Revenue Management Quiz 1 – Flashcards

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Revenue
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The amount of sales achieved in a specific time period. Calculated as Numbers of Units sold X unit price
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Profit
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The net value achieved by a seller and a buyer in a business transaction
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Barter System
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A trading system in which goods and services are exchanged without the use of money.
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ROI
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Reward to investors for taking a risk. Calculated by taking The return and dividing that by the original investment
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Customer-Centric revenue management
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A R.M. philosophy that places customer gain ahead of short-term rev maximization in rm decision making
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Constrained Supply
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When suppliers struggle to satisfy demand
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Hard Constraint
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Supply constraint that can't be removed regardless of demand. E.X(Hotel Room/Restaurant Tables)
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Soft Constraint
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Supply constraint that with sufficient time can be changed. E.X.(Airplane service)
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Yield Management
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Demand Based Revenue Management strategy. Allowing your consumers demand of your rooms to determine how much you're charging.
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Average Daily Rate
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Average selling price of guest rooms during a specific time period. Total Revenue/Total rooms sold
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Occupancy Percentage
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The number of rooms sold represented as a percentage. Total rooms sold/Total available rooms
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RevPAR
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Average revenue generated by each available guest room during a specific period of time. Calculated by ADR X Occupancy percentage
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RevPOR
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Revenue per occupied room. Average revenue generated by each occupied guest room during a specific time. Total Revenue/Total occupied rooms.
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GOPPAR
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Gross operating profit per available room. Average gross operating profit generate by each available guest room. Total Revenue- Management Controllable Expense all over Total Rooms available
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Competitive Set
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A group of similar and directly competing lodging properties to which an individual hotel's operating performance is compared.
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Pace Report
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A summary report describing the amount of future demand for a lodging propert's rooms and the rate at which it is being captured
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Rack Room Rates
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The price of rooms when no discounts of any types are offered
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QSR
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Quick Service restaurant. Same as fast food
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RevPASH
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Revenue per avaialable seat hour. Revenue for an amount of time/(Number of seats X Hours they were avaialable)
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DOSM
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Director of Sales and Marketing.
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Two-tiered Price
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A RM strategy to make customers pay additionally for seperate offered services. (Buying a bottle of wine @ a restaurant, Mini bar)
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Consumer Rationality
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The belief that any decision to purchase from a consumer point of view is based on some sense of personal benefit.
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Value
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The amount of percieved benefit minus the price paid.
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Value Proposition
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A statement describing the good or service to be recieved and, the price paid for it. (Menu Item)
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Oenology
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The study of wine and winemaking
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Law of Supply
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The idea that when demand goes up, supply will follow
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Law of Demand
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The idea that when price goes up, demand will fall
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Break-Even point
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The point at which a firms revenue exactly equals their expenses
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Minimum Sales point
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The revenue level required to reach the break even point for a period of time
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Cost Based Pricing
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A pricing philosophy that involves summing products cost incurred, with a desired profit to arrive at an item's selling price
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Four I's of Service
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Intangibility, Inconsistency, Inseperability, Inventory.
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Intangibility (Relating to service)
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A service cannot be touched or seen before it is purchased.
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Inconsistency
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Uneven performance results from variations between the skills of those delivering the service
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Inseperability
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Making a distinction between the individual delivering the service and the service itself
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Inventory
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Unsold stock vanishes if not sold and the costs associated with idle production capacity can be high
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Idle Production Capacity
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A condition when is servivice is available but there is no demand for it
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Value Based Pricing
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The practice of applying prices to a product based on a buyers percieved value
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Differential Pricing
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The practice of applying different prices to different buyers for the same product
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Inventory Management
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Process of allocating and modifying the number of products available for sale at various prices and through different channels
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Consumer Surplus
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The difference between what a buyer would be willing to pay and the price
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FOM
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Front Office Manager. The individual in charge for administration
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Arbitrage
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The practice of buying at a low price and reselling at a high price. One of the difficulties RM's face in pricing
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Price Fence
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Ethical and Legal standards for price differentiation. It determines what you're allowed to do as an RM when it comes to pricing
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Central Reservation System(CRS)
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Structure used to accept a guests reservation. Directly communicated to the hotel -(Kayak, etc...)
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Property Management System(PMS)
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The hardware and software used by hotels to store the information about their guests
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Intermediary
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An entity that acts as acommunication or service link between buyers and sellers(Kayak)
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Net Room Rate
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Standard ADR-Distribution Channel Cost
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Net ADR Yield
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Net room rate/ Standard ADR
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Price band
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Span from lowest to highest price in a range of prices
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Revenue Management
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Strategic Pricing to optimize greatest business income
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Revenue Optimization
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Strategic pricing to optimize greatest business profits
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Predatory Pricing
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The practice of a firm harming consumers by selling its products below costs or at a price developed with the intent of driving competitors out of the market
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Price gouging
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Increase of prices during a natural disaster or emergency, deemed unfit by society
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Dual entitlement (theory)
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The idea that consumers feel they are entitled to a reasonable price. And, that businesses are entitled to a reasonable profit
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Reference Price
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Price percieved by customers to be the normal price for a product
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Customer Relations Management (CRM)
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A term used to describe a variety of processes (usually computerized) to deal with their customers
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Rooms Manager
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Individual in charge of both the front office and the housekeeping departments
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Transient Room
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A room sale made to an individual who is not part of a large group
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Line-level employees
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Non-managerial employees. Mostly direct communication with the customer
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4 P's of Marketing
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Product, Promotion, Place and Price
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Sherman Anti-Trust Act
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Outlawed all contracts and conspiracies that prevents any company from holding too much of a market
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The Federal Trade Commission Act
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Made in an effort to enforce the Sherman Antitrust Act
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Clayton Act
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Made to restrain companies from unfair and illegal pricing
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The Robinson-Patman Act
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Outlawed predatory pricing for the purpose of monopolizing. Also, prevents collusion among companies.
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