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HOSPITALITY REVENUE MANAGEMENT FINAL EXAM LATEST
ACTUAL EXAM QUESTIONS AND 100% CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+
1. A 120-room hotel reported total rooms revenue of $13,500 for one night.
Last night 90 rooms were occupied. For performance reporting you are
asked to calculate RevPAR using the standard definition (Total Rooms
Revenue ÷ Total Rooms Available). Show the formula and compute the
RevPAR to two decimal places.
A. $150.00
B. $112.00
C. $112.50
D. $100.00
Rationale (step-by-step):
Formula: RevPAR = Total Rooms Revenue ÷ Total Rooms Available.
Total Rooms Revenue = $13,500.
Total Rooms Available = 120 rooms.
Compute: $13,500 ÷ 120 = $112.5 → round to two decimals = $112.50.
(Checks: alternatively RevPAR = ADR × Occupancy; ADR = 13,500 ÷ 90 =
$150.00; Occupancy = 90/120 = 0.75; ADR × Occupancy = 150 × 0.75 =
112.50 — same result.)
2. A hotel’s reported ADR for a weekend is $150 and the occupancy for that
day is 70.0%. Using the relationship RevPAR = ADR × Occupancy,
calculate RevPAR and explain why RevPAR is useful vs ADR or occupancy
alone.
A. $150.00
B. $45.00
C. $105.00
D. $120.00
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Rationale (step-by-step):
RevPAR = ADR × Occupancy. ADR = $150.00; Occupancy = 0.70.
Calculate: $150.00 × 0.70 = $105.00 → $105.00.
Why useful: ADR shows price per occupied room, occupancy shows
utilization; RevPAR combines both into revenue per available room,
capturing both price and volume in one KPI.
3. A corporate sales manager offers a 40-room group (3 nights) at a
negotiated flat rate. Before deciding, the revenue manager runs a
displacement analysis to compare the group’s incremental contribution
against the estimated transient revenue that would be displaced. Explain
what displacement analysis measures, list the typical inputs used in the
calculation, and choose the best description.
A. To calculate the hotel's break-even occupancy.
B. To measure housekeeping productivity only.
C. To estimate the financial trade-off between accepting a group and the
revenue lost by turning away transient guests.
D. To schedule maintenance windows during low demand.
Answer: C. To estimate the financial trade-off between accepting a
group and the revenue lost by turning away transient guests.
Rationale (detailed):
Displacement analysis compares incremental revenue (and incremental
profit) from a proposed group vs. expected revenue/profit from transient
business that would be displaced. Typical inputs: group contract rate,
number of rooms, length of stay, expected pick-up of transients by night
(probabilities and expected rate), variable costs per occupied room
(housekeeping, F&B, distribution), and potential other benefits (F&B
catering, meeting space). The objective is to accept groups only if
incremental profit ≥ displaced transient incremental profit.
4. A hotel is offered a 10-room group for 3 nights at a contracted rate of
$90/night per room. Historical data indicate those same 10 rooms would, in
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the absence of the group, likely be sold to transients at $140/night with
probabilities of sale per night of: Night 1 = 80%, Night 2 = 60%, Night 3 =
60%. Using expected value (probability × price per room per night),
compute the total expected revenue from transients for those 10 rooms over
the 3 nights and determine which option yields higher expected revenue
(group revenue vs expected transient revenue).
A. Group revenue is higher.
B. Transient expected revenue is higher.
C. They are equal.
D. Not enough information.
Rationale (math shown):
Group revenue = 10 rooms × $90/night × 3 nights = 10 × 90 × 3 = $2,700.
Compute transient expected revenue per room across 3 nights:
Night 1 expected = $140 × 0.80 = $112.00
Night 2 expected = $140 × 0.60 = $84.00
Night 3 expected = $140 × 0.60 = $84.00
Sum per room over 3 nights = $112 + $84 + $84 = $280.00 per room
for the 3-night window.
Total transient expected revenue for 10 rooms = $280 × 10 = $2,800.
Comparison: $2,800 (expected transient) vs $2,700 (group) → transient
expected revenue is higher by $100. Hence B.
5. The hotel’s occupancy on a target date is 72% while the competitive set
average occupancy is 60%. The revenue director wants the KPI that
measures how well the property captures market demand relative to
competitors (the occupancy market share indicator). Name that KPI, give the
formula, and select the correct KPI from the list.
A. ADR
B. RevPAR
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C. Market Penetration Index (MPI) / Occupancy Index
D. GOPPAR
Rationale (detailed):
The KPI is Market Penetration Index (MPI), also called Occupancy Index.
Formula: MPI = (Hotel Occupancy % ÷ Comp Set Occupancy %) × 100.
Using the example: MPI = (72% ÷ 60%) × 100 = 1.2 × 100 = 120 → the
hotel is capturing 20% more occupancy than the comp set baseline.
6. During a high-demand holiday weekend the revenue manager applies a
length-of-stay (LOS) restriction: the hotel will only accept bookings with
stays ≥ 3 nights for two nights. Explain, in operational and revenue terms,
why an LOS minimum is used and pick the primary objective it serves.
A. Increase ancillary revenue only.
B. Reduce variable costs.
C. Maximize total revenue and yield by prioritizing longer, higher-yield
stays and avoiding short-stay leakage.
D. Improve housekeeping efficiency exclusively.
Rationale (detailed):
LOS controls protect high-demand dates from short, low-yield stays that
could fragment inventory. By enforcing a minimum LOS, the hotel ensures
rooms are filled by stays that generate more total room nights revenue and
reduce opportunity cost of losing longer stays to short stays. It also
simplifies forecasting and reduces churn (less check-ins/check-outs),
indirectly improving housekeeping and service efficiency.
7. Rank the distribution channels by typical cost to the hotel (from lowest to
highest). Then pick which option correctly identifies the channel that
generally carries the highest commission/cost. Consider typical market
practice (direct, GDS, call center, OTA).
A. Brand direct website (highest)
B. GDS (highest)
HOSPITALITY REVENUE MANAGEMENT FINAL EXAM LATEST
ACTUAL EXAM QUESTIONS AND 100% CORRECT DETAILED
ANSWERS (VERIFIED ANSWERS) |ALREADY GRADED A+
1. A 120-room hotel reported total rooms revenue of $13,500 for one night.
Last night 90 rooms were occupied. For performance reporting you are
asked to calculate RevPAR using the standard definition (Total Rooms
Revenue ÷ Total Rooms Available). Show the formula and compute the
RevPAR to two decimal places.
A. $150.00
B. $112.00
C. $112.50
D. $100.00
Rationale (step-by-step):
Formula: RevPAR = Total Rooms Revenue ÷ Total Rooms Available.
Total Rooms Revenue = $13,500.
Total Rooms Available = 120 rooms.
Compute: $13,500 ÷ 120 = $112.5 → round to two decimals = $112.50.
(Checks: alternatively RevPAR = ADR × Occupancy; ADR = 13,500 ÷ 90 =
$150.00; Occupancy = 90/120 = 0.75; ADR × Occupancy = 150 × 0.75 =
112.50 — same result.)
2. A hotel’s reported ADR for a weekend is $150 and the occupancy for that
day is 70.0%. Using the relationship RevPAR = ADR × Occupancy,
calculate RevPAR and explain why RevPAR is useful vs ADR or occupancy
alone.
A. $150.00
B. $45.00
C. $105.00
D. $120.00
,2|Page
Rationale (step-by-step):
RevPAR = ADR × Occupancy. ADR = $150.00; Occupancy = 0.70.
Calculate: $150.00 × 0.70 = $105.00 → $105.00.
Why useful: ADR shows price per occupied room, occupancy shows
utilization; RevPAR combines both into revenue per available room,
capturing both price and volume in one KPI.
3. A corporate sales manager offers a 40-room group (3 nights) at a
negotiated flat rate. Before deciding, the revenue manager runs a
displacement analysis to compare the group’s incremental contribution
against the estimated transient revenue that would be displaced. Explain
what displacement analysis measures, list the typical inputs used in the
calculation, and choose the best description.
A. To calculate the hotel's break-even occupancy.
B. To measure housekeeping productivity only.
C. To estimate the financial trade-off between accepting a group and the
revenue lost by turning away transient guests.
D. To schedule maintenance windows during low demand.
Answer: C. To estimate the financial trade-off between accepting a
group and the revenue lost by turning away transient guests.
Rationale (detailed):
Displacement analysis compares incremental revenue (and incremental
profit) from a proposed group vs. expected revenue/profit from transient
business that would be displaced. Typical inputs: group contract rate,
number of rooms, length of stay, expected pick-up of transients by night
(probabilities and expected rate), variable costs per occupied room
(housekeeping, F&B, distribution), and potential other benefits (F&B
catering, meeting space). The objective is to accept groups only if
incremental profit ≥ displaced transient incremental profit.
4. A hotel is offered a 10-room group for 3 nights at a contracted rate of
$90/night per room. Historical data indicate those same 10 rooms would, in
,3|Page
the absence of the group, likely be sold to transients at $140/night with
probabilities of sale per night of: Night 1 = 80%, Night 2 = 60%, Night 3 =
60%. Using expected value (probability × price per room per night),
compute the total expected revenue from transients for those 10 rooms over
the 3 nights and determine which option yields higher expected revenue
(group revenue vs expected transient revenue).
A. Group revenue is higher.
B. Transient expected revenue is higher.
C. They are equal.
D. Not enough information.
Rationale (math shown):
Group revenue = 10 rooms × $90/night × 3 nights = 10 × 90 × 3 = $2,700.
Compute transient expected revenue per room across 3 nights:
Night 1 expected = $140 × 0.80 = $112.00
Night 2 expected = $140 × 0.60 = $84.00
Night 3 expected = $140 × 0.60 = $84.00
Sum per room over 3 nights = $112 + $84 + $84 = $280.00 per room
for the 3-night window.
Total transient expected revenue for 10 rooms = $280 × 10 = $2,800.
Comparison: $2,800 (expected transient) vs $2,700 (group) → transient
expected revenue is higher by $100. Hence B.
5. The hotel’s occupancy on a target date is 72% while the competitive set
average occupancy is 60%. The revenue director wants the KPI that
measures how well the property captures market demand relative to
competitors (the occupancy market share indicator). Name that KPI, give the
formula, and select the correct KPI from the list.
A. ADR
B. RevPAR
, 4|Page
C. Market Penetration Index (MPI) / Occupancy Index
D. GOPPAR
Rationale (detailed):
The KPI is Market Penetration Index (MPI), also called Occupancy Index.
Formula: MPI = (Hotel Occupancy % ÷ Comp Set Occupancy %) × 100.
Using the example: MPI = (72% ÷ 60%) × 100 = 1.2 × 100 = 120 → the
hotel is capturing 20% more occupancy than the comp set baseline.
6. During a high-demand holiday weekend the revenue manager applies a
length-of-stay (LOS) restriction: the hotel will only accept bookings with
stays ≥ 3 nights for two nights. Explain, in operational and revenue terms,
why an LOS minimum is used and pick the primary objective it serves.
A. Increase ancillary revenue only.
B. Reduce variable costs.
C. Maximize total revenue and yield by prioritizing longer, higher-yield
stays and avoiding short-stay leakage.
D. Improve housekeeping efficiency exclusively.
Rationale (detailed):
LOS controls protect high-demand dates from short, low-yield stays that
could fragment inventory. By enforcing a minimum LOS, the hotel ensures
rooms are filled by stays that generate more total room nights revenue and
reduce opportunity cost of losing longer stays to short stays. It also
simplifies forecasting and reduces churn (less check-ins/check-outs),
indirectly improving housekeeping and service efficiency.
7. Rank the distribution channels by typical cost to the hotel (from lowest to
highest). Then pick which option correctly identifies the channel that
generally carries the highest commission/cost. Consider typical market
practice (direct, GDS, call center, OTA).
A. Brand direct website (highest)
B. GDS (highest)
