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Revenue Management Glossar

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Displacement Cost (or Group Displacement Cost) refers to revenue lost if a hotel accepts a group booking at the expense of other types of bookings. This information is very important in revenue management, as it helps determine whether accepting a group reservation is financially beneficial, compared to the expected earnings from transient guests (individual travellers who are not part of a group) who might book the same rooms.

Wie man es benutzt

Understanding and calculating group displacement cost is crucial for revenue managers to optimise their booking mix and maximise profitability.


1. Create a forecast to show how much income be earned from selling the same rooms to transient guests during the same period. You will be able to establish a much more accurate forecast using your automated pricing solution (RMS), as it can accurately collect and analyse market data, historical data and current projected occupancy, among other variables. In your forecast, include both your potential ADR and non-room revenue, as both are important to your bottom line. 2. Calculate the anticipated group revenue by adding up the room costs, plus any additional non-room revenue (including meeting room rentals, catering, etc.). 3. Subtract the total forecasted group revenue from the total projected transient revenue to calculate your displacement cost. If the value is positive, it indicates that you might be losing out on revenue on taking the group business. If it’s negative, the group business would be more profitable than the transient business, meaning that it is a good business decision to accept the group booking.

Verwandte Begriffe

Revenue Management, Transient business, Group Business, ADR, RMS, Non-room revenue, Ancillary revenue, Forecasting, Group displacement cost, Revenue Management System (RMS), Historical data, Market data, Occupancy, Historical data, RevPAR
“Calculating the displacement cost can be complicated but it’s worth the effort to accurately establish the income potential of the group opportunity vs. the other potential business that the rooms could earn, and choose the option that maximises revenue opportunities. By evaluating the group displacement, I know whether it is a better business decision to accept the group booking or if I should keep my inventory available for transient travellers instead.”

Hannah Lee

Hannah Lee