Dynamic Pricing & Revenue Management Flashcards

A hotel chain uses historical booking data and local event calendars to adjust room rates daily. This is best described as which type of pricing system?

Answer: Demand-based dynamic pricing

Demand-based dynamic pricing uses historical and predictive demand signals to adjust prices in real time.

Revenue per Available Room (RevPAR) is calculated as:

Answer: Average daily rate multiplied by occupancy rate

RevPAR = ADR × Occupancy Rate, combining both price and utilization into a single performance metric.

An airline sells 20% of seats at a deep discount early, then raises prices as the departure date nears. This strategy is called:

Answer: Yield management

Yield management allocates inventory across price tiers and time horizons to maximize total revenue.

Which metric measures the percentage of available capacity that is actually sold over a period?

Answer: Load factor

Load factor (or utilization/occupancy rate) is sold units divided by available capacity.

A company detects that a competitor just lowered prices and automatically responds with a matching reduction within minutes. This is an example of:

Answer: Algorithmic repricing

Algorithmic repricing uses automated rules or ML models to react to competitive price changes in near real time.

In revenue management, a 'booking curve' refers to:

Answer: The pattern of reservations accumulating over time before a service date

The booking curve tracks how reservations build up over the lead time before a flight, event, or hotel stay.

Which of the following best defines 'price fencing' in dynamic pricing?

Answer: Using conditions or restrictions to separate customer segments so each pays a different price

Price fencing uses qualifying conditions (advance purchase, loyalty status, channel) to prevent higher-willingness-to-pay customers from accessing lower prices.