rev 2
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? $ 125.00 $ 160.00 $ 35.00 $ 140.00
$ 140.00
What is the fundamental assumption upon which the concept of consumer rationality is based? Buyers will pay the lowest price possible for any product or service Buyers act in ways that are of personal benefit to them Buyers usually act in ways that cannot be predicted Buyers never act in ways that can be predicted
Buyers act in ways that are of personal benefit to them
The Knights Inn is a limited-service hotel with 200 rooms. Last month, it achieved a RevPAR of $40. The following options represent different combinations in which the $40 RevPAR could have been achieved. Which of these options is the most profitable for the Knights Inn? ADR = $80; Occupancy = 50% ADR = $50; Occupancy = 80% ADR = $200; Occupancy = 20% ADR = $100; Occupancy = 40%
Correct Answer ADR = $200; Occupancy = 20%
Which of the following is not an example of two-tiered pricing? Set menus with wine options Wholesales Club memberships and food purchases Airline tickets and baggage fees Car buying and gasoline purchases
Correct Answer Car buying and gasoline purchases
Which US law would be violated if a hotel charged different room rates based upon a room buyer's race, religion or ethnic background? Clayton Act Civil Rights Act Consumer Protection Act Sherman Antitrust Act
Correct Answer Civil Rights Act
What is the relationship between differential pricing and consumer surplus? Consumer surplus mandates the use of differential pricing Differential pricing is a strategy used by sellers to minimize consumer surplus Differential pricing is a strategy used by sellers to maximize consumer surplus Consumer surplus prevents the effective use of differential pricing
Correct Answer Differential pricing is a strategy used by sellers to minimize consumer surplus
Which of the Four I's of service addresses the fact that a hotel room that goes unsold on a specific night cannot be discounted and offered for sale the next day? Intangibility Inseparability Inventory Inconsistency
Correct Answer Inventory
According to the most recent Hospitality Sales & Marketing Association International (HSMAI) survey, to whom do the largest percentage of hotel revenue managers report? A corporate level executive Their hotel's general manager Their property level DOSM A property level controller
Correct Answer Their hotel's general manager
Alice is the revenue manager at the Granger hotel. A large volume customer wants a price quote from Alice on 50 rooms per week for the next 52 weeks. Each room would be rented for two days at a time. How many room nights will Alice be quoting on? 204 100 2600 5200
Correct! 5200
What is the net ADR yield (not the net room rate) given the following information:ADR = $250 Distribution channel costs = $50 25% 80% $50 $200
Correct! 80%
What is value-based pricing? A pricing system based upon the total amount of profit needed to maintainan ongoing business A pricing system based upon the value of the sum of costs incurred by a seller A pricing system based upon a buyer's view of product or service value A pricing system based upon a seller's view of product or service value
Correct! A pricing system based upon a buyer's view of product or service value
Which of the following are illegal practices that a RM may encounter? All of these Predatory pricing Collusions and cartels Price gouging during emergencies
Correct! All of these
Which of the following factors is likely to impact a differential pricing strategy? All of these may impact a differential pricing strategy Payment terms Product purchased (quantity, distribution channel, product version, etc.) Customer characteristics (age, affiliation, loyalty, etc.)
Correct! All of these may impact a differential pricing strategy Payment terms
What is the name for the laws and regulations aimed at preventing abusive business behavior or anti-competitive practices? Protection legislation Anti-trust legislation Consumer rights legislation Anti-competition legislation
Correct! Anti-trust legislation
Consider the formula: (A + B) - C = DWhere: A = Perceived tangible product benefitB = Perceived intangible service benefitC = PriceD = ValueIf all other variables are held constant, which statement is also true? As A increases, D decreases As B decreases, D increases As A and B increase, D decreases As C decreases, D increases
Correct! As C decreases, D increases
In a hospitality industry break-even analysis graph the Total Revenues line starts at 0. Why does the Total Costs line always start farther up the y axis? Because fixed costs are incurred even if no guests are served or rooms are sold Because variable costs are incurred even if no guests are served or rooms are sold Because fixed costs less variable costs must always be greater than 0 Because fixed costs are always higher than variable costs
Correct! Because fixed costs are incurred even if no guests are served or rooms are sold
What pricing philosophy uses the formula below to establish prices?Expenses + desired profit = selling price Cost-based pricing Value-based pricing Market share pricing ROI pricing
Correct! Cost-based pricing
What is true about the way buyers generally view variance in a seller's prices? Price increases justified by escalated consumer demand are likely to be viewed favorably Surcharges are viewed more favorably then discounts Price increases justified by supply shortages are likely to be viewed favorably Discounts are viewed more favorably then surcharges
Correct! Discounts are viewed more favorably then surcharges
What is the term used to describe a pricing system in which all customers are charged the same price at all times? Value-based pricing Segmented pricing Fixed pricing Demand-based pricing
Correct! Fixed pricing
What type of benefit is lacking in material qualities and is not able to be touched or seen but nonetheless can still be perceived? Tangible Material Fringe Intangible
Correct! Intangible
What two factors establish a restaurant's weekly customer capacity? Check average and number of hours open per week Number of servers and number of hours open per week Number of seats and number of hours open per week Daily revenue and number of seats
Correct! Number of seats and number of hours open per week
Which differential pricing strategy would in most cases be illegal or unethical if implemented? Pricing based on the occupation of the buyer Pricing based on the ethnicity of the buyer Pricing based on the age of the buyer Pricing based upon the location at which the buyer makes a purchase
Correct! Pricing based on the ethnicity of the buyer
What vehicle do effective revenue managers use to best develop and evaluate their organizations' pricing and revenue management strategies and tactics? Regular e-mails Regular strategy meetings Regular drafting and issuance of memos Regular web postings
Correct! Regular strategy meetings
Penny Larson is travelling to San Francisco on business. Her company will reimburse 100% of her travel expense. Which of economist Milton Friedman's buyer value formulas would apply to her purchase of the hotel rooms she will need during her trip? Spending her own money on herself Spending her own money on someone else Spending someone else's money on someone else Spending someone else's money on herself
Correct! Spending someone else's money on herself
Randall is the revenue manager for a franchisee who owns a five unit quick service restaurant company. Which feature would be the easiest for Randall to change if he sought to increase the value his company provides its customers? The customer seating capacity available The quality of food products offered for sale The quality of service offered The quality of beverage products offered for sale
Correct! The quality of service offered
What is the purpose of a price fence or barrier? To identify who is and who is not eligible for a special pricing offer To minimize the sale of low priced products or services To establish the actual amount of available product inventory To determine the optimum price at which to sell a product or service
Correct! To identify who is and who is not eligible for a special pricing offer
Charging guests for watching a "Pay-Per-View" movie in their hotel guestroom is an example of what type of pricing? Value based pricing Differential pricing Demand based pricing Two-tiered pricing
Correct! Two-tiered pricing
Which of the following is a good differential pricing tool that a RM may use to avoid arbitrage and cannibalization? price fence discounting fixed pricing irrational pricing
Correct! price fence
The RM's use of data and insight to set prices in the hospitality industry is referred to as price gouging targeting strategic pricing two-tiered pricing
Correct! strategic pricing
Which two factors do successful revenue managers employ when they devise and implement strategic pricing plans? Data management and insight Probability theory and basic calculus Data management and probability theory Intuition and insight
Data management and insight
What is the industry term for a customer group which can be readily identified by one or more common characteristics? Market segment Revenue group STR group Comp set
Market segment
RevPOR differs from RevPAR because it considers Revenue divided by available rooms Total Rooms Revenue Available rooms and out of service rooms Occupied rooms only
Occupied rooms only
What is the name for the net value achieved by both parties in a business transaction? Expense Profit Revenue Income
Profit
What is a rack rate? The price of rooms when nonrefundable advance purchases are made The price of rooms when 0-10% discounts are offered The price of rooms when no discounts of any type are offered The price for the most expensive room in a hotel
The price of rooms when no discounts of any type are offered
What is the formula used to calculate Average Daily Rate? Owner's InvestmentOccupancy Rate = Average Daily Rate Total Rooms Sold Total Room's Revenue = Average Daily Rate Total Room's RevenueTotal Rooms Sold = Average Daily Rate Rooms Available for SaleOccupancy Rate = Average Daily Rate
Total Room's RevenueTotal Rooms Sold = Average Daily Rate
What is the industry term used to describe the sum of prices paid by a business's customers? Daily receipts Profits less expenses Total revenues Profit
Total revenues
Which of the following statements about "true" unit costs in the hospitality industry is true? Unit costs are unaffected by an item's selling price Selling prices must equal unit costs Unit costs will vary based upon how high or low an item is priced Unit costs cannot be lower than the unit's selling price
Unit costs are unaffected by an item's selling price
Historically, what concept have hospitality managers mainly used to calculate their selling prices? Costs Profits Revenue Income
costs
If the service increases and price decreases, value for the customer increases is not impacted decreases remains unchanged
increases
In the consumer's mind, value for the product is equivalent to supply of the product what the customer is able to pay perceived benefit minus the price what the competitive set is charging
perceived benefit minus the price
