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What is derived demand? Give an example of derived demand for a hotel in your town.

What is derived demand? Give an example of derived demand for a hotel in your town.

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Derived demand means that the demand for hospitality and travel products from organizational buyers is dependent on the demand for the organizational buyers’ products. For example, if General Motors is having a good year, they will be able to send their top dealers on incentive trips. However, if car sales are down and the company is suffering a loss, GM will probably be more conservative in their spending on incentive trips for dealers. Therefore, the demand for hospitality and travel products by GM is in part dependent on car sales. Ask students to come up with examples of derived demand for a hotel in your market.

Derived demand in hospitality arises when corporate clients' demand for hotel services fluctuates based on their own business performance, like conference bookings tied to company profitability.

Junaid answered 8 months ago
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