Displacement analysis is the calculation a hotel runs before accepting a group or contract, comparing the guaranteed business against the transient demand it would displace, to decide whether the deal adds or destroys revenue.
Accepting a large group at a discounted rate occupies rooms that might have sold higher to individual guests. The analysis forecasts what those rooms would likely have earned and adds the group's total value, including meeting space and catering.
Without displacement discipline, sales teams chase volume and revenue teams chase rate, and the hotel makes contradictory decisions. A simple standardized calculation, applied to every significant group request, aligns both sides on total profitability rather than departmental targets.
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