CHI Revenue & Yield Management 3 — Questions and Answers
Question 1: In the context of revenue management, 'overbooking' is a strategy primarily designed to:
- Offset expected cancellations and no-shows to maximize occupancy (Correct answer)
- Increase ADR by selling premium room types
- Penalize guests who book multiple properties
- Comply with brand franchise agreements
Correct answer: Offset expected cancellations and no-shows to maximize occupancy
Overbooking compensates for predicted cancellations and no-shows so that the hotel can achieve close to 100% occupancy.
Question 2: A 'rate fence' in revenue management is best described as:
- A condition or restriction that justifies a price difference between customer segments (Correct answer)
- A maximum rate ceiling set by franchise agreements
- A firewall between public and negotiated rates in the PMS
- A GDS channel restriction preventing rate parity violations
Correct answer: A condition or restriction that justifies a price difference between customer segments
Rate fences are qualifying rules (e.g., advance purchase, non-refundable, loyalty status) that separate rate tiers and prevent customers from always choosing the cheapest option.
Question 3: The practice of matching the lowest publicly available rate across all channels is known as:
- Rate parity (Correct answer)
- Best available rate (BAR)
- Dynamic pricing
- Yield balancing
Correct answer: Rate parity
Rate parity requires a hotel to offer the same rate across all distribution channels so no channel undercuts the others.
Question 4: What does GOPPAR measure that RevPAR does not?
- Total profitability including operating expenses, not just room revenue (Correct answer)
- Group bookings vs. transient bookings
- Food and beverage revenue per available seat
- GDS booking fees per reservation
Correct answer: Total profitability including operating expenses, not just room revenue
GOPPAR (Gross Operating Profit per Available Room) accounts for all revenue streams and operating costs, providing a profitability view beyond room revenue alone.
Question 5: A hotel uses a 'close to arrival' (CTA) restriction on a specific date. This means:
- No new reservations with an arrival on that date will be accepted (Correct answer)
- Guests must arrive by a specific time or lose their reservation
- The hotel closes early check-in on that date
- Rates are closed to all advance purchase discounts
Correct answer: No new reservations with an arrival on that date will be accepted
A CTA restriction prevents any new reservations from being made with an arrival on the restricted date, often used to protect stays that flow through from adjacent dates.
Question 6: Which of the following best describes 'transient demand' in hotel revenue management?
- Individual leisure and business travelers booking outside of group blocks (Correct answer)
- Day-use guests who do not require overnight accommodations
- Guests who cancel within 24 hours of arrival
- Walk-in guests without prior reservations
Correct answer: Individual leisure and business travelers booking outside of group blocks
Transient demand refers to individual bookings (FIT and BT) as opposed to group or contract business.
Question 7: In revenue management, 'displacement analysis' is used to determine:
- Whether accepting group business is more profitable than holding rooms for transient guests (Correct answer)
- How to relocate walked guests to comparable properties
- The cost of moving a meeting room to a different floor
- Which OTA channel displaces the most direct bookings
Correct answer: Whether accepting group business is more profitable than holding rooms for transient guests
Displacement analysis calculates the total revenue given up by blocking rooms for a group versus selling those rooms to higher-rated transient guests.
CHI Revenue & Yield Management 3
In the context of revenue management, 'overbooking' is a strategy primarily designed to: