - ansOwner's Investment Return /
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Owner's Original Investment = Owner's Return on Investment
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Sandy has 100 hotel rooms to sell. This Saturday night has enough customers to sell 125
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rooms so she will be refusing 25 requests for rooms. What is this an example of? -
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ansconstrained supply
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Which industry was the first to use Yield Management principles? - ansairline
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What is the industry term used to describe the selling of rooms which are not actually avai
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lable for sale? - ansoverbooking
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What is the formula used to calculate Average Daily Rate? - ansTotal Room's Revenue /
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Total Rooms Sold = Average Daily Rate
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Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms.
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What was Tashia's occupancy % last night? - ans70%
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Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms.
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What was Tashia's RevPAR last night? - ans$140
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What is the industry term for the average revenue generated by each occupied guestroo
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m during a defined period of time? - ansRevPOR
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,What is the formula used to calculate GOPPAR? - ans(Total Revenue -
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Management Controllable Expenses) / Rooms Available to Sell = GOPPAR
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What is the industry term for a customer group which can be readily identified by one or m
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ore common characteristics? - ansmarket segment
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What is a rack rate? - ansThe price of rooms when no discounts of any type are offered
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What is: nm nm




Total period revenue nm nm nm




(Number of available seats) x (hours of seat availability) - ansRevPASH formula
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What is the term used to identify a management philosophy that places customer gain ah
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ead of short-term revenue maximization in revenue management decision making? -
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ansCustomer-centric revenue management
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What is the term used to describe the potential customers to whom a business's marketin
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g activities and messages are directed? - anstarget market
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What is the term used to describe efforts undertaken to encourage travel and tourism to a
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specific geographic area or attraction? - ansdestination marketing
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What is the name for the value given up by a buyer and a seller in a business transaction
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? - ansprice
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Charging guests for watching a "Pay-Per- nm nm nm nm nm




View" movie in their hotel guestroom is an example of what type of pricing? - anstwo-
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tiered pricing nm




What is the fundamental assumption upon which the concept of consumer rationality is b
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ased? - ansBuyers act in ways that are of personal benefit to them
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What is the revenue management term used to describe the perceived benefit gained, mi
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nus the price paid, in a business transaction? - ansvalue
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What is created when a seller communicates to a buyer a description of a product to be s
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old and the price at which that product will be sold? - ansvalue proposition
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Which of the following terms would be included in the Place portion of a hotel's marketing
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mix? - ansdistribution channels
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What is the fundamental assumption upon which the Law of Supply is based? -
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ansThe higher the demand for a product the more of it will be produced by sellers
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, According to Alfred Marshall's work, if the price of a product is lower than the natural, or e
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quilibrium price, what will happen? - nm nm nm nm nm




ansThe demand for the product would exceed its supply
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Assume an equilibrium price (P1) is in place for a product. What would the law of supply a
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nd demand predict as an outcome if demand for that product increased? -
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ansThe new price (P2) would be higher than the previous price (P1) and supply would in
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crease

What concept is displayed by the intersecting point on a supply and demand curve? -
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ansAn estimate of the amount of a product that would be purchased at a known price an
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d point in time
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What must be true if a product producer is to continue creating and selling products? -
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ansRevenues must exceed costs
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What is the specialized branch of accounting that focuses on recording and analyzing the
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expenses incurred by an organization? - anscost accounting
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What is the industry term for the point at which an organization's revenues exactly equal it
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s costs? - ansbreak-even point
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Which of the following foodservice costs is a variable cost? - ansfood
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Which of the following lodging costs is a fixed cost? - ansmortgage payments
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In a hospitality industry break-
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even analysis graph the Total Revenues line starts at 0. Why does the Total Costs line al
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ways start farther up the y axis? -
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ansBecause fixed costs are incurred even if no guests are served or rooms are sold
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Which of the following statements about unit costs in the hospitality industry is true? -
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ansUnit costs will vary based upon how high or low an item is priced
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Which of the following statements about the relationship between costs and pricing is tru
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e? - nm




ansAn appropriate selling price for a product or service must dictate its allowable costs
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If a Revenue Manager implements an organization's strategic pricing plan what personal
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characteristic of that Revenue Manager will be most important for ensuring the plan's suc
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cess? - ansan understanding of an organization's customers
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Which formula represents a buyer's view of a sales transaction? - ansPerceived Value -
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Selling Price = Personal Profit
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