Intentional Overbooking – Clever or Questionable?

Intentional overbooking is a common practice for many hoteliers in this day and age. The deliberate plan of taking more bookings than you have rooms is a vital part of your revenue management strategy.

But what happens when it all goes wrong?

Why do Hotels Intentionally Overbook?

For the most part, we overbook hotels in order to achieve maximum occupancy – or as close as we can to it. Every hotelier has experienced vast numbers of cancelled bookings, or no-shows from some guests that unfortunately didn’t quite manage to turn up for one reason or another.

By overbooking, you safeguard hotels against these tragic turns of events. Texas Lodging insist that overbooking is “a low-risk and common strategy in hotel revenue management.”  After all, every room not being occupied is another hole in your budget, so ensuring that as many rooms as possible are filled is simply common sense.

Strategies for Intentional Overbooking

This is a hotelier’s time to shine. The insight, and understanding generated from years of experience and dedication within the hospitality industry really come into play when it comes to calculating overbooking limits.

Overbook too much and you’ll alienate hordes of customers. Fail to overbook enough, and you’ll be altering your revenue management strategies to try and break even.

For a hotelier, you need to pay attention to previously recorded figures such as:

• Cancelled Bookings

• No-shows

• Walk-ins

• Reservations (Group or singular)

And perhaps most importantly:

• Seasonal trends

It’s quite a thing to try and predict the future, especially when your entire business relies on you doing so. That’s why your past experiences within the hotel and your knowledge of destination marketing play a huge role in your calculated predictions.

Will walk-ins cover the combined number of no-shows and cancellations? Will local events provide a surprising boost at a particular time? Most importantly, will you get that balance right?

Intentional Overbooking Goes Wrong

Hotel intentional overbooking can be horrifically mismanaged if not carefully monitored. If you calculate poorly, your hotel will suffer consequences such as: 

• Negative reviews

• Additional costs (finding alternate accommodation and transporting guests there) 

• Loss of customer loyalty

And the slew of ramifications that stem from providing a disappointing experience for paying guests. 

That being said, it’s not always possible to avoid it, so therefore…

How can hoteliers Minimise the Fallout from these situations?

As a hotelier you should categorise your bookings in order of priority. Which bookings are low-risk to move to alternate accommodation? Are some bookings more valuable than others?

Group bookings

Never attempt to move group bookings. Either you are forced to move the entire group and lose all of them, or you move part of them and face the entire group booking becoming angry at your hotel. Not to mention that you would probably be in breach of a group sales contract from an online travel company!

Length of stay

Obviously more nights mean a greater yield of revenue, so let them stay. Prioritise those staying for a week, over those staying for a single night. In general, short-term business trips are the least likely to cause a fuss at being relocated as long as the alternative accommodation is up to standard and nearby.

Double-check before relocation

It may sound like a simple oversight, but people can get it wrong. In fact, there may be no overbooking at all! There may be no need to relocate a guest if a member of your team made a spelling mistake during a duplicate booking.

You should also remember to check the availability of other types of rooms. Perhaps you’ve overbooked on single rooms, but there is a deluxe suite available for the next two nights.

It makes no sense to relocate your guest and lose that potential revenue, when you could place them in the deluxe suite for their two-night stay and claim that it is a complimentary upgrade.

Your customers are satisfied, and your management style fills up all of the rooms available.

Conclusion to Intentional Overbooking

Overbooking is a valid strategy for any experienced hotelier. It improves occupancy rates, builds customer satisfaction and ensures that everyone comes out satisfied with their results.

Just make sure to provide a complimentary bottle of wine for those guests unlucky enough to be relocated!