Revenue Management Final Questions With Detailed
Solutions
The total number of sales achieved in a specific time period. Calculated as:
# of units x unit price= Revenue Right Ans - Revenue
Sales= Cost + Profit (Profit= Revenue- Expenses) Right Ans - Accountants
Profit Formula
The net value achieved by a seller and a buyer in a business transaction
Right Ans - Profit
ROI= Owners Investment Return / Owners Original Investment Right Ans -
ROI (Return on Investment)
The individual or team responsible for ensuring that a company prices match
a customers willingness to pay Right Ans - Revenue Manager
A revenue management philosophy that places customer gain ahead of short-
term revenue maximization in revenue management decision making Right
Ans - Customer-Centric Revenue Management
ADR= Total room revenue / Total Rooms sold Right Ans - ADR- Average
Daily Rate
Total Rooms sold / total rooms available for sale Right Ans - Occupancy
Percentage
ADR x Occupancy %
OR
Total Revenue/ Total rooms available for sale
Single best measure of revenue management Right Ans - RevPAR
Total Revenue/ Total occupied room
,does not consider the number of rooms sold. In most cases, a hotel that
operates with a very high RevPOR but a very low occupancy percent will not
be profitable. Right Ans - RevPOR
(Total Revenue - Management Controlled Expenses) / Total rooms available
for sale Right Ans - GOPAR- Gross Operating Profit Per available room
Total period Revenue/ (# of available seats- hours of seat availability)
OR
Seat utilization % (X) Check average = RevPASH Right Ans - RevPASH -
Revenue Per Available Seat Hour
A measure of the value given up (exchanged) by a buyer and a seller in a
business transaction.
EX) The price of the room is $245 per night Right Ans - Price (Noun)
To establish the value to be given up by a buyer and seller in a business
transaction
EX) We need to meet with the revenue management team to price the New
Year's Eve dinner package Right Ans - Price (Verb)
A pricing strategy in which the buyer must pay a price for the ability to make
additional purchases Right Ans - Two-Tiered Price
In a buyer or seller transaction, the amount of perceived benefit gained minus
the price paid
Perceived Benefit - Price = Value Right Ans - Value
A statement describing the good or service to be received and the price to be
paid for it. Right Ans - Value Proposition
Perceived Benefit-Price < 0 DO NOT Buy
Perceived Benefits - Price = 0 Do Not buy in most cases
, Perceived Benefits - Price > 0 Buy Right Ans - Buyer Assessment
Product
Promotion
Place
Price Right Ans - The 4 P's of the Marketing Mix
The higher the demand for product, the more of it will be produced by sellers
Right Ans - Law of Supply
The higher the price of a product, the less of it will be wanted by buyers
Right Ans - Law of Demand
Desire
Ability to Pay
Willingness to Pay Right Ans - An accurate measurement for demand for
hospitality products requires consideration of the following:
The point at which a firms revenue exactly equals its expenses Right Ans -
Break-Even Point
An expense that generally increases as sales volume increases and decreases
as sales volume decreases Right Ans - Variable Cost
An expense that remains constant despite increases or decreases in volume.
Right Ans - Fixed Costs
A pricing philosophy that involves summing product (or services) cost
incurred, with a desired profit to arrive at an items selling price.
Expenses + Desired profit= Selling Price Right Ans - Cost Based Pricing
The application of data and insight to effectively match prices charged with
buyers perceived value. Right Ans - Strategic Pricing
Selling Price - Cost= Organizational Profit (tangible benefit) Right Ans -
Sellers View of Sale
Solutions
The total number of sales achieved in a specific time period. Calculated as:
# of units x unit price= Revenue Right Ans - Revenue
Sales= Cost + Profit (Profit= Revenue- Expenses) Right Ans - Accountants
Profit Formula
The net value achieved by a seller and a buyer in a business transaction
Right Ans - Profit
ROI= Owners Investment Return / Owners Original Investment Right Ans -
ROI (Return on Investment)
The individual or team responsible for ensuring that a company prices match
a customers willingness to pay Right Ans - Revenue Manager
A revenue management philosophy that places customer gain ahead of short-
term revenue maximization in revenue management decision making Right
Ans - Customer-Centric Revenue Management
ADR= Total room revenue / Total Rooms sold Right Ans - ADR- Average
Daily Rate
Total Rooms sold / total rooms available for sale Right Ans - Occupancy
Percentage
ADR x Occupancy %
OR
Total Revenue/ Total rooms available for sale
Single best measure of revenue management Right Ans - RevPAR
Total Revenue/ Total occupied room
,does not consider the number of rooms sold. In most cases, a hotel that
operates with a very high RevPOR but a very low occupancy percent will not
be profitable. Right Ans - RevPOR
(Total Revenue - Management Controlled Expenses) / Total rooms available
for sale Right Ans - GOPAR- Gross Operating Profit Per available room
Total period Revenue/ (# of available seats- hours of seat availability)
OR
Seat utilization % (X) Check average = RevPASH Right Ans - RevPASH -
Revenue Per Available Seat Hour
A measure of the value given up (exchanged) by a buyer and a seller in a
business transaction.
EX) The price of the room is $245 per night Right Ans - Price (Noun)
To establish the value to be given up by a buyer and seller in a business
transaction
EX) We need to meet with the revenue management team to price the New
Year's Eve dinner package Right Ans - Price (Verb)
A pricing strategy in which the buyer must pay a price for the ability to make
additional purchases Right Ans - Two-Tiered Price
In a buyer or seller transaction, the amount of perceived benefit gained minus
the price paid
Perceived Benefit - Price = Value Right Ans - Value
A statement describing the good or service to be received and the price to be
paid for it. Right Ans - Value Proposition
Perceived Benefit-Price < 0 DO NOT Buy
Perceived Benefits - Price = 0 Do Not buy in most cases
, Perceived Benefits - Price > 0 Buy Right Ans - Buyer Assessment
Product
Promotion
Place
Price Right Ans - The 4 P's of the Marketing Mix
The higher the demand for product, the more of it will be produced by sellers
Right Ans - Law of Supply
The higher the price of a product, the less of it will be wanted by buyers
Right Ans - Law of Demand
Desire
Ability to Pay
Willingness to Pay Right Ans - An accurate measurement for demand for
hospitality products requires consideration of the following:
The point at which a firms revenue exactly equals its expenses Right Ans -
Break-Even Point
An expense that generally increases as sales volume increases and decreases
as sales volume decreases Right Ans - Variable Cost
An expense that remains constant despite increases or decreases in volume.
Right Ans - Fixed Costs
A pricing philosophy that involves summing product (or services) cost
incurred, with a desired profit to arrive at an items selling price.
Expenses + Desired profit= Selling Price Right Ans - Cost Based Pricing
The application of data and insight to effectively match prices charged with
buyers perceived value. Right Ans - Strategic Pricing
Selling Price - Cost= Organizational Profit (tangible benefit) Right Ans -
Sellers View of Sale
