REVENUE MANAGEMENT FINAL PART 1
QUESTIONS AND ANSWERS
Advantages of dynamic pricing ✔ans Maximizing profits and easy price adjustments with respect to its
change in cost supply and demand
Disadvantages of dynamic pricing ✔ans May be perceived as unfair by the customer and corporate
consumers, won't know how much they will be charged ahead of time
Rate parity ✔ans Same rates, regardless of channel
Best Rate Guarantees ✔ans commitment that hotel website rate is the best rate available
Rate Parity agreements ✔ans OTA requirements that the hotel cannot sell a room on its website for less
than the price available on the agent based OTA channel
Last room available agreements ✔ans Negotiated corporate rates
Requirement that the hotel will honor that rate if there are any rooms left
Cannot close the rate so long as rooms are available
Cross-product elasticity ✔ans The probability of supplementary purchases, given the initial lodging
purchase
Pricing Methods - Cost Based Pricing ✔ans Price is determined at a targeted margin above the cost of
the product
A. it does not work in the hotel industry because its almost impossible to know costs as unit costs
change with volume
B. cost does not equate to consumers perception of value
C. if you focus on cost... it will lead to cost cutting at the expense of the customer
does work in f&b but not hotels!!!!
, Pricing method - consumer based pricing ✔ans Consumer reference pricing
Price sensitivity
Consumer reference price ✔ans the prices that consumers anticipate paying or consider reasonable to
pay for a particular good or service
Price sensitvity ✔ans the amount by which changes in a product's price affects consumer demand for
that product
-relationship between quality and price
-relationship between service and price
-link between quality, service, price
Value ✔ans Perceived tangible product benefit + perceived intangible service - price = value
Competition Based pricing ✔ans shopping the competition
-competitive rate structures (historic, current, patterns of change)
Travel click rate 360 analyses
Anticipating competitive response ✔ans -newton's law of motion - for every action, there is a reaction!
-forecasting competitive reaction - historically the default has been to "match"
-"matching and doing one better"
Pricing Model ✔ans
Rate portfolio ✔ans the matrix of available rates by forecasted occupancy
Rate Fences ✔ans -rate eligibility limitations
-rate cannibalization: don't sell a room at a discounted rate that could have been sold at a higher rate
QUESTIONS AND ANSWERS
Advantages of dynamic pricing ✔ans Maximizing profits and easy price adjustments with respect to its
change in cost supply and demand
Disadvantages of dynamic pricing ✔ans May be perceived as unfair by the customer and corporate
consumers, won't know how much they will be charged ahead of time
Rate parity ✔ans Same rates, regardless of channel
Best Rate Guarantees ✔ans commitment that hotel website rate is the best rate available
Rate Parity agreements ✔ans OTA requirements that the hotel cannot sell a room on its website for less
than the price available on the agent based OTA channel
Last room available agreements ✔ans Negotiated corporate rates
Requirement that the hotel will honor that rate if there are any rooms left
Cannot close the rate so long as rooms are available
Cross-product elasticity ✔ans The probability of supplementary purchases, given the initial lodging
purchase
Pricing Methods - Cost Based Pricing ✔ans Price is determined at a targeted margin above the cost of
the product
A. it does not work in the hotel industry because its almost impossible to know costs as unit costs
change with volume
B. cost does not equate to consumers perception of value
C. if you focus on cost... it will lead to cost cutting at the expense of the customer
does work in f&b but not hotels!!!!
, Pricing method - consumer based pricing ✔ans Consumer reference pricing
Price sensitivity
Consumer reference price ✔ans the prices that consumers anticipate paying or consider reasonable to
pay for a particular good or service
Price sensitvity ✔ans the amount by which changes in a product's price affects consumer demand for
that product
-relationship between quality and price
-relationship between service and price
-link between quality, service, price
Value ✔ans Perceived tangible product benefit + perceived intangible service - price = value
Competition Based pricing ✔ans shopping the competition
-competitive rate structures (historic, current, patterns of change)
Travel click rate 360 analyses
Anticipating competitive response ✔ans -newton's law of motion - for every action, there is a reaction!
-forecasting competitive reaction - historically the default has been to "match"
-"matching and doing one better"
Pricing Model ✔ans
Rate portfolio ✔ans the matrix of available rates by forecasted occupancy
Rate Fences ✔ans -rate eligibility limitations
-rate cannibalization: don't sell a room at a discounted rate that could have been sold at a higher rate
