True/False Questions. Circle either T for true or F for false:

1. A hotels rack rate is the quoted, published rate that is charged to full-paying, non-discounted customers. T F

2. By including day rate (also known as half-day rate or day use rate) rooms as part of the occupancy figure, it is possible to exceed 100% occupancy on a given day. T F

3. One of the biggest problems facing the lodging industry today is the fact that room rates have not kept up with inflation. Inflation has been growing much faster than the average room rate in Canada.

T F

4. If the hotel industry were perfectly elastic, than a decrease in rates would have a resulting increase in occupancy. T F

5. Discounting and rate cutting are synonymous. In other words, in the hospitality industry, discounting and rate cutting mean the same thing. T F

Multiple Choice Questions. Circle the one answer that best completes the thought:

6. The Building Cost Room Rate Formula rule-of-thumb suggests that the hotel should charge one dollar in room rate for every $_________ in building construction costs per room:

1. $100.00
2. $1,000.00
3. $10,000.00
4. $100,000.00
5. None of the above

7. Using the ideal room rate method, if your actual ADR is lower than the ideal room rate, this indicates:

1. you do not have enough contrast (in quality, dcor, or amenities) to warrant the price difference between your low- and high-priced rooms
2. your front desk is suffering from poor salesmanship
3. your front desk is doing an excellent job up-selling rooms to guests
4. both a and b are true. But c is false
5. both a and c are true. But b is false

8. The Hubbart Room Rate Formula works quite well doing what it was designed for. However, there are some weaknesses inherent in the formula. Which of the following is generally considered a weakness of the Hubbart Room Rate Formula:

1. The resulting rate is only a guess because the whole premise is built on assumptions or projections
2. It puts the cart before the horse. With the Hubbart, you need to forecast occupancy before you calculate rate, but the number of rooms a hotel sells is partly a function of the rate it charges
3. The burden of making-up profits (covering losses) from poorly operated departments falls to the rooms division who must charge enough to cover the losses from other areas
4. The Hubbart Room Rate is just one number. Management still needs to decide how to manipulate that number over seasonal and room type rate variations
5. All of the above are true

9. The lodging industry is against the proliferation of room taxes. Which of these reasons explains why?

1. The lodging industry pays about twice the tax rate as most other industries
2. Room taxes are essentially taxation without representation
3. Higher room taxes make certain jurisdictions or communities less competitive for group rooms business
4. Room tax rates have grown from 3 to 4 percent some 25-years ago to an average of almost 12 percent today
5. All of the above are reasons why the lodging industry is against the proliferation of room taxes

10. Which of the following lodging customer markets is generally inelastic with regard to price and extremely concerned with date? In other words, guests from this market type must stay in the hotel on a certain date and are willing to pay the price to do so:

1. The leisure market
2. The corporate market
3. The tour group market
4. The senior market
5. none of the above

11. The greatest amount of revenue in a hotel normally comes from:

1. food sales
2. miscellaneous sales from other revenue outlets such as gift shops etc.
3. rental of rooms
4. beverage sales
5. none of the above

12. Over the past several years hotel rates in Canada have generally increased:

1. at a rate below the rate of inflation
2. at a rate above the rate of inflation
3. at a rate about the same as the rate of inflation
4. hotel room rates have not increased at all
5. hotel rates have only increased in new hotels

13. Property taxes as a percentage of hotel revenue are the highest in which of the following Canadian markets:

1. Montreal
2. Vancouver
3. Calgary
4. Toronto
5. Edmonton

14. Which of the following rate programs is most common in todays hotels?

1. Corporate Rate
2. Seasonal Rate
3. Weekly rate
4. Seniors rate
5. All of the above rate discounts are common at most of todays hotels

15. Comp (complimentary) rooms are often given for which of the following reasons?

1. To settle a guest complaint
2. Other hoteliers
3. Association executives considering the property as a possible meeting place
4. Travel agents and travel writers on FAM trips
5. All of the above may be considered for comp rooms