Hospitality Revenue Management Final Exam
Review/ 196 Quizzes & Ans.
What is the industry term used to describe the sum of prices paid by a business's customers? -
Answer: total revenues
Historically, what concept have hospitality managers chiefly used to calculate their selling
prices? - Answer: costs
What is an algebraic equivalent of the formula: Sales = Costs + Profit? - Answer: profit=sales-
costs
What is the economic term used to describe the difference between what a consumer is
charged for a product or service and the price that consumer would willingly pay for it? -
Answer: consumer surplus
Page 1 of 25
,What is the relationship between differential pricing and consumer surplus? - Answer:
Differential pricing is a strategy used by sellers to minimize consumer surplus
Which course of action would be most beneficial to the profit generating ability of a revenue
manager's business? - Answer: The majority of any consumer surplus is captured by the
business
Hottickets.com is a web-based business that buys popular concert tickets in bulk. It buys the
tickets at a low price because it qualifies for group ticket discounts offered by concert
promoters. Hotticket.com then marks up and immediately resells the tickets it has purchased to
interested individuals who visit the Hotticket website. What is the name of the activity
Hottickets.com is engaging in? - Answer: arbitrage
What is the purpose of a price fence or barrier? - Answer: To identify who is and who is not
eligible for a special pricing offer
Which differential pricing strategy would in most cases be illegal or unethical if implemented? -
Answer: Pricing based on the ethnicity of the buyer
The use of a formal customer rewards program is an example of what type of differential pricing
strategy? - Answer: Pricing based on customer characteristic
The requirement that a buyer present a coupon at the time of purchase is an example of what
type differential pricing strategy? - Answer: Pricing based on customer characteristic
The premium prices charged for dinner served at the restaurant Le Jules Vernes on the second
level of the Eifel Tower in Paris, France can be attributed, in part, to which type of differential
pricing strategy? - Answer: pricing based on location
Page 2 of 25
, A business hotel's promotion targeting local area residence and designed to offer them
significantly reduced room rates on Sunday nights is an example of which type of differential
pricing strategy? - Answer: pricing based on location
Which statement about high volume buyers in the hospitality industry is true? - Answer: The
per-unit cost of selling to them is less than the cost associated with low-volume buyers
Offering reduced room rates only to those room buyers willing to book their reservations via an
internet website is an example of which type of differential pricing strategy? - Answer: Pricing
based on distribution channel
What is the formula revenue managers use to calculate Net ADR Yield? - Answer: Net Room
Rate
Standard ADR = Net ADR Yield
Offering guests the opportunity to purchase a sandwich, fries and a soft drink at a price lower
than that which would be charged for those same items purchased separately is an example of
which type of differential pricing strategy? - Answer: pricing based on bundling
Which statement about revenue management and revenue optimization is true? - Answer:
Revenue management seeks to maximize income while revenue
optimization seeks to maximize long-term profits
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? - Answer: 5200
Hotel revenue managers face hard supply constraints. In which industry below are hard
constraints also likely to be encountered? - Answer: hair salons
Page 3 of 25
Review/ 196 Quizzes & Ans.
What is the industry term used to describe the sum of prices paid by a business's customers? -
Answer: total revenues
Historically, what concept have hospitality managers chiefly used to calculate their selling
prices? - Answer: costs
What is an algebraic equivalent of the formula: Sales = Costs + Profit? - Answer: profit=sales-
costs
What is the economic term used to describe the difference between what a consumer is
charged for a product or service and the price that consumer would willingly pay for it? -
Answer: consumer surplus
Page 1 of 25
,What is the relationship between differential pricing and consumer surplus? - Answer:
Differential pricing is a strategy used by sellers to minimize consumer surplus
Which course of action would be most beneficial to the profit generating ability of a revenue
manager's business? - Answer: The majority of any consumer surplus is captured by the
business
Hottickets.com is a web-based business that buys popular concert tickets in bulk. It buys the
tickets at a low price because it qualifies for group ticket discounts offered by concert
promoters. Hotticket.com then marks up and immediately resells the tickets it has purchased to
interested individuals who visit the Hotticket website. What is the name of the activity
Hottickets.com is engaging in? - Answer: arbitrage
What is the purpose of a price fence or barrier? - Answer: To identify who is and who is not
eligible for a special pricing offer
Which differential pricing strategy would in most cases be illegal or unethical if implemented? -
Answer: Pricing based on the ethnicity of the buyer
The use of a formal customer rewards program is an example of what type of differential pricing
strategy? - Answer: Pricing based on customer characteristic
The requirement that a buyer present a coupon at the time of purchase is an example of what
type differential pricing strategy? - Answer: Pricing based on customer characteristic
The premium prices charged for dinner served at the restaurant Le Jules Vernes on the second
level of the Eifel Tower in Paris, France can be attributed, in part, to which type of differential
pricing strategy? - Answer: pricing based on location
Page 2 of 25
, A business hotel's promotion targeting local area residence and designed to offer them
significantly reduced room rates on Sunday nights is an example of which type of differential
pricing strategy? - Answer: pricing based on location
Which statement about high volume buyers in the hospitality industry is true? - Answer: The
per-unit cost of selling to them is less than the cost associated with low-volume buyers
Offering reduced room rates only to those room buyers willing to book their reservations via an
internet website is an example of which type of differential pricing strategy? - Answer: Pricing
based on distribution channel
What is the formula revenue managers use to calculate Net ADR Yield? - Answer: Net Room
Rate
Standard ADR = Net ADR Yield
Offering guests the opportunity to purchase a sandwich, fries and a soft drink at a price lower
than that which would be charged for those same items purchased separately is an example of
which type of differential pricing strategy? - Answer: pricing based on bundling
Which statement about revenue management and revenue optimization is true? - Answer:
Revenue management seeks to maximize income while revenue
optimization seeks to maximize long-term profits
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? - Answer: 5200
Hotel revenue managers face hard supply constraints. In which industry below are hard
constraints also likely to be encountered? - Answer: hair salons
Page 3 of 25
