Booking Pace, Group Wash, and Whether a 12% Discount Pays
A 180-room hotel is forecasting a 30-day month beginning in 90 days. On the books: 1,240 room nights at a $198 ADR ($245,520) - 620 group at $158 and 620 transient at $238. At the same point last year the hotel had 1,410 room nights at $186 ($262,260) and finished that month with 4,050 room nights at $184. This year's group blocks carry an 8% historical wash. Rooms variable cost is about $38 per occupied room night. The director of sales proposes a blanket 12% discount on all remaining transient rates to "close the pace gap"; the GM wants the math first.
1. Compare current pace to the same point last year. Is the hotel ahead or behind, and by how much?
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Pace comparison
- Room nights: 1,240 vs 1,410 = −170 (−12.1%)
- Rooms revenue: $245,520 vs $262,260 = −$16,740 (−6.4%)
- ADR: $198.00 vs $186.00 = +$12.00 (+6.5%)
Verdict Behind on revenue, but by only about two-thirds of the room-night gap, because rate is absorbing part of the shortfall. The hotel is trading volume for rate and sits $16,740 short of last year's position.
Critical caveat $198 is an on-the-books forecast, not a final. OTB ADR typically erodes 3–6% as late, lower-rated bookings arrive. At a 4% erosion, realized ADR would be about $190 and rooms revenue $235,600 - a gap of about $26,660, not $16,740. All pace conclusions should be run on an expected ADR, and the erosion assumption should be refreshed monthly against actual conversion.
2. Apply the group wash and project where the month lands if last year's pickup repeats. What range should the hotel plan against?
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Apply wash
- Expected group: 620 × 0.92 = 570 room nights
- Expected on the books after wash: 570 + 620 = 1,190 (22.0% of 5,400 room nights)
Pickup assumption Last year the hotel picked up 4,050 − 1,410 = 2,640 room nights between this point and arrival.
- Repeat scenario: 1,190 + 2,640 = 3,830 room nights = 70.9% occupancy.
Risk-adjust it Transient pace is 12% behind last year, so a full repeat is optimistic. At 85–90% of last year's pickup (2,244–2,376 room nights):
- 3,434–3,566 room nights = 63.6%–66.0% occupancy
Revenue range At roughly $190 realized ADR: $652,000–$678,000, versus last year's 4,050 × $184 = $745,200.
Planning guidance Budget and staff to the low end (~$652,000) and hold the upside as upside. Setting labor or incentive targets on the repeat scenario guarantees a miss and creates pressure for exactly the kind of late discounting that destroys the rate position.
3. Evaluate the proposed 12% blanket discount using contribution break-even. What would you do instead?
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Contribution math
- Today: $198 − $38 variable cost = $160 contribution per room night; 1,240 × $160 = $198,400.
- After a 12% cut: ADR $174.24 − $38 = $136.24 contribution.
Volume needed to hold contribution $198,400 ÷ $136.24 = 1,456 room nights - +17.4% over what is on the books (+216 rooms).
Volume needed just to hold revenue $245,520 ÷ $174.24 = 1,409 rooms (+13.6%) - but revenue break-even is the wrong test, because every added room costs $38 to service.
Verdict The proposal requires 216 room nights of demand that the pace data says does not exist, in a month already 12% behind, where the pickup curve is the only source of volume. It also lands realized ADR near $174, below last year's $184 - you would sacrifice rate and still miss revenue.
Instead
- Hold the rate fence; close the softest dates to opaque/wholesale channels rather than cutting published rates.
- Use targeted, date-specific offers only where forecast occupancy is below ~65%, each with a published rate floor and a measured pickup.
- Push group prospecting on shoulder dates: 40 rooms at $158 with F&B attached can beat 60 discounted transient rooms at $174.
- Track rate integrity weekly. If realized ADR falls below $184, the strategy has failed on both occupancy and rate.