Overbookings: the boogeyman of accommodation buisness

Overbookings are one of the most unwanted phenomena in the hospitality business. Doesn’t matter how big your business might be, at least once you had to deal with the overbooking. When we talk to our new customers, almost every single time they are asking if we will be able to save them from overbookings. However, we shouldn't name it to be the great issue in the business, because some properties see them as opportunities. So what is an overbooking and how it can be positive?

Why do overbookings happen?

When property is not using any management system, they need to manage availabilities manually. We know that manual work can take time. Also, there is human mistake factor. If you won’t update your online sales channels instantly, you might receive another booking for the same room, same date.

Even if the property is using property management system with integrated channel manager, overbookings are still a possibility. The risk is not so high as doing updates manually, but still, it’s there. Systems might have short outages and then fail to sync the availability. Also happens that at the same time two reservations are being made into different channels. In this case, even the systems that you're using, can't prevent the overbooking.

Yes, there is always a possibility to cancel the reservation if you don’t have any free room left. And yes, this might bring few problems:

A negative review from the guest because of cancelled reservation
Unhappy guests if you need to relocate them to lower room class or another property
A possibility that after you cancel overbooking, the previous reservation also will get cancelled leaving you the with empty room
Negative attitude from OTAs because of the high rate of cancelled reservations from your side

Can Overbooking be a positive thing?

In general, it can be a stressful situation, especially in the high season. But… From my experience, I can say, that some providers are looking at overbookings as higher sales possibilities. Such hoteliers even create the environment for overbookings. They're doing it by publishing more rooms than they actually have. They are sure that reservation can be allocated somewhere and that guest still will leave happy. If overbooked dates are far from the current day, there is also quite big chance of cancellation. So either one or another guest can cancel their stay, leaving a space for overbooking to become a normal reservation.

Most probably this point of view is more supported in hotels, where guests are not booking one particular room but rather a room type. With individual apartments or villas is a bit different. Their guests know for sure what they booked and they expect to see what they wanted. The main rule is not to put a guest in lower category room. As long as you give them a free upgrade - overbooking can be a positive thing.

Getting back to the main idea - overbookings happen due to the lack of time for administration. Accommodation providers have to decide on one thing: do they want to hire more people, who would make sure that calendars are up to date. Meaning that there always needs to be a person taking care of updates 24/7. Or they should purchase the PMS system with channel manager which would do the job automatically. Meaning that they will reduce the manual work, but they will have extra costs for the system.

The choice is yours.