Revenue Management & Pricing Strategy Flashcards

Which distribution channel typically charges hotels the HIGHEST commission fees?

Answer: Online Travel Agencies (OTAs) like Expedia or Booking.com

OTAs typically charge commissions of 15–30%, making them the most expensive distribution channel compared to direct bookings.

What is 'rate parity' in the context of hotel distribution?

Answer: Maintaining consistent room rates across all distribution channels

Rate parity requires hotels to offer the same price across all channels (OTAs, direct, GDS) to avoid undercutting any single platform.

A hotel's occupancy is low mid-week. Which revenue management tactic is MOST appropriate?

Answer: Offer promotional rates or packages to stimulate demand

When occupancy is below target, promotional rates, packages, or targeted campaigns can stimulate incremental bookings and fill unsold inventory.

What does GOPPAR measure in hotel performance analysis?

Answer: Gross Operating Profit Per Available Room

GOPPAR (Gross Operating Profit Per Available Room) measures total profitability by accounting for all revenue and operating expenses, not just room revenue.

Which factor would MOST likely cause a revenue manager to implement a 'minimum length of stay' (MinLOS) restriction?

Answer: High demand around a local event, with risk of stranded low-value nights adjacent to it

MinLOS restrictions during high-demand periods (e.g., around a concert or convention) prevent short stays that would block higher-value multi-night reservations.

What is 'displacement analysis' used for in hotel revenue management?

Answer: Evaluating whether accepting a group booking at a discounted rate is worth the lost transient revenue

Displacement analysis compares the net revenue of a group booking against the potential transient revenue that would be displaced to decide if the group is worth accepting.