Why hotel overbooking

Great Tips and very well written. This article really helps me to choose better things. Thanks for sharing. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. This site uses Akismet to reduce spam. The reasons hotels overbook their guests is similar to why airlines overbook their flights. Hotel bookings typically have less stringent cancellation policies than airline tickets; people can usually cancel 24 hours prior to their booking without being charged.

As a result, sometimes hotels find themselves with too many reservations and not enough rooms. Below statistical and historical data should be stored and processed by the reservation manager or revenue manager to calculate optimum overbooking levels. Confirmed reservations vs no-shows based on historical data. Expected cancellations. Predicted stay overs and predicted under stays. Predicted Walk-in guests. This leads to instances like no-shows and booking cancellations.

To ensure full occupancy, hotels are trying their best to deal with no-shows and cancellations. And this is where overbooking strategy for hotels plays a major role. In the hotel industry, overbooking is a key revenue management strategy that helps maximize occupancy. It is the act of selling more rooms than are available in a hotel in a certain date range. Revenue managers implement overbooking practices in hotels by carefully calculating and anticipating a certain percentage of existing reservations that may get canceled.

Even though it is a part of the revenue management strategy, overbooking hotel rooms is purely related to room allocation and inventory management. This is mainly done to insulate hotels from revenue loss that may arise due to no-shows and last-minute reservation cancellations.