CTC CTC Financial Management & Pricing Strategies

Question 1

What does the term 'net rate' mean in travel industry pricing?

Accepted Answer

The wholesale cost a supplier charges the travel agent before markup

Answer

A net rate is the base wholesale price a supplier (hotel, tour operator, etc.) charges the agent, to which the agent adds their markup or commission.

Question 2

Which pricing strategy involves setting a high initial price and gradually lowering it over time?

Accepted Answer

Price skimming

Answer

Price skimming involves launching at a premium price to capture high-value customers first, then reducing prices to attract more price-sensitive buyers.

Question 3

A travel consultant earns a 10% commission on a $3,500 cruise booking. What is the commission amount?

Accepted Answer

$350

Answer

10% of $3,500 equals $350, which is the commission earned by the travel consultant.

Question 4

What is a 'override commission' in the travel industry?

Accepted Answer

Bonus commission paid by a supplier when an agent reaches a sales volume threshold

Answer

Override commissions are bonus payments suppliers offer agents who exceed a specified sales volume, incentivizing higher booking levels.

Question 5

Which financial document summarizes a travel agency's revenues and expenses over a specific period?

Accepted Answer

Income statement (Profit & Loss)

Answer

The income statement (Profit & Loss statement) shows total revenues, costs, and resulting profit or loss over a defined accounting period.

(CTC) Certified Travel Consultant Practice Test

(CTC) Certified Travel Consultant Practice Test

CTC CTC Financial Management & Pricing Strategies