Our goal is to help you confidently price group business to maximize your hotel's total revenue. Our system analyzes powerful data points to recommend a group rate that ensures you're capturing the most value, whether your hotel is facing high or low demand.
Here’s a simple breakdown of how we do it.
How We Calculate Displacement
Displacement is the potential revenue you might miss out on from other guests (like transient or non-group travelers) if you accept a particular group.
To figure this out, our system:
Looks at Your Capacity: It starts with your hotel's total bookable capacity for the group's requested dates.
Checks Current Bookings: It sees how many rooms are already booked by other guests.
Forecasts Other Demand: It then forecasts how many additional guests are likely to book those same nights.
Finds the Compression: If the group's request, plus your current bookings, plus the forecasted demand, exceeds your total capacity, our system identifies those potential lost bookings and which nights are more proportionally impacted.
Factors in Shoulder Nights: The primary displacement, or displacement that happens as a direct results of the group block over blocked room nights, can also cause secondary displacement. Secondary displacement happens where guests may have arrived before, or stayed after, your group block, but are no longer able to because rooms are not available over the primary group dates. FLYR leverages sophisticated arrivals and LOS forecast models to determine secondary displacement.
Calculates expected transient ancillary spend: The ancillary revenue being added by your group is only half the story; displaced transient guests likely would have generated non-room revenue, as well. FLYR calculates expected spend on a per segment per night basis, weighted to the forecast and incorporating configured profit margins, to account for net bottomline contribution of ancillary revenue streams.
Applies commissions and channel cost: The net group profit and net incremental profit figures available in your quotation KPI header also incorporate group commission costs and configured channel costs for displaced transient business
How We Recommend Your Price
The recommended price ensures that the group is more valuable than the combined business you would have had otherwise, or that the suggested group rate supports forecasted expectations for this segment based on previous group trends and willingness to pay.
If Displacement is High: The "displaced revenue" we calculated above is the primary factor. The price is built up from this "opportunity cost" to make sure you're capturing that lost potential, while also accounting for other real costs and benefits:
Potential Walk Costs: If OTB reservations cannot be maintained in order to accommodate a block request, they will be considered as lost revenue. This scenario also supports the input of a cost of walk, if there are additional costs that are appropriate to factor in.
If Displacement is Low (or Zero): Even if the group isn't displacing other guests, we still provide a smart, data-driven recommendation. The system looks at other key factors to determine a price that's competitive but profitable, including:
Forecasts: What we predict your Group ADR and general dynamic ADR will be.
Historical Data: How your groups have performed in the past, factoring in actualized group occupancy and ADRs.
Safety Nets: Your hotel's own minimum price constraints (whether default or from an active price setting) are a weighted factor in calculating the lower bound of a recommended price. Please note this does not mean your min/max settings are directly applied to group pricing.
Key Data Factors (At a Glance)
To put it all together, here are the main data points our system analyzes:
For Displacement:
Requested group units per night
Group ancillary revenues
Group ancillary revenues profit margins
Group commissions to both rooms and ancillaries
Hotel capacity
Current bookings (OTB)
Forecasted transient demand
Forecasted transient revenue (ADR)
Forecasted transient demand channel cost
Forecasted transient ancillary revenues
Forecasted transient ancillary revenues profit margins
For Pricing:
The total "Displacement Cost" (if any)
Forecasted group ADR
Forecasted dynamic ADR
Historical group ADR
Group ancillary charges
Potential walk costs
Commissions
Your hotel's minimum price constraints
How We Calculate Breakeven
The Breakeven price represents the per-room rate you would need to charge the group so that the total incremental value of the group booking is not negative. It answers a simple but critical question:
“What is the tipping point at which accepting this group brings in more revenue than not accepting it?”
Here’s how the calculation works.
1. Start with the value of displaced business
We first calculate the total projected value of the transient demand that would be displaced if the group were accepted. This includes:
Displaced transient room revenue:
Forecasted displaced room nights × forecasted transient ADR
Displaced transient ancillary revenue:
Expected ancillary spend from those displaced guests, based on forecasted segment behavior and configured margins
This gives us the total value at risk from accepting the group.
2. Account for group ancillary contribution
Next, we consider how much ancillary revenue the group itself is expected to generate, using:
Group size and length of stay
Both fixed and variable ancillary spend inputs
Because ancillary revenue contributes to the total value of the group, it reduces the amount that must be recovered through the room rate for purposes of calculating breakeven.
3. Solve for the breakeven room rate
Finally, we determine the room rate per unit that would differentiate a positive vs. negative total incremental revenue contribution of the group.
Conceptually, the calculation is:
Breakeven Rate =
(Displaced transient room revenue + displaced transient ancillary revenue - Group ancillary revenue)
÷
Total group room nights requested
At this rate:
The combined value of group rooms + group ancillaries
Exactly offsets the combined value of displaced transient rooms + displaced transient ancillaries
4. What the breakeven rate tells you
The breakeven rate is a reference point, not a pricing instruction. It helps you understand:
How much value the group needs to generate per room night to offset any displacement. A lower displacement, and higher group ancillary contribution, may even result in a negative breakeven! This tells you that, aside from your room costs, you can be aggressive in room pricing to secure this group due to its ancillary contribution.
How sensitive the room pricing is to group ancillary contribution and transient demand conditions