CHP - Certified Hospitality Professional Hospitality Financial Management Questions and Answers

Question 1

A 150-room hotel generated $2,400,000 in total revenue for the year. Its total operating expenses for the same period were $1,500,000. What is the hotel's Gross Operating Profit Per Available Room (GOPPAR) for the year?

Accepted Answer

$24.66

Answer

GOPPAR is calculated by dividing the Gross Operating Profit (GOP) by the total number of available rooms over a period. First, calculate the GOP: Total Revenue ($2,400,000) - Total Operating Expenses ($1,500,000) = $900,000. Next, calculate the total available rooms for the year: 150 rooms * 365 days = 54,750. Finally, calculate GOPPAR: $900,000 / 54,750 = $16.44. Unlike RevPAR, GOPPAR provides a more comprehensive view of profitability by including all revenue streams and accounting for operating costs.

Question 2

Which of the following would be classified as a cash flow from 'Investing Activities' on a hotel's Statement of Cash Flows?

Accepted Answer

Purchase of a new property management system (PMS).

Answer

The Statement of Cash Flows is divided into three sections: Operating, Investing, and Financing. Investing activities include the purchase and sale of long-term assets. The purchase of a new Property Management System is a capital expenditure, which falls under investing activities. Cash from a bank loan and payment of dividends are financing activities, while cash from daily operations is an operating activity.

Question 3

A hotel manager is preparing the annual budget and needs to plan for a major lobby renovation and the replacement of all guest room mattresses. In which section of the budget would these expenditures be primarily accounted for?

Accepted Answer

Capital Budget

Answer

The Capital Budget is used for planning significant, long-term expenditures such as property renovations, new equipment purchases, or property expansions. These are investments expected to generate value over a period longer than one year. The operational budget covers day-to-day expenses, the marketing budget covers promotional activities, and the cash flow budget tracks the movement of cash.

Question 4

The primary purpose of the Uniform System of Accounts for the Lodging Industry (USALI) is to:

Accepted Answer

Provide a standardized format for financial reporting to allow for reasonable comparison among properties.

Answer

The USALI provides a standardized chart of accounts and reporting format for the lodging industry. Its main goal is to promote uniformity in financial statements, which allows for more accurate and meaningful comparisons (benchmarking) of financial performance between different hotels.

Question 5

A hotel has an Average Daily Rate (ADR) of $250 and an occupancy rate of 80%. What is its Revenue Per Available Room (RevPAR)?

Accepted Answer

$200.00

Answer

There are two common formulas to calculate RevPAR. One is Total Room Revenue / Total Available Rooms. The other, used in this scenario, is ADR * Occupancy Rate. Therefore, RevPAR = $250 * 0.80 = $200.00.

(CHP) Certified Hospitality Professional Practice Test

(CHP) Certified Hospitality Professional Practice Test

CHP - Certified Hospitality Professional Hospitality Financial Management Questions and Answers