Displacement and Negotiated PricingCornell Course

Group business from associations or conferences often comprises 50% or more of hotel room nights. Although groups typically negotiate their rates, systematic approaches to group pricing are still underdeveloped. In this course, you will examine strategic and tactical group-booking decisions over the long, medium, and short terms. You will examine why the hotel's strategic focus is the mix of groups while its tactical focus is rate and availability decisions for specific group requests. In the medium term, the hotel's focus shifts as both group and transient reservations begin to arrive. Finally, in the short term, the hotel's focus is on group materialization. In other words, will the group use its entire block of rooms?

The course demonstrates how an effective revenue management strategy deals with arrival uncertainty using forecasting and overbooking. It explores the issue of displacement, looking specifically at how a property, when considering a group booking, should estimate the future arrivals that could be rejected due to lack of room availability. You'll discover that, using estimates of displacements, hotels can determine the number of rooms to allocate to each segment.

Note that you are being asked to use Microsoft Excel for this course. It contains an add-in called Solver. While many open-source spreadsheet programs include Solver, the MS Excel version has a specific function that you will need for this course.

You are required to have completed the following courses or have equivalent experience before taking this course:

• Price and Inventory Controls
• Price Sensitivity and Pricing Decisions
• Segmentation and Price Optimization