Revenue Management Quiz 1

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

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