Displacement 2

A Forecasting Review: Displacement Theory Definition: The acceptance of a group or a certain market segment over another. Eg 300 bedroom hotel/1 night in July 174 rooms already reserved = 126 rooms available. Forecast say that you will have interest from individual travellers (approx. 80 rooms - P/U) = 46 rooms available to sell. BUT - a request comes through for a group (76 rooms). SO WHAT DO WE DO?

PLAN B

ACCEPT THE GROUP

300 Bedrooms/ 1 night in July 1. 174 rooms already booked Revenue Potential = 175 x 174 = $30,450.00 2. 76 Rooms (Galaxo Group) Revenue Potential = 90 x 76 = $6,840.00 3. 50 Rooms still available Revenue Potential = 175 x 50 = $8750.00 (reliable?) Look at the figures above and discuss.

PLAN A

Turnaway the Group

300 Room Hotel in July 1. 174 rooms already booked Revenue Potential = 175/- x 174 = $30,450.00 2. 80 Rooms Transient Pick-Up Revenue Potential = 175/- x 80 = $14,000.00 3. 46 Rooms still available Revenue Potential = 175/- x 46 = $8050.00 (reliable?) Look at the figures above and discuss

Plan A & Plan B Exercise 1. Looking at these scenarios - what else has to be taken into consideration? 2. Explain displacement using Plan A as your example. 3. Give full reasoning behind choosing Plan A, and the same for Plan B. 4. Using market segments discuss the advantages and disadvantages of displacement theory.