CHP Revenue Management & Pricing Strategy 1 — Questions and Answers
Question 1: What does RevPAR stand for in hotel revenue management?
- Revenue Per Available Room (Correct answer)
- Revenue Per Active Rate
- Rooms Per Available Rate
- Revenue Per Arriving Reservation
Correct answer: Revenue Per Available Room
RevPAR (Revenue Per Available Room) measures a hotel's ability to fill rooms at an average rate and is calculated as ADR × Occupancy %.
Question 2: What is the primary goal of yield management in a hotel?
- To minimize the number of rooms sold
- To maximize revenue by selling the right room to the right guest at the right time and price (Correct answer)
- To standardize room rates regardless of demand
- To reduce the cost of housekeeping labor
Correct answer: To maximize revenue by selling the right room to the right guest at the right time and price
Yield management optimizes revenue by dynamically adjusting pricing based on demand, booking window, and market conditions.
Question 3: A hotel has 200 rooms, sells 150 rooms in a night, and achieves an ADR of $120. What is the RevPAR?
- $120
- $90 (Correct answer)
- $75
- $180
Correct answer: $90
RevPAR = ADR × Occupancy % = $120 × (150/200) = $120 × 0.75 = $90.
Question 4: Which pricing strategy involves offering lower rates for reservations made far in advance?
- Last-minute pricing
- Advance purchase / early bird pricing (Correct answer)
- Rack rate pricing
- Walk-in pricing
Correct answer: Advance purchase / early bird pricing
Advance purchase rates reward early bookers with discounts while helping hotels secure revenue and improve forecasting accuracy.
Question 5: What is the 'competitive set' (comp set) used for in hotel revenue management?
- Identifying which staff to promote
- Benchmarking the hotel's performance against similar competing properties (Correct answer)
- Setting the minimum wage for hospitality workers
- Determining the cost of goods sold in F&B
Correct answer: Benchmarking the hotel's performance against similar competing properties
The comp set is a group of comparable hotels used to benchmark metrics like RevPAR, ADR, and occupancy to understand market position.
Question 6: What does a hotel's 'rack rate' represent?
- The discounted rate offered to loyalty members
- The published, undiscounted standard room rate before any promotions (Correct answer)
- The rate charged to travel agents
- The rate offered during off-peak season
Correct answer: The published, undiscounted standard room rate before any promotions
The rack rate is the hotel's maximum published price, from which discounts (corporate, AAA, OTA, etc.) are typically calculated.
CHP Revenue Management & Pricing Strategy 1
What does RevPAR stand for in hotel revenue management?