Why do hotels overbook

But you have to be prepared for all the possible scenarios for this to work. Here is this post we will show you how to create an effective overbooking strategy that minimizes the collateral effects and give you tips on how you deal when the worse happens and turn the bad experience into a positive one. You probably know by now what overbooking is.

As a strategy or a simple mistake, overbooking is quite common in the hotel industry. Probably every hotel has experienced it at least once. But, if it can bring so many risks, why do hotels overbook? Hotels adopt overbooking as a strategy because a room that goes empty a night jeopardizes your annual revenue. Basically, because it cannot be sold twice the next night or any other night. That is the main reason why overbooking is practiced. It is a low risk when done right and the oldest most commonly used method to increase profitability.

Listen here:. An overbooking strategy can be very beneficial or damaging to hotels. It all depends on how well it is planned. Although guests, understandably, see overbooking as a negative situation, if the strategy is done based on calculations, the potential of optimization of the revenue is great and it can be positive to the hotel.

For overbooking to become a strategy and not a simple mistake, it will require a lot of data analysis. Again, we are not talking about guessing. We are talking about probability. In order to succeed, the overbooking strategy requires professionally trained and experienced staff to reduce the risk of miscalculation. But miscalculation of what exactly? Overbooking is when you sell more than you have, right? Yet, hotels also have a number of booking cancellations every month. With that said, this plan of action is based on the presumption that a certain percentage of bookings will not show up.

Why is that important? Over the past 16 years, SmartHOTEL has been helping Hoteliers find their way through the exciting and confusing world of online distribution.

From our office based in the Netherlands, our team serves over hotels worldwide by providing channel management and tailored online distribution solutions. Overbooking strategies: what is it, and does your hotel need it? What is overbooking? Why is an overbooking strategy important? You might also like: 5 successful pricing strategies for a higher revenue Tips for an overbooking strategy Data analysis is critical to draw up a good strategy.

When you start, we advise you to include the following points in your assessment: The total available rooms The confirmed reservations on a specific date The number of reservations with payment guarantee e.

Also read: 4 performance indicators metrics for a more profitable hotel What are the advantages and disadvantages of overbooking? By Chantal Mieremet September 07, Related Posts. Tips for hotel owners and vacationers : learn and profit from booking sites! July 22, 0 Comments. Covid changes generates new opportunities in the hotel market. June 17, 0 Comments.

How much money does your hotel lose through the rise of virtual credit cards? May 11, 0 Comments. However, if you booked your stay independently of a tour operator, not as a package, and the hotel has overbooked, they will likely try to find you another room but they do not have to offer you an alternative. If ever you are in a situation of hotel overbooking, it is best to contact tripcentral.

Blog Home » Why do hotels overbook? Trip Sense tripcentral.