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Hotel Overbooking Strategy

Virág Dajka
Sep 3, 2021 1:05:35 PM

What we’re about to discuss here might, at first glance, seem like a contradiction in terms. A strategy for hotel overbooking? Isn’t overbooking a problem, a situation in which you’ll end up with angry customers, refunds, and negative reviews online? 

Well, not necessarily. Although it may feel contradictory or confusing, there are, in fact, very valid reasons for overbooking in hotels. In fact, when done properly, it’s not a crisis scenario at all: it’s a strategy for maximizing bookings, and by extension, revenue. In the limited space we have here, then, we’ll endeavor to answer a few questions: how do we define overbooking? What, exactly, is a hotel overbooking strategy? And most importantly, why should you and your residence have one?

Hotel Overbooking Solutions

What are we talking about when we talk about overbooking?

This first part really should go without saying, but it doesn’t hurt to be extra clear on this point, so here it goes. Overbooking’s meaning, in a hotel context, is simply that more rooms have been reserved than there are actual rooms in your residence on a given night. It doesn’t matter, ultimately, whether these reservations arrive via telephone, your hotel’s website or an Online Travel Agency such as Expedia. If, at the end of the day, you’ve got more people set to arrive at your hotel than you have rooms to hold them, you’re overbooked.

Why would you ever deliberately overbook your hotel?

This is, of course, a very fair question. From the perspective of a guest, it actually seems like quite the ludicrous proposition. After all, why on earth would I book a room at a hotel knowing that, upon arrival, there might not even be a room for me there after all?

That point of view is logical, and makes a great deal of sense, as far as it goes. For a hotelier, however, the matter stands rather differently. When running a hotel, you have to constantly be aware of cancellations, as they can quickly and easily impact revenue, and endanger the viability of your residence as a whole. In order to minimize the impact of cancellations, and maximize occupancy, then, some hoteliers choose to occasionally overbook their residence. The key question here, as in so many things, is how to overbook a hotel, without doing more harm than good.

Hotel overbooking strategy: what to watch out for, and what to avoid

A bad, poorly-designed hotel booking strategy is a recipe for chaos and disruption. It can lead to stressed staff members, a confused front-desk, and, worst of all, angry, angry guests. Regularly turning away guests who have already booked rooms with you is a painful, embarrassing mistake, one that can negatively impact the reputation of a hotel. This is, it goes without saying, the kind of disaster that you can, and should, avoid at all costs. 

An intelligent booking plan, by contrast, will serve the interests of your hotel, without negatively impacting your guests. With attention and careful planning, you can minimize the impact of cancellations, and maximize occupancy, without damaging your relationship with current, future, and potential guests. 

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A few pointers

It’s worth noting, as an aside, that overbooking is by no means something that your hotel should be engaging in every single day. If you do, you’ll quickly become overwhelmed, have many guests turned away, and your reputation will suffer a potentially irreparable hit. Rather, as we’ll see, the decision to overbook needs to be made carefully, with due attention paid to the specific realities of your residence.

First and foremost, if you are going to overbook your hotel on a particular day, you need to ensure that you have back-up plans if the worst happens, and you actually have to turn away guests. Make sure you have overbooking partnerships with nearby hotels—they’ll take guests that can’t fit when your hotel is full, and in exchange you’ll take theirs on days when they’re overbooked.

Similarly, on a day that you’ve chosen to overbook, you need to be clear on who, exactly, you might be bumping. You need to make sure that any reservations that might be bumped are not guaranteed ones. Similarly, it’s a good idea to avoid booting higher-priced reservations, or long-time repeat guests.

In order to do all this, though, it’s crucial to have a clear database of guests, as well as data on repeat guests, peak booking seasons, and other factors. To make sense of all this information, and to wield it effectively, you might just need some help.

Manage bookings, overbooking, and more with SabeeApp

As we’ve seen, in order to craft an effective overbooking strategy, you’re going to need data, and an effective way to analyze it. Here is where hotel management software, such as SabeeApp, can help. A top-notch property management software makes keeping track of, and making sense of, information a breeze. With all of your data collected in one, state-of-the-art software, you can make informed, intelligent decisions that will lead your hotel to profit and success. 

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