Overbookings can be stressful for the front desk and the guest, but you can manage them with ease if you have a proper plan in place.
NB: This is an article from Cloudbeds, one of our Expert Partners
While for some hoteliers it’s best to avoid overbookings altogether, for others, a good strategy can increase revenue, improve the occupancy rate and mitigate losses. Sometimes, however, simultaneous bookings happen when two guests book the same room from different channels at the same time.
Subscribe to our weekly newsletter and stay up to date
How could this happen? A good channel manager refreshes every minute or so, leaving an unavoidable small window where multiple guests can book the same room.
System setup errors are also common. All channel managers and individual channels require careful setup. Mistakes can happen if you miss a step or don’t include all of your rooms. That’s why you should always aim to follow the setup guides provided by your property management system (PMS), channel manager, and the booking channel. Each channel needs to be mapped correctly in order to coordinate the number of rooms and room types in your software with other channels.
Additionally, you may distribute your hotel rooms across multiple third-party channels such as OTAs, GDS providers, or meta-search providers. This practice, although encouraged for gaining more bookings, can lead to overbookings, especially if you’re managing all of your distribution channels manually because the distribution channels won’t have access to your most current room inventory.
Overbooking can be a cost-effective strategy if implemented correctly. It helps hotels mitigate losses by ensuring your hotel is full even if there are last-minute cancellations. Should you run into a situation where there are no rooms left on the day of check-in, it’s oftentimes more cost-effective to find transportation and alternative accommodations for the displaced guest than to have rooms sit empty.
On the other hand, overbooking can have negative consequences, most notably, the impact on customer satisfaction. Overbookings can be a stressful situation for the front office and guests. A plan that effectively “walks” guests is crucial. Walking guests means that you arrange accommodations for them elsewhere if your property is overbooked.
It’s important to carefully monitor and restrict the number of times you have to “walk” a guest, and when the incident does occur, ensure you handle it with extreme care to avoid any potential negative feedback or reviews.
Is an overbooking strategy right for your property?
In short, it can be, but you need to make sure you have clear processes in place. If your property tries to manage overbookings without a strategy, it can lead to a negative financial impact, as well as negative reviews. Alternatively, having an overbookings strategy can lead to a positive financial impact because you are making sure your property is booked to full capacity whenever possible, taking into account your typical cancellations and no-shows. After all, if you’re overbooked, that means your property is full.
Without a strategy, you’re always losing money when you have an overbooking. But with a strategy, you have the opportunity to increase room revenue because you minimize the risk of no-shows and cancellations. With a plan, you can fully book your hotel and minimize empty rooms.
