Hotel Revenue Glossary · Segmentation

Group Business

Reservations for a block of rooms booked under a single contract, typically at a negotiated rate. Group business includes corporate meetings, conferences, weddings, sports teams, and tour groups. Groups usually require 10 or more rooms per night.

Why it matters: Group business provides base-load occupancy but typically at discounted rates. The revenue management challenge is balancing group commitments against transient demand to optimize total revenue — accepting too much group can displace higher-rated transient bookings.

Worked example: A 180-room hotel is offered 40 rooms a night for three nights in October at A$155. Unconstrained transient demand for those nights is 165 rooms, so accepting displaces 165 + 40 - 180 = 25 transient rooms a night that would have sold at A$215. Group brings 40 × 155 = A$6,200 a night; displaced transient costs 25 × 215 = A$5,375. The A$825 nightly gain is real but thin, so the meeting spend and the wash rate decide it.

Common mistake: Comparing the group rate to BAR and stopping there. A$155 against A$215 looks like a A$60 loss per room, but only the rooms that actually displace transient demand cost you anything — the rest were never going to sell. Work out the displaced count first, then compare totals.

All glossary terms Transient Business Displacement Analysis Wash Factor