The unconstrained demand of a hotel is your total demand for a particular date irrespective of your capacity. Hotels should identify when unconstrained demand is above the capacity of the hotel. This is an important part of your hotel revenue management strategy.
The unconstrained demand will help you calculate your Last Room Value for certain dates, and possible length of stay restrictions that may apply. Once peak periods are detected, you can start regretting low paying business. Historical data capture will help to calculate potential unconstrained demand. It is possible to develop manual tools which would help to identify those periods, such as with excel.
The unconstrained demand shall help you to evaluate the Last Room Value and displaced revenue.
Record your denials for individuals but also for group bookings: by length of stay, by market segments, with total value for groups. What is your group unconstrained demand? Develop your denial and regrets reasons:
You may also record on your demand calendar when you main competitors are fully booked or sell high rates as this affects the demand to your hotel.
So to recap, unconstrained demand is the total demand you have for a particular date, including beyond 100% occupancy. Constrained demand, are within the availability constraints of your inventory (100%).
Below an image that may better visualize the concept.