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What does “market demand” mean in the hotel industry?

Market demand has a big impact on your hotel pricing strategies and overall business. Learn what “market demand” means, what factors to pay attention to, and how to manage your hotel’s data to increase occupancy rate.

The hotel industry has many factors to consider when measuring market demand. But do you ever hear the term “market demand” and wonder exactly what it means? In this article, we’ll explain the fundamentals of these two important words that can have a big impact on your business and hotel reservations.

What is market demand?

Simply put, market demand is the amount of interest potential customers have in booking a hotel room in a certain place, at a certain time. For example, if there is a popular event in your area – a conference or a festival, perhaps – the market demand for those dates would probably be high, as there would be a lot of people looking for a place to stay.

As someone running a property, it’s important for you to pay close attention to your particular market demand - it will affect your hotel prices – and your profits. Generally speaking, the higher the market demand is, the higher you should set your hotel room rates.

What factors affect market demand?

There are many factors that have an influence on market demand and, by extension, your approach to pricing strategies. These include current occupancy rates, day-to-day booking data, past bookings, competitors’ prices, local events, group bookings and more.

On top of this, there are some hotel accommodation factors that are becoming increasingly difficult to predict. For example:

  • Potential hotel guests aren’t planning travel as far in advance as they have done in the past
  • Last-minute travel is on the rise for both business and leisure travellers
  • Factors such as natural disasters, terrorist incidents and unforeseen election results all affect demand. 

Make sense of your hotel accommodation factors

With so many factors at play, it takes a lot of work to accurately gather all the information and data that contribute to your market demand. Exploring and researching websites, following competitors’ rates, organizing calendars, sorting through previous years’ data – and then crunching all the numbers.

Fortunately, BookingSuite offers RateIntelligence, a rate shopping tool which helps you manage information affecting your hotel rates and market demand. By using the hotel industry’s most reliable property data tool, you will understand how and when travellers are booking hotel rooms. As a result, you will gain a firm handle on market demand, and ultimately, secure more profit for your business by boosting hotel reservations.

Explore RateIntelligence

1 Comment

  1. Amber Castle
    April 30, 2018

    Thank you so much for the tips shared.


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