CHA Revenue Management & Pricing 3 — Questions and Answers
Question 1: What does 'total revenue management' expand beyond traditional room revenue to include?
- All revenue-generating outlets across the hotel including F&B, spa, and parking (Correct answer)
- Global distribution revenue only
- Revenue from all properties in a brand portfolio
- Long-term contract revenue streams
Correct answer: All revenue-generating outlets across the hotel including F&B, spa, and parking
Total revenue management optimizes revenue across all hotel profit centers—rooms, F&B, spa, meeting space, parking—not just guestrooms.
Question 2: A 'hurdle rate' in hotel revenue management is best defined as:
- The minimum acceptable rate at which a room should be sold on a given night (Correct answer)
- The maximum rate competitors are charging
- The break-even rate needed to cover fixed costs
- The rate threshold that triggers a revenue alert
Correct answer: The minimum acceptable rate at which a room should be sold on a given night
A hurdle rate is the floor price below which a room should not be sold, protecting revenue integrity on high-demand nights.
Question 3: Which forecasting method uses weighted averages of historical data, giving more importance to recent periods?
- Exponential smoothing (Correct answer)
- Moving average
- Linear regression
- Pickup analysis
Correct answer: Exponential smoothing
Exponential smoothing assigns decreasing weights to older data points, making recent booking patterns more influential in the forecast.
Question 4: When a hotel offers a 'stay-sensitive' rate restriction, it is requiring:
- A minimum length of stay or maximum length of stay (Correct answer)
- Advance purchase of at least 7 days
- A non-refundable deposit at booking
- Saturday night inclusion in all stays
Correct answer: A minimum length of stay or maximum length of stay
Stay-sensitive restrictions include minimum length of stay (MinLOS) and maximum length of stay (MaxLOS) controls to optimize room night yield.
Question 5: The 'cost of intermediation' in hotel distribution refers to:
- Commission fees and transaction costs paid to third-party booking channels (Correct answer)
- The labor cost of managing a reservations department
- Technology expenses for the property management system
- Training costs for revenue management staff
Correct answer: Commission fees and transaction costs paid to third-party booking channels
Cost of intermediation includes OTA commissions, GDS fees, and other charges paid to intermediaries for delivering a booking.
Question 6: Which concept describes the practice of selling perishable inventory (hotel rooms) at a discount close to the date to avoid zero revenue?
- Last-minute distressed inventory pricing (Correct answer)
- Overbooking management
- Displacement analysis
- Demand-based pricing
Correct answer: Last-minute distressed inventory pricing
Since an unsold room night generates zero revenue, hotels may discount last-minute availability rather than let rooms go empty.
Question 7: In the context of group business, 'displacement analysis' evaluates:
- Whether accepting group business will displace higher-rated transient demand (Correct answer)
- How to move group guests to overflow hotels
- The cost of relocating a group to a different meeting room
- Overbooking levels when group blocks go unused
Correct answer: Whether accepting group business will displace higher-rated transient demand
Displacement analysis compares the total group revenue against the transient revenue that would be lost by blocking rooms for the group.
CHA Revenue Management & Pricing 3
What does 'total revenue management' expand beyond traditional room revenue to include?