Hotel Revenue Glossary · Demand

Price Sensitivity

The degree to which a guest segment's booking behavior changes based on room rate. Price-sensitive segments shop aggressively for the lowest rate, while price-insensitive segments prioritize location, brand, or service quality over cost.

Why it matters: Estimate price response from comparable property cohorts by purpose, date, product, terms, channel, lead time, and alternatives. Corporate and OTA labels do not establish low or high sensitivity.

Worked example: Two cohorts book the same Thursday. Cohort A reserves inside three days — 41 rooms at an average A$232. Cohort B reserves 40-plus days out — 55 rooms at A$188. Lift BAR A$15 across the next four Thursdays: cohort B falls to 46 rooms, down 16% (9 / 55) on an 8% rate move (A$15 / A$188), while cohort A gives up one room on a 6% move. At this property the long-lead buyers are the sensitive ones, whatever the segment code says.

Common mistake: Reading sensitivity off the rate someone paid. A guest on a A$155 negotiated rate is not price-sensitive; they are on a contract. Sensitivity is how volume responds when the price moves, which you can only see by moving it and watching the same cohort across comparable dates.

All glossary terms Demand Elasticity Market Segment Rate Fence