Every hotel’s worst nightmare is hotel overbooking. It is acceptable how it can hamper the performance of the hotel and directly impact the hotel’s reputation. But what exactly is a hotel overbooking, and why is it feared a lot? And what if I told you you could turn this unfortunate series of events into something beneficial for your hotel?
This article will exactly show you how you can benefit from the most feared term in the hotel industry, which is overbooking.
In the hotel industry, overbooking is a practice where hotels accept a greater number of bookings than the actual number of rooms available to ensure maximum occupancy. This step is often taken to minimize the risk of empty rooms and to boost revenue.
However, this game can sometimes lead to complications, and hotels can end up in uncomfortable situations such as double bookings and poor customer service quality, which can negatively impact the hotel’s reputation.
There can be plenty of reasons why the hotel faces this complicated issue of overbooking. From a faulty system to an effort to boost the overall revenue of the hotel, Let us discuss all the major points that contribute to the overbooking scenario.
Hotels rely on past data and analytics like Google Analytics to forecast the bookings they will be getting at that time. Hotel owners analyze the data and booking patterns for actual bookings, cancellations, or no-shows.
As all this game works on probability and outcomes, there is a time when hotels estimate the available rooms and accept more bookings as compared to the available rooms.
Guests can cancel bookings at the very last moment for various reasons. This is a common reason why hotels have to deal with empty rooms.
This uncertainty pushes hotels to oversell rooms to counteract the potential revenue losses caused by last-minute cancellations.
A faulty Channel Manager can cause overbooking by incorrectly updating rooms across different channels. If it fails to synchronize reservations in real-time or shows incorrect information, customers will not be able to see updated inventory and end up booking the same room multiple times.
This scenario is very likely when dealing with multiple OTAs at the same time. Channel managers can play a pivotal role in avoiding overbooking.
But the whole theme of this blog is to let you know how you can take advantage of hotel overbooking and boost your hotel’s overall performance while simultaneously reducing the risk factor.
On rare occasions, hotels use overbooking to mainly minimize the risk of running empty rooms. Hotels should keep in mind that this risky affair can sometimes backfire. But despite the risks, it can also offer several advantages for both the hotels and the guests.
Let’s go through the five major advantages of hotel overbooking in detail.
Hotels make use of the overbooking strategy to make the most revenue possible. Every day, several customers cancel their booking at the last moment. To counter this, they accept more bookings than they can accommodate.
This especially helps them maximize their revenue in busy times. By looking at past booking and cancellation patterns, hotels can predict the number of last-minute cancellations. This allowed them to only overbook that number of rooms. This means they’re making more money by accommodating additional guests.
When hotels overbook, they aim to achieve full occupancy at the Hotel. Think of it like a well-planned chess move during peak times, such as holidays or events when lots of people show up. By doing so, hotels make sure they’re making the most of their rooms.
It helps them increase occupancy rates, which doesn’t just benefit the hotel’s pocket but makes their operations more efficient and profitable.
The prices of the hotel rooms keep changing based on the number of bookings they are expecting. If, in some cases, hotels don’t want to overbook, they strategically sell higher prices to cover the losses they incur from empty rooms. Overbooking helps them maintain competitive pricing.
So, in simple terms, overbooking helps hotels stay reasonably priced for guests. This is particularly crucial for attracting budget-conscious travelers and staying competitive in the industry.
You won’t believe it when I say, that overbooking can sometimes make guests happy. Let me explain. When hotels expect cancellations and plan overbooking, they prepare for last-minute reservations. This flexibility helps create a positive impression on the guest.
Imagine a guest needs a room urgently during a busy period, and the hotel, despite showing booking online, can accommodate them. It shows hotels care about their guests and are willing to deliver the best guest experience at any cost.
Hotels sometimes experience the hassle of guests failing to show up, which can lead to trouble. To solve this problem, the hotels overbook their rooms to be better prepared for no-shows. Most significantly, this plan enables them to avoid incurring costs on empty rooms and control the impact arising from no-shows more effectively.
Hotels can minimize financial losses by calculating how many rooms to overbook and doing it well. This is like a backup plan so that hotels won’t lose too much because of the unanticipated absence of guests.
Overbooking may be a useful tool for hotels; however, it calls for careful planning as well as strategies with finesse. This helps to strike a balance between risks and gains to maximize revenue, enhance occupancy levels, remain competitive, satisfy customers, and manage uncertainties arising from no-shows.
Keep in mind that overbooking should be thoughtfully employed and responsibly done by both the hotels and their visitors so that both parties benefit mutually. The more hotels use overbooking in a planned and responsible way, the better it will be for everyone involved.
Thanks for reading my comprehensive guide on How to Benefit from Hotel Overbooking.
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