Htm 4250 Midterm

Question 1

7 characteristics of industries where RM is applicable

Answer 1

1. Versioning Opportunity
2. Variable Demand
3. Fixed Capacity
4. Perishable Service
5. Low Variable Costs
6. High Fixed Costs
7. Advance

Question 2

ADR is not a measure of

Answer 2

Profitability or variability

Question 3

When RevPAR is increasing, price and capacity tools are

Answer 3

Being used well

Question 4

When RevPAR is decreasing, price and capacity tools are

Answer 4

Not working so well

Question 5

Total RevPAR

Answer 5

Average total room generated by each available, but not necessarily occupied room

Question 6

RevPOR is based on

Answer 6

Based on occupied rooms, not rooms available

Question 7

CPOR

Answer 7

Room related costs incurred directly as a result of selling a guest room, variable cost per room

Question 8

GOP

Answer 8

Total revenue less management-controllable operating expenses

Question 9

Flow Through

Answer 9

Measure of change in profit due to change in revenue

Question 10

Occupancy strength and weakness

Answer 10

S: Easy to compute
W: Does not consider ADR

Question 11

ADR strength and weakness

Answer 11

S: Easy to compute
W: Does not consider occupancy

Question 12

RevPAR strength and weakness

Answer 12

S: Easy to compute
W: Does not consider nonroom revenue or profitability

Question 13

RevPOR strength and weakness

Answer 13

S: Considers all hotel revenue generated
W: Does not consider the number of rooms sold or profitability

Question 14

Total RevPAR strength and weakness

Answer 14

S: Considers all hotel revenue generated
W: Does not consider profitability

Question 15

GOPPAR strength and weakness

Answer 15

S: Assess profitability of room sales effort
W: Results depended on non-RM efforts

Question 16

Flow through strength and weakness

Answer 16

S: Assesses profitability of incremental revenues
W: Results dependent on non-RM efforts; data may bot be readily accessible

Question 17

Accurate forecasts are important for:

Answer 17

1. Scheduling workers
2. Purchasing supplies
3. Managing cash flow
4. Modifying the price

Question 18

Three types of data to forecast with:

Answer 18

1. Historical
2. Current
3. Future

Question 19

Fixed average

Answer 19

The average within a specific and unchanged time period

Question 20

Rolling average

Answer 20

The average amount of sales revenue, rooms sold, or other data over the changing time period

Question 21

Average ADR does not =

Answer 21

Classic average formula because rooms sold are different

Question 22

Trailing Period

Answer 22

A data collection method that discards the oldest piece of data when the newest data is added

Question 23

Rms pricing strategies

Answer 23

1. Reduction in average rate
2. Increase in average rate in response to high demand
3. Increase in average rate in times of average or low demand

Question 24

Two-tiered price

Answer 24

A pricing strategy in which the buyer must pay a price for the ability to make additional purchases

Question 25

Value =

Answer 25

Perceived benefit - Price

Question 26

Cost-based pricing

Answer 26

A pricing philosophy that involves summing product (or service) costs incurred, with a desired profit, to arrive at an item's selling price

Question 27

The four I's of service

Answer 27

1. Intangibility 2. Inconsistency 3. Inseparability 4. Inventory

Question 28

Value-based pricing

Answer 28

The practice of establishing prices for a firm's products and services based primarily on the buyer's perceived value of those products and services

Question 29

Differential Pricing

Answer 29

The practice of seller charging different prices to different buyers for the same product or slightly different versions of the same product

Question 30

Inventory Management

Answer 30

The process of allocating and modifying the number of products available for sale at various prices and through various distribution channels

Question 31

Consumer Surplus

Answer 31

The difference between the amount a buyer would be willing to pay for a product or service and the amount they are charged

Question 32

Value-Based Pricing

Answer 32

The practice of establishing prices for a firm's products and services based primarily on the buyer's perceived value of those products and services

Question 33

Cannibalization

Answer 33

The practice of taking advantage of discounted rates where 'high willingness buyers' masquerade as 'low willingness buyers' to avoid paying higher prices

Question 34

Arbitrage

Answer 34

The nearly simultaneous purchase of a product at a low price and reselling at a higher price to make a profit

Question 35

Displacement Analysis Process

Answer 35

1. Establish the net room revenue differential 2. Establish the net food and beverage revenue differential 3. Determine other net revenue 4. Summarize the determine the net differential

Question 36

Market Segmentation (2)

Answer 36

1. Price Sensitive 2. Price Insensitive

Question 37

Forecasting (2)

Answer 37

1. Demand 2. No shows/cancellations

Question 38

Optimization (3)

Answer 38

1. Selling price 2. Inventory allocation 3. Revenue

Question 39

Versioning opportunity

Answer 39

Clear differentiation between market segments, so multiple versions of the product can be offered

Question 40

Variable demand

Answer 40

Peaks in valleys in demand, and can be predicted, but not with a high degree of certainty

Question 41

Fixed capacity

Answer 41

Expensive or impractical to add or subtract supply in the short run, but some ability to temporarily shift it

Question 42

Perishable service

Answer 42

There is a time dimension to the provision of the service. Once that time has passed, the inventory loses all value

Question 43

Low variable cost

Answer 43

The cost of selling an additional unit of the existing capacity is low relative to the price of the service

Question 44

High fixed costs

Answer 44

There is a high amount of cost associated with each unit of sale that must be paid regardless of sales