Unconstrained demand
Why is it important to monitor unconstrained demand in hotels?
Knowing the unconstrained demand allows more accurate revenue management decisions.
This data allows to:
- Estimate the true revenue potential in a time period
- Assess whether the hotel could have sold more with greater availability or different pricing
- Better define pricing, segmentation, and distribution strategies in high-demand periods
- Prevent Spillage (lost revenue due to early sell-out)
Using the unconstrained demand is important to also analyze past events: for example, if on a certain day the hotel sold out well before the arrival date, comparing actual bookings to the requests can highlight a demand that exceeds the offer.
How is unconstrained demand estimated in hotels?
Unconstrained demand is not directly observable but can be estimated through:
- Historical demand data (including unconverted requests)
- Booking engine search trends
- Rejected requests or waitlisted guests
- Pickup and lead-time analysis in similar periods
- Advanced forecasting with revenue management software
Example: if a hotel has 50 rooms booked and receives 20 additional requests it cannot fulfill, Unconstrained Demand is 70 rooms