Revenue Management Quiz 1

the revenue cycle

optimize demand, create demand, maintain guest satisfaction

unconstrained demand

total demand including excess demand above capacity

segmentation

revenue managers classify and target customers in specific groups based upon their characteristics, behaviors, and performances

optimal mix of sales

to maximize RevPAR and profit, hotels have to understand booking patterns, seasonality, customer preferences, and more

channel management

each reservation has a different cost of acquisition (cost of booking)

rate parity agreements

hotels are forced to offer the same pricing and same availability

house profit

the difference in the amount earned and the amount spent (revenue - operating cost)

profit margin

percentage of house profit compared to the revenue source

market share

the performance metric used to measure how a hotel does compared to a defined competitive set

competitive set

a list of competitors that the hotel ownership and management select in order to measure their results against based upon which hotels are believed to be direct competitors for sales and bookings

inventory management

the art of selling the right product at the right time for the right price to the right customer

variable demand and seasonality

a hotel has fluctuating demand by day of week, time or year, and dates of holidays and special events, resulting in the need for variable pricing throughout the year

booking pace

demand forecasting system and revenue manager will utilize booking pace trends and competitive pricing to predict remaining demand and pricing power as a stay date approaches

economic value

the sum of all the benefits and features that a product or service offers a customer

group

negotiated rates for a group of rooms for a specific date and often non-repeating

contract

airline crews that require a set fixed number of rooms per night, 365 days a year

retail

rooms sold through the hotel’s distribution channels for general sale

special corporate

negotiated rates between a business and hotels to accommodate the business’s out of town employees and clients

government

per diem established for a set geographical area

wholesaler

contracts between a hotel and travel merchandiser

packages

hotels utilize room inventory and add other services to it in order to entice customers to book

qualified rates

other public or private rates offered to guests based on specific memberships

benchmark rate

Best available rate, provides the foundation of your pricing strategy

value creation

services and products are combined and priced in a manner that increases the perceived economic value for a unique set of customers

positioning against the competitve set

evaluating a hotel’s experience against other similar properties and then determining the appropriate rate premium or discount that will create economic value for a specific segment

pricing level

pricing changes on a daily basis as revenue managers update price point based on a combination of factors (projected occupancy, capacity, etc)

rooms mix

hotels have a selection of room types to accommodate the different needs of its customers

static pricing

regardless of when the customer is making the reservation, the rate would be the same, provided there is a room available to accommodate them

dynamic pricing

hotel rates vary by season, day of the week, or by the hour depending on many factors

differential pricing through booking parameters

hotels use additional discounted pricing in order to attract early bookers at traditionally higher rates than what they would otherwise sell rooms for

opaque pricing

sell rooms at lower pricing through channels that allow for the rate not to be publicly displayed as such

rate parity and channel distribution

most hotel companies have “best rate guarantee” policies, which highlight the company’s commitment to maintaining the best (or equal) price on their website

price sensitivity

the customer’s reaction to price changes

computer-generated sensitivity models

computer-generated pricing models have been created to assist a revenue manager in determining the optimal pricing for the hotel