The playoff between transient and group business can sometimes feel like a never-ending battle, but what’s the best option for your hotel? Discover the benefits of both segments, two key considerations for your business, and advice from our team of experts.
NB: This is an article from Duetto
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What is group and transient business?
Group business is made up of guests looking to book multiple rooms at once. This can be people looking to book a block of rooms to large corporate, tour, or event groups that require more.
In contrast, transient business consists of corporate and leisure guests looking for short and last-minute hotel stays.
Benefits of group business
- Fill low-demand periods as rooms are needed all year.
- Generate regular and predictable revenue, making it easier to forecast.
- Result in fewer cancellations as bookings are contracted with cancellation clauses.
- Often require additional services such as catering or meeting rooms.
- Are cheaper to acquire as fewer people are involved in the booking.
Benefits of transient business
- Achieve a higher average daily rate (ADR) as bookings are typically made at the last minute.
- Greater number of transient bookings compared to group business
- Helps yield the last remaining inventory at higher rates.
- More flexible in terms of room allocations, as guests will take what is available.
- Builds loyalty, especially with business guests.
Two key considerations
1. Work out what’s important for your hotel
Knowing what you want to achieve as a business is essential and will help you determine what type of guest you want to attract:
- Is occupancy your number one goal?
- Do you want the security of guaranteed income?
- Are you looking to maximize your revenue?
- Is ancillary spend critical to success?
2. Complete a displacement analysis
It all boils down to displacement analysis – a calculation of the value of group bookings vs transient bookings – by accepting one segment over another, what revenue are you bringing in? And what are you turning away? If you wait for transient bookings, is there an opportunity to sell rooms at a higher rate as demand increases? Or, are you running the risk of losing out on a guaranteed group income?
