Unconstrained Demand is part of a hotel’s Demand Forecast. It is a representation of a hotel’s total demand for a given period. It is a useful KPI for revenue management decisions, especially when it relates to maximizing revenue on a hotel’s last remaining rooms available.
There are also many ways to organize data to identify Unconstrained Demand. Hotels should consider implementing manual tools (such as through applications like Excel or hotel management apps) that help with organizing data and identifying periods of Unconstrained Demand.
What is Unconstrained Demand For?
Evaluating Unconstrained Demand helps hotels identify when that demand exceeds the hotel’s capacity. Identifying these periods will help hotel revenue managers identify when they might need to change revenue management strategies by raising room rates. In other words, identifying Unconstrained Demand helps revenue managers maximize revenue during periods of high demand.
Benefits of Unconstrained Demand
Identifying Unconstrained Demand is essential for determining the value of a hotel’s ‘Last Room Available’. It also helps revenue managers apply any possible length of stay restrictions for periods of higher demand. By capturing, organizing, and evaluating a hotel’s historical guest data, managers can calculate potential Unconstrained Demand.
Using Unconstrained Demand to forecast a hotel’s revenue potential is useful because it allows revenue managers and hotel executives to identify their ‘ideal’ demand scenario.
Limitations of Unconstrained Demand
Unconstrained Demand does NOT account for a hotel’s current capacity. Some might say that a Demand Forecast that places too much value on Unconstrained Demand can be overly optimistic. This is because it does not account for any constraints that might reduce demand, therefore, reduce a hotel’s revenue potential.
How is Unconstrained Demand Calculated
A hotel can implement its own system for calculating Unconstrained Demand. There is no universal system for making these calculations, but a hotel manager can use their existing Demand Calendar to help with these calculations.
Example of Unconstrained Demand
Some examples of data used to calculate Unconstrained Demand include room nights booked, expected pick up, total bookings, and total number of rooms available. Again, managers should designate a specific time period for which calculations of Unconstrained Demand are made.