Hotel Revenue Glossary · Demand

Demand Elasticity

The degree to which hotel room demand changes in response to a change in price. Elastic demand means a small rate change produces a large change in bookings. Inelastic demand means bookings change very little regardless of rate adjustments.

Why it matters: Demand elasticity determines whether rate increases will stick or drive guests away. Business travelers on compression nights have inelastic demand — they will pay the higher rate. Leisure travelers during shoulder season have elastic demand — a $20 increase may deter bookings.

All glossary terms Price Sensitivity Demand Curve Dynamic Pricing