A Decision Model for Hotel Revenue Management Displacement Analysis for Transient Room Demand vs. Group Room Demand

Abstract

Introduction and Purpose In addition to the decision analysis of hotel rates for different market segments of customers, hotel revenue management strategies also include decisions to accept a mix of transient (individual) room demand vs. group room sales. The objective of hotel revenue management strategies are to maximize revenues from selling hotels rooms and ancillary hotel services in an environment with supply capacity constraints. Displacement is defined as accepting one type of customer business and displacing (not accepting) another type of customer business. The purpose of this study is to develop a displacement analysis decision model that identifies revenue variables, capacity constraints, and decision criteria in making decisions on the acceptance of transient room demand vs. group room demand.