HMD 440 Midterm Exam Questions and Answers Latest Update 2025-2026
What is Revenue Management? - Answers Managing prices to maximize the total revenue: This
means managing the way your price your product to discount to price sensitive customers and
maximize price from less price sensitive customers. Works best for companies with a
perishable inventory.
What makes hospitality unique? - Answers it has high customer contact, caters to leisure time,
and vulnerable to economic changes
How do you deal with excess demand? - Answers Raise prices, decrease availability on OTA's,
and evaluate group business more closely to make sure contracts meet revenue projections
How do you define Revenue Management - Answers Yield management (or revenue
management) is the application of information systems and pricing strategies to allocate the
right capacity to the right customer at the right place at the right time
What is forecasting? - Answers Forecasting is the art and science of predicting the future based
on the past and present.
What is the law of demand? - Answers The law of demand states that if all other factors remain
constant, high price leads to low demand. As the price of that good goes down, the amount sold
increases.
How do you measure demand? - Answers Forecasting, Prior Year information, Competitor Rates,
and Citywide information
What is the law of supply? - Answers The law of supply states that as the price rises for a given
product/service, suppliers are willing to supply more. Selling more goods/services at a higher
price means more revenue
How do you measure supply? - Answers The number of rooms you have, the number of rooms
your competitors have, the number of rooms available on Airbnb, Homeaway, etc.
How do you deal with excess supply? - Answers Discount rooms: Following the law of demand,
decrease the room rate
Create bundles: If you have a change in demand, meaning that you already sold rooms at a high
rate and now you have an excess supply, you can hide discounts in bundles
Work with online travel agencies (OTA's) like Expedia and Priceline- Participate in flash sales-
Deepen discounts on packages with airlines, book now and save more
, Try to sell groups
Offer special rates to extend or check out late to guests already in house
What is overbooking? - Answers Selling more rooms than you have in anticipation of no shows
What is overselling? - Answers Having less no shows than you forecasted
- Results in walking guests and guest service issues
-Should be calculated as a percentage of the total number of no shows, not a set number of
rooms
What are Rate Fences? - Answers Closed to arrival (CTA): Cannot check in on a high demand
day- Forces guest to stay on "shoulder" nights that surround high demand days
Minimum night stay: Must stay for a minimum amount of nights to spread demand
Maximum night stay: Forces long term, lower rated business to check out
What is the role of the revenue manager? - Answers -Interpret data
-Create actionable items from that data
-Communicate it to operations
Where did Revenue Management begin? - Answers in the airline industry
When can you use revenue management? - Answers Works in any industry with perishable
inventory, variable demand, and fixed inventory
What is bundling? - Answers Bundling allows sellers to sell a less desirable product with a more
desirable product when they control all of the products
Pros of Bundling - Answers -Allows for discounting through specific channels
-Allows for discounting without lowering prevailing rate
-Helps to sell properties with a lower brand image
-Helps to promote the property, car rental, airline, etc. via the third party
What is Revenue Management? - Answers Managing prices to maximize the total revenue: This
means managing the way your price your product to discount to price sensitive customers and
maximize price from less price sensitive customers. Works best for companies with a
perishable inventory.
What makes hospitality unique? - Answers it has high customer contact, caters to leisure time,
and vulnerable to economic changes
How do you deal with excess demand? - Answers Raise prices, decrease availability on OTA's,
and evaluate group business more closely to make sure contracts meet revenue projections
How do you define Revenue Management - Answers Yield management (or revenue
management) is the application of information systems and pricing strategies to allocate the
right capacity to the right customer at the right place at the right time
What is forecasting? - Answers Forecasting is the art and science of predicting the future based
on the past and present.
What is the law of demand? - Answers The law of demand states that if all other factors remain
constant, high price leads to low demand. As the price of that good goes down, the amount sold
increases.
How do you measure demand? - Answers Forecasting, Prior Year information, Competitor Rates,
and Citywide information
What is the law of supply? - Answers The law of supply states that as the price rises for a given
product/service, suppliers are willing to supply more. Selling more goods/services at a higher
price means more revenue
How do you measure supply? - Answers The number of rooms you have, the number of rooms
your competitors have, the number of rooms available on Airbnb, Homeaway, etc.
How do you deal with excess supply? - Answers Discount rooms: Following the law of demand,
decrease the room rate
Create bundles: If you have a change in demand, meaning that you already sold rooms at a high
rate and now you have an excess supply, you can hide discounts in bundles
Work with online travel agencies (OTA's) like Expedia and Priceline- Participate in flash sales-
Deepen discounts on packages with airlines, book now and save more
, Try to sell groups
Offer special rates to extend or check out late to guests already in house
What is overbooking? - Answers Selling more rooms than you have in anticipation of no shows
What is overselling? - Answers Having less no shows than you forecasted
- Results in walking guests and guest service issues
-Should be calculated as a percentage of the total number of no shows, not a set number of
rooms
What are Rate Fences? - Answers Closed to arrival (CTA): Cannot check in on a high demand
day- Forces guest to stay on "shoulder" nights that surround high demand days
Minimum night stay: Must stay for a minimum amount of nights to spread demand
Maximum night stay: Forces long term, lower rated business to check out
What is the role of the revenue manager? - Answers -Interpret data
-Create actionable items from that data
-Communicate it to operations
Where did Revenue Management begin? - Answers in the airline industry
When can you use revenue management? - Answers Works in any industry with perishable
inventory, variable demand, and fixed inventory
What is bundling? - Answers Bundling allows sellers to sell a less desirable product with a more
desirable product when they control all of the products
Pros of Bundling - Answers -Allows for discounting through specific channels
-Allows for discounting without lowering prevailing rate
-Helps to sell properties with a lower brand image
-Helps to promote the property, car rental, airline, etc. via the third party
