Hotel overbooking is one of the most misunderstood tactics in revenue management. Done well, it can protect your occupancy and revenue against cancellations and no-shows. Done poorly, it creates “walked” guests, bad reviews, OTA penalties, and a front-desk meltdown on your busiest nights.
NB: This is an article from Chekin
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Pros and cons of hotel overbooking
Advantages of hotel overbooking
When controlled, overbooking can:
- Protect revenue from no-shows and late cancellations.
- Increase occupancy on high-demand dates.
- Improve RevPAR by avoiding empty rooms you “expected” to sell.
- Stabilize forecasting and staffing by smoothing demand volatility.
Disadvantages and risks
Uncontrolled overbooking can:
- Damage reputation through negative reviews and social posts.
- Trigger OTA consequences (fees, ranking impacts, visibility loss).
- Increase costs: relocation payments, upgrades, transport, staff overtime.
- Create legal/contractual exposure (a confirmed booking is a commitment in many jurisdictions).
- Break trust with repeat guests and high-value segments.
How to decide if hotel overbooking makes sense for you
If you’re considering intentional overbooking, start with one rule: never overbook to compensate for weak demand. Overbooking is a hedge against predictable attrition, not a growth hack.
The safest inputs to use
Build your decision on your own historical data:
- No-show rate by channel (Direct vs OTA vs Corporate).
- Cancellation rate by lead time (30+ days, 7 days, same-day).
- Seasonality and day-of-week patterns.
- Room-type constraints (suites and family rooms are harder to “replace”).
- Special events (concerts, fairs) where relocations become expensive.
Practical caps that reduce regret
Instead of “one global percentage,” set caps by context:
- Lower cap on peak compression nights (when the city sells out).
- Lower cap for unique room types.
- Higher cap when you have reliable nearby partner hotels and stable cancellation patterns.
Prevention: how to avoid accidental hotel overbooking
Most overbooking pain is accidental. Fixing it is usually cheaper than dealing with walked guests.
Upgrade your availability control (systems and integrations)
A resilient stack typically includes:
- PMS as the single source of truth for inventory.
- Two-way channel manager to sync availability and rates in real time.
- Booking engine tied to the same inventory pool (no “separate calendars”).
- Clear rules for out-of-order rooms and maintenance blocks.
