HOTEL LODGING REVENUE
MANAGEMENT EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
Duration control - Answer-Places time constraints on accepting reservations in order to
protect rooms for multi-day reservations (which represent higher levels of revenue)
FAIR MARKET SHARE FORECASTING - Answer-"This refers to how a revenue
manager and management together must understand how well their hotel is doing in
relation to its competition-this is called FAIR MARKET SHARE"
High-Demand Tactics - Answer-Close or restrict discounts
Apply minimum length of stay restrictions carefully
Reduce group room allocations
Reduce or eliminate 6 p.m. holds
Tighten guarantee and cancellation policies
Raise rates to be consistent with competitors
Consider a rate raise for packages
Apply full price to suites and executive rooms
Select dates that are to be closed-to-arrivals
Evaluate the benefits of sell-throughs (DO YOU ALLOW A GUEST TO STAY
'THROUGH' PEAK?)
Apply deposits and guarantees to last night of stay (MINIMIZES EARLY
DEPARTURES)
High/Low Demand Simplified - Answer-ou pick the date; we pick the rate"
" You pick the rate; we pick the date"
Low-Demand Tactics - Answer-Sell value and benefits
Offer packages
Keep discount categories open
Encourage upgrades
Offer stay-sensitive price incentives
Remove stay restrictions
Involve your staff
Establish relationships with competitors
Lower rates
Four Revenue Management Tactics - Answer-Hurdle Rate, Minimum Length of Stay,
Sell-Through, Close to Arrival
Minimum Length of Stay - Answer-means that a reservation can only be accepted for a
specific number of nights, or it will not be accepted. Does this have any negatives?
, Sell-Through - Answer-this is like the minimum stay strategy ACCEPT it allows the front
desk to accept a reservation BEFORE the min. stay dates are applied
Hurdle Rate - Answer-is the lowest rate set by management each day. If you sell above
the hurdle rate, it is acceptable; any rate below the hurdle rate is unacceptable for that
day. Is this a good idea?
Close to Arrival - Answer-also tied into the other strategies allowing a reservation as
long as the guest arrives before a specific high demand period
achievement factor - Answer-the % of the rack rate that a hotel actually receives; in
hotels not using revenue management software, this factor is generally approximated by
dividing the actual average room rate by the potential average rate
booking lead time - Answer-a measurement of how far in advance bookings are made
breakeven analysis - Answer-an analysis of the relationships among cost, revenue, and
sales volume, allowing one to determine the revenue required to cover all costs; also
called cost-volume-profit analysis.
close to arrival - Answer-a yield management availability strategy that allows
reservations to be taken for a certain date as long as the guest arrives before that date;
for example a hotel may accept a reservation for a wednesday night if the guest's actual
stay begins on tuesday night
contribution margin - Answer-sales less cost of sales for either an entire operating
department or for a given product; represents the amount of sales revenue that is
contributed toward fixed accosted and/or profits
cost per occupied room - Answer-the variable or added cost of selling a product that is
incurred inly if the room is sold; also called marginal cost
discount grid - Answer-a chart indicating the occupancy percentage necessary to
achieve equivalent net revenue, even different discount levels.
displacement - Answer-the turning away of transient guests for lack of rooms due to the
acceptance of group business; also called non-group displacement
dynamic packaging - Answer-the customization of a travel package according to a
specific guest's needs. Hotel find dynamic packaging especially effective during
expected periods of low occupancy.
equivalent occupancy - Answer-given a contemplated or actual change in the average
room rate, equivalent occupancy is the occupancy % required to produce the same net
revenue as was produced by the old price and occupancy percentage.
MANAGEMENT EXAM QUESTIONS WITH
COMPLETE SOLUTIONS
Duration control - Answer-Places time constraints on accepting reservations in order to
protect rooms for multi-day reservations (which represent higher levels of revenue)
FAIR MARKET SHARE FORECASTING - Answer-"This refers to how a revenue
manager and management together must understand how well their hotel is doing in
relation to its competition-this is called FAIR MARKET SHARE"
High-Demand Tactics - Answer-Close or restrict discounts
Apply minimum length of stay restrictions carefully
Reduce group room allocations
Reduce or eliminate 6 p.m. holds
Tighten guarantee and cancellation policies
Raise rates to be consistent with competitors
Consider a rate raise for packages
Apply full price to suites and executive rooms
Select dates that are to be closed-to-arrivals
Evaluate the benefits of sell-throughs (DO YOU ALLOW A GUEST TO STAY
'THROUGH' PEAK?)
Apply deposits and guarantees to last night of stay (MINIMIZES EARLY
DEPARTURES)
High/Low Demand Simplified - Answer-ou pick the date; we pick the rate"
" You pick the rate; we pick the date"
Low-Demand Tactics - Answer-Sell value and benefits
Offer packages
Keep discount categories open
Encourage upgrades
Offer stay-sensitive price incentives
Remove stay restrictions
Involve your staff
Establish relationships with competitors
Lower rates
Four Revenue Management Tactics - Answer-Hurdle Rate, Minimum Length of Stay,
Sell-Through, Close to Arrival
Minimum Length of Stay - Answer-means that a reservation can only be accepted for a
specific number of nights, or it will not be accepted. Does this have any negatives?
, Sell-Through - Answer-this is like the minimum stay strategy ACCEPT it allows the front
desk to accept a reservation BEFORE the min. stay dates are applied
Hurdle Rate - Answer-is the lowest rate set by management each day. If you sell above
the hurdle rate, it is acceptable; any rate below the hurdle rate is unacceptable for that
day. Is this a good idea?
Close to Arrival - Answer-also tied into the other strategies allowing a reservation as
long as the guest arrives before a specific high demand period
achievement factor - Answer-the % of the rack rate that a hotel actually receives; in
hotels not using revenue management software, this factor is generally approximated by
dividing the actual average room rate by the potential average rate
booking lead time - Answer-a measurement of how far in advance bookings are made
breakeven analysis - Answer-an analysis of the relationships among cost, revenue, and
sales volume, allowing one to determine the revenue required to cover all costs; also
called cost-volume-profit analysis.
close to arrival - Answer-a yield management availability strategy that allows
reservations to be taken for a certain date as long as the guest arrives before that date;
for example a hotel may accept a reservation for a wednesday night if the guest's actual
stay begins on tuesday night
contribution margin - Answer-sales less cost of sales for either an entire operating
department or for a given product; represents the amount of sales revenue that is
contributed toward fixed accosted and/or profits
cost per occupied room - Answer-the variable or added cost of selling a product that is
incurred inly if the room is sold; also called marginal cost
discount grid - Answer-a chart indicating the occupancy percentage necessary to
achieve equivalent net revenue, even different discount levels.
displacement - Answer-the turning away of transient guests for lack of rooms due to the
acceptance of group business; also called non-group displacement
dynamic packaging - Answer-the customization of a travel package according to a
specific guest's needs. Hotel find dynamic packaging especially effective during
expected periods of low occupancy.
equivalent occupancy - Answer-given a contemplated or actual change in the average
room rate, equivalent occupancy is the occupancy % required to produce the same net
revenue as was produced by the old price and occupancy percentage.
