Hotel Revenue Management Chapters 1-6

The variable cost of a room night is the dollar amount it would cost on average to make up one room and get it ready for new occupancy. The basics that are provided to each new arriving guest can cost the hotel __________ per day.

$10-$40

END CHP: 2 If the (net) room rate for a room is $118 and the variable cost for that room is $20, what is the contribution margin for that room?

$118 - $20 = $98.00

If (net) room revenue for the week was $49,490 and 490 total rooms were available for that same week , what is the RevPAR for the week?

$49,490 / 490 = $101

If total room revenue for the week was $92,530 and the hotel sold 974 room nights that same week, what is the ADR for the week?

$92,530 / 974 = $95 ADR

If (net) ADR for the week was $87 and the Occupancy percentage for the week was 62%, what is the RevPAR for the week?

.62 x $87 = $53.94

ll If a 300-room hotel achieves a 70 percent occupancy rate for April at an ADR of $153 per room, what will the total room revenue equal for the month of April?

.70 x 300 room = 210 April has 30 days -> 210 x 30 days = 6,300 ADR = $153 x 6300 = $963, 900

In January, the 200-room Snow Bound Inn ran a special for skiers that resulted in them selling 5,735 rooms during the month. What was the occupancy percentage for the month of January?

200 rooms x 31 days = 6200 5,735 rooms sold / 6200 = .0925 or 92.5%

What information do you need in order to calculate a rate achievement factor?

ADR and rack rate

Businesses that benefit the most from revenue management:

All of the above

To interpret measures of a hotel's performance, managers often compare those measures with:

All of the above

A long-term forecast of demand is based on:

All of the above A given hotels past performance GDP Disposable income

If hotels need accurate market intelligence data, __________ is(are) the highest profile source(s) in the North America hospitality industry. Subscribers can get reports both on aggregate market data and on a property-specific basis.

All of the above: STR PKF TravelClick

What does up-selling ideally accomplish?

All the above Increased revenues Increased margins Increased satisfaction

A growing number of guests are able to check themselves in and bypass the front desk by using ____________________.

All the above smart door locks self-service kiosks online check-ins

An over-booked hotel may "find" or reclaim rooms by ____________________.

All the above upgrading rooms converting rooms re-instating rooms

The most frequently applied constraint is __________ __________.

All the above: Capacity allocation Rate threshold Stay (duration) control

Which of the following statements about market intelligence is FALSE?

An effective revenue manager usually purchases all available relevant market intelligence.

In the last 45 years in North America, a new class of owners and investors, who had no lodging operational experience, have chosen a(n) __________ to watch over the managers of the hotels that they owned to insure that both revenue and profit potentials were maximized.

Asset manager

__________ is the term that refers to the capability of various hotel managers to quickly analyze ever larger amounts of complex information through the use of ever more sophisticated technology.

Big data

END CHP: 5 Dynamic pricing adjusts room rates __________.

Both A & B: Upward and Downward

Which of the following contains a breakdown of all revenue and expenses reasonably planned and expected for a particular period and is not likely to change unless unforeseen events force a revision?

Budget

It takes a significant initial investment to secure a piece of land, build a hotel on it, and furnish it with all the necessary furniture, fixtures , and equipment (FF&E). This cost structure reflects the fact that the hotel industry is __________.

Capital-investment

Which stay control measure is seldom the best option for revenue maximization?

Close to arrival

A revenue manager notices that the hotel is filling up rapidly for a future date. In response, she decides to close a discount level for that day This is an example of:

Demand-based dynamic pricing

Melissa called the High Demand Hotel on Wednesday to make a weekend reservation. The reservation agent checked the computer and then politely told Melissa that the hotel was sold out and they would not be able to provide her with a room. What type of guest would Melissa be classified as?

Denial

Measuring the effectiveness of a revenue management system is:

Difficult because the causes of measurable changes may not be clear.

After customers have met their basic financial requirements, any remaining money is considered:

Discretionary income

How do an internal ADR and an external ADR differ?

External ADR uses gross room revenue, while Internal ADR uses net room revenue.

T/F: Revenue management in the hotel industry has no relationship to the airline industry's yield management initiatives of the mid-1980s.

False

T/F: The consumer trend of peer-to-peer travel and sharing via social media, together with the growing public distrust of rating agencies and promotional corporate information in general, means that decreasing numbers of travelers consult the reviews of fellow travelers before booking resort or hotel accommodations.

False

If a cost is not directly related to sales volume, it can be classified as a __________ cost.

Fixed

Most of the maintenance costs in a hotel are considered _________ costs, as they do not directly depend on sales and occupancy performance.

Fixed

In the short-term, hotels have a finite number of hotel rooms to sell and can't sell more than their total capacity even when the demand is there. This is know as a(n) ____________________ Environment.

Fixed-capacity

When the American Airlines CEO developed yield management, what type of information was crucial to its success?

Forecasting

Which of the following is a measure of cost efficiency?

Gross Operating Profit Per Available Room

Which of the following is NOT another term for the rack rate?

Hurdle rate

Hotel properties are not just capital assets, but are also ______________________ businesses.

Income-generating

What risk does the use of overbooking fail to address?

Losses due to guest dissatisfaction

Which of the following is NOT a criterion needed for an industry to unlock the full potential of revenue management?

Low fixed cost and high variable cost

Total revenue management refers to:

Managing several revenue streams at the same time

END CHP: 1 The only way to achieve the sustainable financial success of a hotel property is to ____________________.

Maximize top-line revenue

Which of the following statements is false?

Most Internet searches are organic with results based solely on relevant search criteria.

In the hotel industry, the term revenue management was initially the preferred term for this process in __________?

North America

The sale of a hotel room is a time-sensitive product. Unsold rooms can't be sold once the day is past. Therefore, a hotel room night is known as a _________ product.

Perishable

Nominal growth minus the inflation rate equals __________ __________.

Real growth

Which of the following statements about hotel revenue management is FALSE?

Revenue mgt. is new, as are all the strategies that are employed to maximize profit

__________ refers to a variation of demand based on the season of the year.

Seasonality

__________ __________ refers to the number of rooms set aside in the group block that do not sell to members of the group by the agreed-upon cut-off date; these rooms can then be released from the group hold and sold to others.

Spill factor

Which approach to pricing takes a long-term view?

Strategic view

Short-term forecasting provides vital information for __________ revenue management.

Tactical

____________________ reduces revenue and dilutes RevPAR.

Tactical discounting

A given hotel's comp set should contain all other hotels:

That compete for the same guests.

Pace of build refers to:

The rate at which reservations are being made for a future date

T/F: The practice of Minimum Length of Stay (MLOS) restrictions are legal as long as all customers, regardless of his or her protected status, are welcome who meet the MLOS criteria.

True

T/F: Product perishability, seasonality of demand, and cost structure are characteristics of the business model for other industries that were the first to embrace revenue management.

True

__________ means to give a higher category (or premium) product to the customer at no extra charge

Upgrading

In North America, hotels usually pick up the room charge of guests who have to be __________ due to overbooking.

Walked

Revenue management, sometimes called yield management, is a set of revenue maximization strategies and tactics that:

can be used to increase profitability

The Hip-Hop Hotel is expecting the arrival of a major pop star and her entourage while she performs three concerts in a nearby venue. Her security team has been working with the property management team to ensure that she is able to check in while the lobby is receiving minimal use. They have also demanded a long list of other accommodations that will keep the entire staff busy on the day of she checks in. What type of stay control tactic might the Hip-Hop Hotel institute?

close to arrival

END CHP: 3 All online activities or transactions leave a ____________________, whether the user clicks through an airline's home page for seat selection, chooses a certain bed type at a hotel, charges a meal to a room, uses a debit card to pay for parking at an amusement park, or drops off a rental car at an airport. The challenge posed by big data is to harness the power of the available data and make business sense of it.

data trail

When a hotel property changes ownership, the new owners often reposition a hotel ____________________ which is easier and cheaper than a major overhaul. This shift may involve branding a non-branded hotel or re-flagging a branded one.

down-market

When the demand for rooms outpaces the supply, one of the ways that revenue managers can take advantage of this situation in order to enhance revenue is by applying ____________________ restrictions.

minimum length stay

What is a guest called who decides to stay past than his or her scheduled check-out date?

overstay

Which of the following factors decreases the number of rooms expected to be available on a given date?

overstay

A ____________________ measures chosen indicators in relation to the market averages of the same indicator.

penetration index

Differences in room size, location, view, and so forth may and should be reflected in rates referred to as __________.

physical rate fences

A ____________________ is a tactic to maximize revenue by offering price incentives for longer stays.

stay sensitive hurdle rate

END CHP: 4 Expected early departures are referred to as __________.

under stays