Overbooking in the hospitality industry can be seen as a “double edged sword” - a profitable practice when working for you, and an utterly disastrous one when working against you. When used ineffectively, the stigma of unprofessionalism can result - often leading to slander on social media outlets, leaving your establishment with a “brand” difficult to shake. You are dealing with real people, with real lives and real plans - who become real upset when things don’t go their way.
There are many facets to be considered when attempting to hone the skill of overbooking and using it effectively to grow your business. For starters, it is imperative that you know your customer base in order to attempt to predict their behaviors. Are you a hostel, catering to student travellers who are more likely to book last minute? Are you an economy hotel, attracting families who book and plan their stay months in advance? Or are you an upscale boutique hotel appealing to the business-type, whose plans are known to change on a whim? By knowing your clientele, you have a better chance of predicting their behaviors and likeliness in checking in, thus determining the extent at which you can implement overbooking.
It is important to keep up to date with what is happening in the area. Festivals, big concerts, and popular events that cause rooms to sell out in the city usually mean minimal “no-show” rates. Therefore, manage your overbookings accordingly. By keeping an eye on what your competitors are doing and their capacity rates, you can get a better feel for the demand in the area.
It is a constant challenge to minimize the negative effects overbooking can have on an establishment. Managing & predicting no-shows and determining when to overbook can be a daunting task with little or no reprieve. This is where an effective hotel booking system can be an advantage. Such a system has the capacity to put controls in place when it comes to excessive overbookings due to things such as natural disasters. Processing credit cards at the time of booking and updating 3rd party booking sites to reflect live changes in room availability are other ways in which overbooking practices can be managed accordingly. Furthermore, a system can be implemented to increase direct contact with the guest - confirming their arrival days in advance (helping reduce no-shows), explaining the terms and conditions surrounding cancellations, and even allowing them to check in online earlier, at own their convenience.
When used properly, the practice of overbooking has the capacity to grow a business exponentially. It is about managing the risks and rewards, and utilizing an effective hotel management system in doing so.