What is the meaning / definition of Unconstrained Demand in the hospitality industry?
Unconstrained demand refers to the quantity of rooms in a hotel that could be sold if there were no constraints, no limits.
When considering unconstrained demand, a hotel manager or revenue management team must ask themselves: "If there was no limitation whatsoever on our hotel's capacity, during, say, the Christmas and New Year holiday period, what would the total demand for rooms amount to in monetary terms?"
But what is the use of knowing this, you might ask yourself!
Well, when total demand for a particular date is identified irrespective of capacity, a hotel can then plan better for the future and perhaps even take steps to increase capacity, to accommodate the demand and therefore maximise revenue. It can also gauge better or even accurately calculate what price to charge for different types of rooms and suites around/on a certain date or period.