Download HOSPITALITY REVENUE MANAGEMENT EXAM and more Exams Hospitality and Tourism in PDF only on Docsity!
HOSPITALITY REVENUE MANAGEMENT EXAM
QUESTIONS WITH VERIFIED ANSWERS
"The purpose of successful hospitality businesses is to - CORRECT ANSWER Provide profits to
its customers and increase their wealth." "The individual or team responsible for ensuring that a company's prices match a customer's
willingness to pay. - CORRECT ANSWER Revenue Manager(s)"
"A revenue management philosophy that places customer gain ahead of short term revenue
maximization in revenue management decision making is called - CORRECT ANSWER
Customer-Centric Revenue Management" "A source of business customers or vehicle used to communicate with a source of customers is
called a - CORRECT ANSWER Channel/Distribution Channel"
"Constrained Supply is the condition that exists when - CORRECT ANSWER Sellers cannot
readily increase the amount of products or services available for sale when consumer demand for them increases" "The advertising and promotion of travel and tourism activities in a specifically designated
geographic area is called - CORRECT ANSWER Destination Marketing"
"A Target Market consists of - CORRECT ANSWER Potential customers to whom a business'
marketing activities and message are directed."
"Price is a measure of - CORRECT ANSWER The value given up (exchanged) by a buyer and a
seller in a business transaction."
"In the consumer's mind, value for the product is equivalent to - CORRECT ANSWER
perceived benefit minus the price"
"The minimal sales point is equivalent to - CORRECT ANSWER the dollar sales volume at the
break even point (revenue - cost = 0)"
"If the quality of the product increases and price decreases, value for the customer - CORRECT
ANSWER increases"
"If the service increases and price decreases, value for the customer - CORRECT ANSWER
increases" "Match the product sold with the pricing terminology Guest rooms Meeting rooms Special guest services Games of chance Transportation
Admission - CORRECT ANSWER Room rate
Room rental Service charge Minimum bet Fare Ticket price"
"The shoulder period refers to - CORRECT ANSWER the period of lowest demand"
"In a 400 room hotel, which is the better pricing pricing strategy (using GOPPAR only) given the following information
180 unsold rooms Standard rate $179 (current ADR) $35 room cost (prep, sell and clean) -
CORRECT ANSWER Sell all remaining rooms to a group contract @ $109"
"The term used for a product offering that consists of multiple products and/or services that are grouped together and offered at a price that is lower than if the items were to be purchased
separately. - CORRECT ANSWER bundling"
"In F&B, its important to know the sources of your revenue and the magnitude. One way to do this is by identifying the various Revenue Centers, i.e., main dining, outdoor dining, bar, take out, etc., and then determining how much of the total revenue each revenue center accounts for. This is called Revenue Center contribution and is communicated as a percentage. To calculate Revenue Center contribution in F&B and other segments of the industry, you would divide each Revenue
Center's sales by which of the following - CORRECT ANSWER Total revenue"
"Which of the following expenses are "distributable expenses", i.e., they can be assigned to one
specific department within an operation. - CORRECT ANSWER insurance
General Manager CORRECT rooms-related labor pool clearning supplies" "A business affected by identifiable, but only marginally predictable, fluctuations in economic
activity is referred to as a ____________________ business. - CORRECT ANSWER Cyclical"
"True/False: Because menu items, events, a good night's sleep, a fleet of rental cars, cruise experiences can readily be replicated (due to lack of patents or unique features), the hospitality
industry has a high barrier to entry - CORRECT ANSWER False: Recall that a barrier to entry
is something that thwarts (slows down or prohibits) another's ability to copy the product offered. The basic hospitality products can be easily replicated, so the barrier to entry is low. However, service and quality often distinguish a good product or experience from another." "A business affected by identifiable and very predictable fluctuations in economic activity is
referred to as a ____________________ business. - CORRECT ANSWER Seasonal"
"Match the hospitality industry department (or function) on the left with the responsibility on
the right - CORRECT ANSWER Messaging to customer: Marketing
Relationship with customer : Sales Revenue related data: Accounting Management of channels: Distribution
Guest experience: Operations Inventory/Product and Price: Revenue Management" "Most of the entities below are classified as "Chains". Which one is a "Parent Company"
consisting of multiple chains? - CORRECT ANSWER Choice"
"Which two geographic categories are the most important for a hotel GM? - CORRECT
ANSWER Market and Tract/Sub-Market
The GM should be focused on his closest competition and area of influence" "Comp sets are used for many purposes in hotel operations, which of the following is one of these
purposes? - CORRECT ANSWER Comp sets can be used to aid the sales and marketing
departments in determining the effectiveness of various pricing decisions Comp sets can have an effect on a general managers compensation Comp sets can be used in management contracts for performance requirements"
"The four key considerations when creating a Competitive Set are? - CORRECT ANSWER
Participation, Proximity, Pricing and Product"
"What is the average number of hotels in a competitive set? - CORRECT ANSWER between 5
and 6"
"When can a competitive set be created? - CORRECT ANSWER competitive set may be created
while the hotel is under construction"
"What are the three different operation types - CORRECT ANSWER Corporate, Franchise,
Independent"
"What is a Reverse Comp Set? - CORRECT ANSWER Properties that name your hotel in their
competitive set"
"Who creates a competitive set for a chain hotel? - CORRECT ANSWER It is a joint effort
involving many stakeholders"
"Which is a true statement about Parent Companies? - CORRECT ANSWER Parent Companies
and the related chains have changed over time"
reference point in their mind so that when they go to purchase their ticket, they are not shocked by the price." "Which of the following pricing stratgies allows the theme park management to quickly reprice
individual attractions or services within the park to reflect changes in demand? - CORRECT
ANSWER pay as you go pricing
Legoherel p 147"
"Which of the following is not a Theme Park Manager's benefit of online ticket sales - CORRECT
ANSWER longer lines at the ticket booths
Benefits ability to offer pre-purchase discounts ability to block out certain purchase dates locks the guest in to visiting the park in the future Legoherel p 151" "Which of the following appeals to the guest's desire for convenience and efficiency while also
increasing revenues without adjusting capacity for the theme park? - CORRECT ANSWER
Disney's Fast Pass - guests make reservatios to ride a particular ride at a set time Legoherel p 151"
"Expenditures per guest in the theme park industry are known as - CORRECT ANSWER per
caps Legoherel p 148" "Which of the following terms best describes a theme park's pricing strategy wherein a single, all- inclusive admission price that the guest purchases includes admission ticket to the theme park as
well as for rides, shows and other attractions? - CORRECT ANSWER pay one price pricing
Legoherel p 147" "Walt Disney's single entrance concept was unique, but intentional. Which of the following is
NOT supported by a single entrance concept? - CORRECT ANSWER guest flexibility to
immediately access a particular area of the park
Legoherel p 146"
"Which of the following is NOT a variation in pay one price theme park pricing stratgies -
CORRECT ANSWER Separate entrance and ride tickets
Variation examples Two Day - Two Park pricing senior pricing Rosen College student pricing Separate entrance and ride tickets is an example of pay as you go pricing (Legoherel, p146)" "In addition to the fixed, physical design of the theme park, revenue management can also be
improved through the use of which of the following variable design components - CORRECT
ANSWER portable vending carts
Not variable design components movable barriers to block entrances to shows automated turnstiles Legoherel p 149" "Increasing the length of stay in a theme park is a fundamental strategy employed by all park
operators because the longer a guest stays, the - CORRECT ANSWER more money they are
likely to spend Legoherel p 148" "You and your friends are all excited about going to the Orange County Fair. Upon arrival, the parking attendant greets you and requests $10 for parking on the fair grounds. After parking, you each are required to pay $5 to get in to the Fair. As you make your way through the fair, you notice that there are no prices for food and beverage, or exhibits, or rides, or games -- all of these options are listed in terms of number of tickets required. Based on what you know, you quickly realize that the Orange County Fair has adopted which of
the following pricing strategies? - CORRECT ANSWER pay as you go pricing
"Which of the following characteristics of theme parks make the adoption of revenue
management strategies viable for theme parks? - CORRECT ANSWER variation in demand
high operational fixed & variable costs high capital investment ability to communicate pricing changes quickly" "Which of the following terms best describes a theme park's pricing strategy wherein the guest purchases an admission ticket to the theme park as well as individual tickets for rides, shows and
other attractions? - CORRECT ANSWER pay as you go pricing"
"Which of the following is NOT a source of income in Theme Parks? - CORRECT ANSWER
Staff & Administration" "Walt Disney's single entrance concept was unique, but intentional. Which of the following is
NOT supported by a single entrance concept? - CORRECT ANSWER guest flexibility to
immediately access a particular area of the park" "Which of the following terms best describes a theme park's pricing strategy wherein a single, all- inclusive admission price that the guest purchases includes admission ticket to the theme park as
well as for rides, shows and other attractions? - CORRECT ANSWER pay one price pricing"
"Which of the following is the correct term for a variation by age, number of days of admission,
and/or group sales in pay one price theme park pricing strategies? - CORRECT ANSWER
consumer segmentation pricing" "Just like in the hotel business, the yieldable capacity of car rental business does not fluctuate
significantly within a year. - CORRECT ANSWER False"
"In which situation might it be wise for a cruise ship to offer "free upgraded cabins" to repeat customers? all of the situations mentioned on an new cruise itinerary that faces hefty competition if higher priced, premium cabins are not selling
if lower priced cabins are sold out but demand has not wained - CORRECT ANSWER if higher
priced, premium cabins are not selling p 166" "Which of the following is the most profitable revenue source for cruise ships? Cabin sales Ship board photography Sale of shore excursions
Beverage sales - CORRECT ANSWER Sale of shore excursions
The margin on shore excursions (revenue less cost) is greatest in comparison. p 163" "When planning cruise itineraries, it's important to allow enough time for passengers to enjoy the port of call. Which of the following is NOT a consideration when calculating the time that passengers will be able to be off the ship in the port? anticipated activities of the passengers on ship the day before arrival in port travel party size speed of travel between ports amount of time on ship on the day prior to arriving in the port
Time it takes the ship to get in and out of port - CORRECT ANSWER travel party size
Because the cruise ship manages revenue both on board and off the ship, it's important to allow enough time for passengers to get acquainted with the ship and enjoy the amenities and spend money before getting off the ship. The travel time between ports and the time it takes to get the ship in and out of port also impact the amount of time passengers can spend in the port. (Page 161)" "Which of the following would be considered a "lead price" for a cruise? standard cabin with balcony
"While continuous improvements in revenue, ADR, and occupancy are good, it's often difficult to know whether your business is really doing well in terms of the overall market. Therefore, businesses in the hospitality industry typically use a(n) ________________ to gauge the performance
of their business within the marketplace. - CORRECT ANSWER Comp set
H&M Ch 22"
"In the university, an example of a hard constraint is: - CORRECT ANSWER number of
classrooms Remember a hard constraint cannot be readily modified or overcome."
"Revenue management is the act of directing sources of income within the confines of -
CORRECT ANSWER capacity, supply and demand"
"Legoherel, Poutier, & Fyall point out that revenue optimization is not only about product
versioning, distribution channel selection, and pricing, but also - CORRECT ANSWER careful
selection of the most profitable customers" "According to Legoherel, Poutier, & Fyall, one key component of revenue management is
recognizing that pricing is a - CORRECT ANSWER strategic variable"
"Which is the correct calculation for RevPASH? - CORRECT ANSWER Total
revenue/Available seat hours" "In a 300 seat restaurant, what were the total table turns for the night using the following information? Nightly Recap Hours of Operation Guests Served 5 - 6 PM 125 6 - 7 PM 265 7 - 8 PM 300 8 - 9 PM 270
9 -10 PM 150 - CORRECT ANSWER 3.7"
"Your GM is looking for last night's occupancy rate because he is concerned about the 50 rooms that are out of service due to broken furniture. Your hotel has 960 rooms. If 620 rooms were
occupied last night, what was the occupancy rate last night? - CORRECT ANSWER 68%
Remember that occupancy is always stated as a percentage and is calculated based on the number of available rooms, not total rooms. In this case, you need to subtract 40 rooms from the total available because they are out of service due to a pipe break. Therefore, 620/(960-50)=88%" "There were 228 occupied rooms in your 400 room hotel, what was the occupancy rate last night?
- CORRECT ANSWER 57% Occupancy rate is always discussed as a percentage and is calculated by dividing the rooms sold by the total units available, therefore =228/400" "In a 200 room hotel where 150 rooms have been sold, what is the average daily rate given the following information by segment? Transient rooms = 20 at $185 each Corp Business rooms = 50 at $149 each Contract rooms = 65 rooms at $
AAA rooms = 15 rooms at $165 - CORRECT ANSWER $142.40"
"An index is calculated by - CORRECT ANSWER Dividing the subject's criteria by the
competitive set's criteria"
"If the quality of the product increases and price decreases, value for the customer - CORRECT
ANSWER Increases
Pg. 76" "Which of the following does NOT contribute to the ability to charge a higher price? Perishability Consumer demand Surplus
Quality - CORRECT ANSWER Surplus"
"Match the product sold with the pricing terminology Guest rooms Meeting rooms
"If the service increases and price decreases, value for the customer - CORRECT ANSWER
Increases Pg. 76"
"The minimal sales point is equivalent to - CORRECT ANSWER the dollar sales volume at the
break even point (revenue - cost = 0) H&M Ch 2 Page 57" "Using the following information for a 1,500 seat boutique concert venue, what recommendation would you make to the Revenue Manager regarding ticket prices? Show Date(s) Changes in Demand at Alternate Prices Single Seat Demand at Current Price Changes in Demand at Alternate Prices $ 20 $ 30 $ 40 $ 50 $ 60 Fri - Sat 25% 13% 1750 -13% -25% Sun 50% 25% 1200 -25% -50% Mon-Thurs 75% 38% 400 -38% -75% Pricing for Sunday should be decreased by 20% Raise prices by 25% on Sundays to increase consumer value. Pricing for Fri & Sat could be increased by at least 25%
It would be best to give tickets away on Tuesdays. - CORRECT ANSWER Pricing for Fri & Sat
could be increased by at least 25%"
"The term for the price that consumers perceive to be the "normal" price is: - CORRECT
ANSWER Reference price
Reference price: Yes, this is the price the consumer "refers to" in their mind to judge your price as acceptable or not." "Which of the following has a higher Net ADR Yield? Standard ADR = 200; Distribution Cost = 20
Standard ADR = 210; Distribution Cost = 30 - CORRECT ANSWER Standard ADR of 200 and
cost of 20
H&M Ch 4 p 114 Net ADR Yield = Net room rate / standard ADR where Net Room Rate = Standard ADR - distribution costs" "True/False: According to the 10 principles of managing revenue, successful businesses are
careful to focus internally, rather than externally. - CORRECT ANSWER False
Focusing externally means being focused on your customers' needs. when you do this, the business needs of profit, return customers, etc. will come." "In a 400 room hotel, which is the better pricing pricing strategy (using GOPPAR only) given the following information 180 unsold rooms Standard rate $179 (current ADR) $35 room cost (prep, sell and clean) Sell all remaining rooms to a group contract @ $ Sell 120 rooms (natural demand) at $ Walk all of your guests
Do not sell any more rooms - CORRECT ANSWER Sell all remaining rooms to a group contract
"Arbitrage can be hazardous to a RM's differential pricing strategy because - CORRECT
ANSWER the RM's firm may lose out on the difference between the price paid and the value of
the product in the marketplace H&M Ch4, p 101" "What is the net ADR yield (not the net room rate) given the following information:
ADR = $250 Distribution channel costs = $50 - CORRECT ANSWER 80%
Net room rate/standard ADR = Net ADR Yield where Net Room Rate = ADR less distribution channel costs"
"ADR multiplied by occupancy rate is the formula for which Revenue Management measure -
CORRECT ANSWER RevPAR"
Price gouging - unreasonable price increases - CORRECT ANSWER Collusion - secret
agreements on pricing or offers Predatory pricing - selling below cost Price gouging - unreasonable price increases Refer to section in text on legal and ethical aspects of RM" "True/False: It is the Revenue Manager's responsibility to determine the positioning for the
hotel, restaurant, or property. - CORRECT ANSWER False"
"When determining whether to take one customer (or group) over another, what is the most
important consideration for a revenue manager? - CORRECT ANSWER The worth of the
customer versus the worth of the displaced business."
"In displacement, the revenue manager must consider total worth of the customers. - CORRECT
ANSWER Choice
Remember that the Chain is the Brand the customers see, in most cases." "Which two geographic categories are the most important for a hotel GM?
You Answered - CORRECT ANSWER Market and Tract/Sub-Market
The GM should be focused on his closest competition and area of influence" "Comp sets are used for many purposes in hotel operations, which of the following is one of these purposes Comp sets can be used to aid the sales and marketing departments in determining the effectiveness of various pricing decisions Comp sets can have an effect on a general managers compensation
Comp sets can be used in management contracts for performance requirements - CORRECT
ANSWER All the above"
"The four key considerations when creating a Competitive Set are? - CORRECT ANSWER
Participation, Proximity, Pricing and Product"
"What is the average number of hotels in a competitive set? - CORRECT ANSWER between 5
and 6"
"When can a competitive set be created? - CORRECT ANSWER A competitive set may be
created while the hotel is under construction"
"What are the three different operation types - CORRECT ANSWER Corporate, Franchise,
Independent"
"What is a Reverse Comp Set? - CORRECT ANSWER Properties that name your hotel in their
competitive set"
"Who creates a competitive set for a chain hotel? - CORRECT ANSWER It is a joint effort
involving many stakeholders"
"Which is a true statement about Parent Companies? - CORRECT ANSWER Parent Companies
and the related chains have changed over time"
“Revenue management is the act of directing sources of income within the confines of -
CORRECT ANSWER capacity, supply and demand"
"GOPPAR takes into account which of the following variables that is not considered in RevPAR? -
CORRECT ANSWER Controllable expenses"
"Name revenue optimization strategies - CORRECT ANSWER Market segmentation,
Duration control , BAR (Best Available Rate)" "Legoherel, Poutier, & Fyall point out that revenue optimization is not only about product
versioning, distribution channel selection, and pricing, but also - CORRECT ANSWER careful
selection of the most profitable customers"
"The net value achieved by a seller and a buyer in a business transaction - CORRECT
ANSWER Profit"
"A Barter System is a - CORRECT ANSWER Trading system in which goods and services are
exchanged without the use of money." "The area of study concerned with the production, consumption, and transfer of wealth is called
CORRECT ANSWER Economics"
