Brands & segments
Group demand
Also written: group business
What Group demand means
Group demand represents room bookings, event space rentals, and food and beverage revenues generated by contracts covering ten or more rooms per night for business conventions, corporate meetings, weddings, or tour groups.
Formula
Minimum Acceptable Group Rate = (Total Transient Revenue Displaced - Non-Room Group Revenue + Group Marginal Costs) ÷ Group Room Nights
How it is used
Revenue managers use group demand to build a baseline occupancy months or years in advance, known as group wash or group pace. Securing group contracts early reduces fill risk for high-capacity hotels, allowing operators to yield transient rates higher as the arrival date approaches. Sales teams evaluate group inquiries by calculating total revenue potential—including banqueting, meeting room fees, and AV rentals—against the displaced transient room revenue that could have been earned at higher individual rates.
Worked example
A 200-room hotel receives a bid for 50 rooms over two nights (100 room nights). The group offers $150 per night and agrees to spend $5,000 on catering. Transient displacement analysis shows those 100 rooms could sell at $200 transient rate. Displaced transient revenue is $20,000. Group room revenue is $15,000 plus $5,000 catering, equaling $20,000 total revenue, making the group contract profitable after factoring in lower group acquisition costs.
Common mistake
Accepting group business too early at low rates without contract attrition clauses risks displacing high-paying transient guests during peak demand dates.
Related terms
Group demand in our reporting
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