Revenue Management Exam Questions and Answers

Revenue Management - Answer-Also Known as Yield Management An essential instrument for matching supply and demand by dividing customers into different segments based on their purchase intentions and allocating capacity to different segments in a way that maximizes a particular's facility's revenues. The constellation of tools and actions dedicated toward the achievement of an optimal level of the hotels net revenues and gross operating profit 7 key point of Revenue Management - Answer-1. Right customer- market segments 2. Right product 3. Right distribution channel- accessing customers (web,directly) 4. Right Price 5.Right time 6. Right Communication- how product and prices are perceived, the way information is provided on website and value they receive from product 7. Optimal Level of hotel's net revenue and GOP 9 Economic Fundamentals that determine the use of RM - Answer-1. Product Perishability 2. Limited Capacity 3. High Fixed and Low Variable Costs 4. Unequal Demand through day/ week/ month year 5. Possibility of Forecast Demand 6. Possibility to Segment Market Demand 7.Different Price Elasticities of market segments 8.Different Willingness to pay of market segments 9. Possibility of Advanced Booking Product Perishability - Answer-Hotel's product cannot be stored for later consumption/ important to shift demand btwn higher and lower periods Example: Offering alternative dates to customers that have been denied accommodation for particular period when hotel was booked. Limited Capacity - Answer-Number of Customers that the hotel can serve within a particular period of time High Fixed/ Low VC - Answer-Fixed Costs are those costs that do not change according to the number of guests in the hotel- depreciation, salaries--Fixed Costs are 60- 80 % of all costs in the hotel