Hospitality Revenue Management final exam
review
What is the industry term used to describe the sum of prices paid by a business's customers? - CORRECT
ANSWER total revenues
Historically, what concept have hospitality managers chiefly used to calculate their selling prices? -
CORRECT ANSWER costs
What is an algebraic equivalent of the formula: Sales = Costs + Profit? - CORRECT ANSWER profit=sales-
costs
What is the name for the net value achieved by both parties in a business transaction? - CORRECT
ANSWER profit
What element is not present in a barter economy? - CORRECT ANSWER money
What is the formula used to calculate an owner's ROI? - CORRECT ANSWER Owner's Investment Return /
Owner's Original Investment = Owner's Return on Investment
Sandy has 100 hotel rooms to sell. This Saturday night has enough customers to sell 125 rooms so she
will be refusing 25 requests for rooms. What is this an example of? - CORRECT ANSWER constrained
supply
Which industry was the first to use Yield Management principles? - CORRECT ANSWER airline
What is the industry term used to describe the selling of rooms which are not actually available for sale?
- CORRECT ANSWER overbooking
What is the formula used to calculate Average Daily Rate? - CORRECT ANSWER Total Room's Revenue /
Total Rooms Sold = Average Daily Rate
,Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was
Tashia's occupancy % last night? - CORRECT ANSWER 70%
Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was
Tashia's RevPAR last night? - CORRECT ANSWER $140
What is the industry term for the average revenue generated by each occupied guestroom during a
defined period of time? - CORRECT ANSWER RevPOR
What is the formula used to calculate GOPPAR? - CORRECT ANSWER (Total Revenue - Management
Controllable Expenses) / Rooms Available to Sell = GOPPAR
What is the industry term for a customer group which can be readily identified by one or more common
characteristics? - CORRECT ANSWER market segment
What is a rack rate? - CORRECT ANSWER The price of rooms when no discounts of any type are offered
What is:
Total period revenue
(Number of available seats) x (hours of seat availability) - CORRECT ANSWER RevPASH formula
What is the term used to identify a management philosophy that places customer gain ahead of short-
term revenue maximization in revenue management decision making? - CORRECT ANSWER Customer-
centric revenue management
What is the term used to describe the potential customers to whom a business's marketing activities and
messages are directed? - CORRECT ANSWER target market
What is the term used to describe efforts undertaken to encourage travel and tourism to a specific
geographic area or attraction? - CORRECT ANSWER destination marketing
, What is the name for the value given up by a buyer and a seller in a business transaction? - CORRECT
ANSWER price
Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what
type of pricing? - CORRECT ANSWER two-tiered pricing
What is the fundamental assumption upon which the concept of consumer rationality is based? -
CORRECT ANSWER Buyers act in ways that are of personal benefit to them
What is the revenue management term used to describe the perceived benefit gained, minus the price
paid, in a business transaction? - CORRECT ANSWER value
What is created when a seller communicates to a buyer a description of a product to be sold and the
price at which that product will be sold? - CORRECT ANSWER value proposition
Which of the following terms would be included in the Place portion of a hotel's marketing mix? -
CORRECT ANSWER distribution channels
What is the fundamental assumption upon which the Law of Supply is based? - CORRECT ANSWER The
higher the demand for a product the more of it will be produced by sellers
According to Alfred Marshall's work, if the price of a product is lower than the natural, or equilibrium
price, what will happen? - CORRECT ANSWER The demand for the product would exceed its supply
Assume an equilibrium price (P1) is in place for a product. What would the law of supply and demand
predict as an outcome if demand for that product increased? - CORRECT ANSWER The new price (P2)
would be higher than the previous price (P1) and supply would increase
What concept is displayed by the intersecting point on a supply and demand curve? - CORRECT ANSWER
An estimate of the amount of a product that would be purchased at a known price and point in time
What must be true if a product producer is to continue creating and selling products? - CORRECT
ANSWER Revenues must exceed costs
review
What is the industry term used to describe the sum of prices paid by a business's customers? - CORRECT
ANSWER total revenues
Historically, what concept have hospitality managers chiefly used to calculate their selling prices? -
CORRECT ANSWER costs
What is an algebraic equivalent of the formula: Sales = Costs + Profit? - CORRECT ANSWER profit=sales-
costs
What is the name for the net value achieved by both parties in a business transaction? - CORRECT
ANSWER profit
What element is not present in a barter economy? - CORRECT ANSWER money
What is the formula used to calculate an owner's ROI? - CORRECT ANSWER Owner's Investment Return /
Owner's Original Investment = Owner's Return on Investment
Sandy has 100 hotel rooms to sell. This Saturday night has enough customers to sell 125 rooms so she
will be refusing 25 requests for rooms. What is this an example of? - CORRECT ANSWER constrained
supply
Which industry was the first to use Yield Management principles? - CORRECT ANSWER airline
What is the industry term used to describe the selling of rooms which are not actually available for sale?
- CORRECT ANSWER overbooking
What is the formula used to calculate Average Daily Rate? - CORRECT ANSWER Total Room's Revenue /
Total Rooms Sold = Average Daily Rate
,Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was
Tashia's occupancy % last night? - CORRECT ANSWER 70%
Tashia's hotel sold 175 rooms last night at an ADR of $200.00. Her hotel has 250 rooms. What was
Tashia's RevPAR last night? - CORRECT ANSWER $140
What is the industry term for the average revenue generated by each occupied guestroom during a
defined period of time? - CORRECT ANSWER RevPOR
What is the formula used to calculate GOPPAR? - CORRECT ANSWER (Total Revenue - Management
Controllable Expenses) / Rooms Available to Sell = GOPPAR
What is the industry term for a customer group which can be readily identified by one or more common
characteristics? - CORRECT ANSWER market segment
What is a rack rate? - CORRECT ANSWER The price of rooms when no discounts of any type are offered
What is:
Total period revenue
(Number of available seats) x (hours of seat availability) - CORRECT ANSWER RevPASH formula
What is the term used to identify a management philosophy that places customer gain ahead of short-
term revenue maximization in revenue management decision making? - CORRECT ANSWER Customer-
centric revenue management
What is the term used to describe the potential customers to whom a business's marketing activities and
messages are directed? - CORRECT ANSWER target market
What is the term used to describe efforts undertaken to encourage travel and tourism to a specific
geographic area or attraction? - CORRECT ANSWER destination marketing
, What is the name for the value given up by a buyer and a seller in a business transaction? - CORRECT
ANSWER price
Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what
type of pricing? - CORRECT ANSWER two-tiered pricing
What is the fundamental assumption upon which the concept of consumer rationality is based? -
CORRECT ANSWER Buyers act in ways that are of personal benefit to them
What is the revenue management term used to describe the perceived benefit gained, minus the price
paid, in a business transaction? - CORRECT ANSWER value
What is created when a seller communicates to a buyer a description of a product to be sold and the
price at which that product will be sold? - CORRECT ANSWER value proposition
Which of the following terms would be included in the Place portion of a hotel's marketing mix? -
CORRECT ANSWER distribution channels
What is the fundamental assumption upon which the Law of Supply is based? - CORRECT ANSWER The
higher the demand for a product the more of it will be produced by sellers
According to Alfred Marshall's work, if the price of a product is lower than the natural, or equilibrium
price, what will happen? - CORRECT ANSWER The demand for the product would exceed its supply
Assume an equilibrium price (P1) is in place for a product. What would the law of supply and demand
predict as an outcome if demand for that product increased? - CORRECT ANSWER The new price (P2)
would be higher than the previous price (P1) and supply would increase
What concept is displayed by the intersecting point on a supply and demand curve? - CORRECT ANSWER
An estimate of the amount of a product that would be purchased at a known price and point in time
What must be true if a product producer is to continue creating and selling products? - CORRECT
ANSWER Revenues must exceed costs
