Chapter 6 – Revenue Management – Flashcards

question
Revenue Management
answer
The determination of precisely what a hotel's room should sell for and the methods used to sell them make up the increasingly complex process the hotel industry calls
question
Yield Management
answer
Demand forecasting systems designed to maximize revenue by holding rates high during times of high room demand and by discounting room rates during times of lower guest room demand these systems may be applied manually or with programs built into a hotel's PMS
question
Inventory
answer
Rooms of all types that are available to be sold by the hotel
question
Negotiated Rates
answer
A special room rate offered for a fixed period of time to a specific hotel client
question
Blackout Dates
answer
Any day in which the hotel will not honor a negotiated rate
question
Length of Stay (LOS)
answer
The number of nights a hotel's individual guests use their rooms
question
Stay-over
answer
A guest not scheduled to check out of the hotel on the day his/her room status is assessed. The guest is staying at least one more day
question
Central Reservation System (CRS)
answer
An entity, operated by a franchisor, that offers potential guests the opportunity to make reservations as its affiliated (branded) hotels by telephone, fax, and/or the internet
question
Rate Resistance
answer
Refusal to make a reservation because the rate quoted is perceived, by the guest, to be too high
question
Demand
answer
The total amount of a good or service consumers want to buy at a specific price
question
Supply
answer
The total amount of a good or service available for sale
question
Room Rate Economics
answer
The processes by which revenue managers price rooms while considering how consumers may react to pricing strategies used
question
Law of Demand
answer
The concept of economics that recognizes when supply is held constant, an increase in demand results in an increase in selling price conversely, with supply held constant, a decrease in demand leads to a decreased selling price
question
Law of Supply
answer
The concept of economics that recognizes when demand is held constant, a decrease in supply leads to a decreased selling price. Conversely, with demand held constant, a decrease in supply leads to an increased selling price
question
Rate Type
answer
A single (unique) rate for a specific type of room. Rate Types are preprogrammed into a hotel's PMS
question
Concierge Level
answer
A section of a hotel (usually with restricted access) reserved for special guests paying higher room rates and receiving special amenities
question
Special Event Rates
answer
A temporary increase in rack rate based upon a specific event such as a concert, sporting event, or holiday. Also "super" or "premium" rack (i.e: New Years Eve at Manhattan)
question
American Plan (AP)
answer
A special rate that includes specifically identified guest meals (typically breakfast, lunch, and dinner)
question
Modified American Plan (MAP)
answer
A special rate that includes a specifically identified guest meal (usually one per day, often breakfast)
question
European Plan (EP)
answer
A room rate that doesn't include guest meals
question
All-inclusive (Rate)
answer
A special rate that typically includes all guest meals and unlimited beverages as well as the use of other specifically identified hotel amenities and services
question
Day Rate
answer
A special rate that typically includes 8-12 hours (not-overnight) use of a room
question
Half-Day Rate
answer
A special rate that typically includes 1-4 hours (but not overnight) use of a room
question
Fade Rate
answer
A reduced rate authorized for use when a guest seeking a reservation exhibits price (rate) resistance. Sometimes called "flex rate"
question
Hubbart Formula
answer
Determines room rates (ADR) or what the hotel's ADR should be to reach the hotel owner's financial goals to compute the formula, specific financial and operational assumptions must be provided, including dollar amounts for property construction, total cost of operations, number of rooms sold, the owner's desired ROI on the hotel's land, building, and FF&E
question
Cost Per Key
answer
The average purchase price of a hotel's guest room expressed in thousands of dollars (i.e: a 200-room hotel offered for 12,000,000 is selling at a cost of 60,000 per key)
question
Call-around
answer
a telephone "shopping" technique in which a hotel staff member calls competitive hotels to inquire about room rates and availability (helps determine room rates)
question
Revenue Management Essentials
answer
Making forecasts, managing occupancy (TBA)
question
Other Revenue
answer
Revenue derived from the sale of hotel products and services that are not classified as rooms, food, or beverages
question
Minimum Length of Stay (MLOS)
answer
A hotel requires guests who seek a room to stay for a designated minimum number of nights
question
Close to Arrival (CTA)
answer
the hotel declines reservations for guests attempting to arrive on this specific date
question
Overbooking
answer
A situation in which the hotel has more guest reservations for room than it has rooms available to lodge these guests. Also "oversold"
question
Walk(ed)
answer
A situation in which a guest with a reservation is relocated from the reserved hotel to another hotel b/c no room was available at the reserved hotel
question
Frequent Guest Program (Loyalty Program)
answer
A promotional effort administered by a hotel brand which rewards travelers each time they choose to stay at that specific brand's affiliated hotels. Rewards include: free night stays, room upgrades, and complimentary hotel services
question
GoPAR
answer
Short for gross operating profit per available room. Total revenue - Direct Operating Expense + Indirect Operating Expense / Total Rooms available to be sold
question
Competitive Set
answer
The group of competing hotels against which an individual hotel's operating performance is compared
question
Occupancy Index
answer
Occupancy rate of a selected hotel/Occupancy Rate of that hotel's competitive set
question
ADR Index
answer
ADR of a selected hotel/ADR of that hotel's competitive index
question
RevPar Index
answer
RevPar of a selected hotel/RevPAR of that hotel's competitive index
question
Room Mix
answer
The ratio of room types contained within a hotel
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question
Revenue Management
answer
The determination of precisely what a hotel's room should sell for and the methods used to sell them make up the increasingly complex process the hotel industry calls
question
Yield Management
answer
Demand forecasting systems designed to maximize revenue by holding rates high during times of high room demand and by discounting room rates during times of lower guest room demand these systems may be applied manually or with programs built into a hotel's PMS
question
Inventory
answer
Rooms of all types that are available to be sold by the hotel
question
Negotiated Rates
answer
A special room rate offered for a fixed period of time to a specific hotel client
question
Blackout Dates
answer
Any day in which the hotel will not honor a negotiated rate
question
Length of Stay (LOS)
answer
The number of nights a hotel's individual guests use their rooms
question
Stay-over
answer
A guest not scheduled to check out of the hotel on the day his/her room status is assessed. The guest is staying at least one more day
question
Central Reservation System (CRS)
answer
An entity, operated by a franchisor, that offers potential guests the opportunity to make reservations as its affiliated (branded) hotels by telephone, fax, and/or the internet
question
Rate Resistance
answer
Refusal to make a reservation because the rate quoted is perceived, by the guest, to be too high
question
Demand
answer
The total amount of a good or service consumers want to buy at a specific price
question
Supply
answer
The total amount of a good or service available for sale
question
Room Rate Economics
answer
The processes by which revenue managers price rooms while considering how consumers may react to pricing strategies used
question
Law of Demand
answer
The concept of economics that recognizes when supply is held constant, an increase in demand results in an increase in selling price conversely, with supply held constant, a decrease in demand leads to a decreased selling price
question
Law of Supply
answer
The concept of economics that recognizes when demand is held constant, a decrease in supply leads to a decreased selling price. Conversely, with demand held constant, a decrease in supply leads to an increased selling price
question
Rate Type
answer
A single (unique) rate for a specific type of room. Rate Types are preprogrammed into a hotel's PMS
question
Concierge Level
answer
A section of a hotel (usually with restricted access) reserved for special guests paying higher room rates and receiving special amenities
question
Special Event Rates
answer
A temporary increase in rack rate based upon a specific event such as a concert, sporting event, or holiday. Also "super" or "premium" rack (i.e: New Years Eve at Manhattan)
question
American Plan (AP)
answer
A special rate that includes specifically identified guest meals (typically breakfast, lunch, and dinner)
question
Modified American Plan (MAP)
answer
A special rate that includes a specifically identified guest meal (usually one per day, often breakfast)
question
European Plan (EP)
answer
A room rate that doesn't include guest meals
question
All-inclusive (Rate)
answer
A special rate that typically includes all guest meals and unlimited beverages as well as the use of other specifically identified hotel amenities and services
question
Day Rate
answer
A special rate that typically includes 8-12 hours (not-overnight) use of a room
question
Half-Day Rate
answer
A special rate that typically includes 1-4 hours (but not overnight) use of a room
question
Fade Rate
answer
A reduced rate authorized for use when a guest seeking a reservation exhibits price (rate) resistance. Sometimes called "flex rate"
question
Hubbart Formula
answer
Determines room rates (ADR) or what the hotel's ADR should be to reach the hotel owner's financial goals to compute the formula, specific financial and operational assumptions must be provided, including dollar amounts for property construction, total cost of operations, number of rooms sold, the owner's desired ROI on the hotel's land, building, and FF&E
question
Cost Per Key
answer
The average purchase price of a hotel's guest room expressed in thousands of dollars (i.e: a 200-room hotel offered for 12,000,000 is selling at a cost of 60,000 per key)
question
Call-around
answer
a telephone "shopping" technique in which a hotel staff member calls competitive hotels to inquire about room rates and availability (helps determine room rates)
question
Revenue Management Essentials
answer
Making forecasts, managing occupancy (TBA)
question
Other Revenue
answer
Revenue derived from the sale of hotel products and services that are not classified as rooms, food, or beverages
question
Minimum Length of Stay (MLOS)
answer
A hotel requires guests who seek a room to stay for a designated minimum number of nights
question
Close to Arrival (CTA)
answer
the hotel declines reservations for guests attempting to arrive on this specific date
question
Overbooking
answer
A situation in which the hotel has more guest reservations for room than it has rooms available to lodge these guests. Also "oversold"
question
Walk(ed)
answer
A situation in which a guest with a reservation is relocated from the reserved hotel to another hotel b/c no room was available at the reserved hotel
question
Frequent Guest Program (Loyalty Program)
answer
A promotional effort administered by a hotel brand which rewards travelers each time they choose to stay at that specific brand's affiliated hotels. Rewards include: free night stays, room upgrades, and complimentary hotel services
question
GoPAR
answer
Short for gross operating profit per available room. Total revenue - Direct Operating Expense + Indirect Operating Expense / Total Rooms available to be sold
question
Competitive Set
answer
The group of competing hotels against which an individual hotel's operating performance is compared
question
Occupancy Index
answer
Occupancy rate of a selected hotel/Occupancy Rate of that hotel's competitive set
question
ADR Index
answer
ADR of a selected hotel/ADR of that hotel's competitive index
question
RevPar Index
answer
RevPar of a selected hotel/RevPAR of that hotel's competitive index
question
Room Mix
answer
The ratio of room types contained within a hotel
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