What is a hotel overbooking?

What is a hotel overbooking?

Hotel overbooking is a term used to describe a situation when a hotel has more reservations than the number of rooms available. How is it possible and why? Is the hotel overbooking strategy planned?

Why hotels make overbooking?

Many people do not understand the hotel overbooking strategy. It is a risky game. What if all the guests arrive and there will be no rooms available to accommodate all of them? It is a secondary thing for a hotel. They can relocate a guest to another hotel or make a money return. The most important thing for the hotel is revenue. The more reservations will be made, the higher the money income the hotel will get. Yes, there will be a problem with guests who arrive and cannot stay because of a lack of room. However, the hotel will get 100% guaranteed revenue or even more.

What is a hotel overbooking strategy?

The overbooking of hotel rooms can be done purposely. Many hotels have a hotel overbooking strategy, which allows (or even plans) to make certain percentage of more reservations, than a number of rooms available.

When hotel overbooking is planned, qualified hotel staff foresee what percentage of more reservations can be made to get higher income without loss. Sometimes hotels allow making more reservations on a special date because they know that there will be huge interest in reserving hotel rooms that time but some reservations may be canceled by guests. This may happen when for example there is a special celebration in town and there will be a lot of incoming tourists but people are making hotel bookings in advance and then may change their mind about taking part in the event. Therefore, the hotel takes more reservations as it knows that some of them will be canceled anyway.

Check here what are your rights when the hotel you reserved is overboked!

However, a hotel overbooking strategy may be done during the day. For instance reservation department can check in the morning that the hotel is fully booked and decide how many more reservations can be made that day. How do they do that? Mostly by checking how many reservations are not guaranteed or by checking guests’ stay history. Some guests make reservations but never come to the hotel. If hotel staff catch that, they are free to overbook rooms in place of non-guaranteed reservations or booking by no-showing guests.

How hotel overbooking strategy is done?

To understand how hotel makes overbooking, imagine that a hotel is booked 100% but 10% of reservations has no guarantee that guest will come e.g.

  • They did not guarantee the stay with a credit card,
  • They did not pre-pay for the stay,
  • They did not give a personal confirmation by answering hotel e-mails/phone calls when employees try to ask them if they arrive today.

In this situation hotel cannot be sure that it will sell the 10% of rooms as guests may come or not. Therefore if there will be walk-in guest who would like to have a room and pay for it straight, the hotel will take him/her and make overbooking. The hotel’s guaranteed income will get higher at the same time.

Sometimes hotels even overbook rooms when 100% of reservations are payment guaranteed and can have over 100% revenue. What is interesting in many cases it works well and the hotel does not get money loss at the same time. Some guests who made guaranteed bookings may not arrive even if they already paid for a hotel room. Therefore, hotels can accommodate someone in their place and get paid twice for one room.

Can hotel be overbooked by accident?

Accidental hotel overbooking is when hotel employees do not control incoming reservations and miss the fact that the hotel is already fully booked. This may happen for example when someone will call to make a reservation and an employee will make it without checking out room availability. However, sometimes overbooking reservations comes in automatically from the online reservation system because there was a wrong number of available rooms set and guests could book a hotel room even if it is physically not available.

Hotel overbooking strategy is complicated and needs to be done carefully. However, many hotels use it and manage well with increasing revenue without (or with very small) damage to guest opinion, satisfaction, or hotel budget.

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