Originally Posted by nzed

I will try and make this as concise as I can;

The hotel in which I currently work does not look at pricing/rate structures from a break-even point of view. We rely on historical data to track demand periods and use discounts off our rack rate to encourage demand when necessary (also known as BAR - Best Available Rate). This is all apart from contracted wholesale or corporate rates that we must accept regardless of occupancy levels.

We also prefer to let a room go empty than sell it a discounted rate that is below our set minimums as this can negatively affect our efforts to raise rates when needed (similar to how some airlines will not upgrade someone from Y to J becuase a seat is empty a la SQ, CX). Competitor rates are also monitored, particularly during high demand periods.

We are measured by total revenue, occupancy and REVPAR, with total revenue our main focus, within the standards set by the brand.

Displacement refers mostly to groups - for example I will calculate the revenue a lower-rated group will displace against the possibility that the hotel will fill these rooms with higher-rated FIT guests closer to the arrival date. Potential F&B revenue is also considered.

This is just scraping the tip of the iceberg - it is a very detailed and complicated process that manages to confuse most guests when I have discussed the subject with them. Happy to discuss further if anyone has questions although my experience is mostly in Asia/Pacific resorts and may not be relevant to current practices in the US.