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.