Home Revenue Management Reservation How to Manage Overbooking… Properly! Part II

How to Manage Overbooking… Properly! Part II

Dec 20, 2012  By 

  • Check, check, and check again
    ;
    this is front-of-house’s domain.  Each reservation should be checked time and time again – the guest contacted prior to arrival (at least 2-5 days before arrival) to confirm arrival times, requirements and visit purpose.  This then ensures that all bookings are confirmed and reservations appropriately guaranteed.  Even doing this you will get some non-arrivals, but it will help reduce them.  If you are required to outbook, at least with knowing why people are visiting, you can arrange accommodation that suits their needs – do not send the disabled guest to the top of a 3 story set of stairs in an old castle!

  • Let Front of House determine the overbooking levels

    and negotiate this with them – okay, so the first time you ask Front of House this question, they will say a flat out zero – no overbooking!  I would! But the fact everyone must accept is that overbooking is a gamble and must happen to ensure revenue is controlled as much as possible.  generally, your reception team will be able to ‘give you the feel’ for a certain day – after years on the job, many managers and receptionist can accurately predict whether you will be worthwhile overbooking or not, just by knowing what is on, what your (and your competitor;s) selling rate is and how many rooms are left in the hotel….. you would be surprised at this seemingly ‘psychic’ ability – I have been known to accurately predict the non-arrivals from the arrivals list on the very day

  • Overbook when you can, and only when you can

    if it is quiet in an area, then overbook to your hearts content.  Just bear in mind that 90% of the time that you overbook, you will not even end up full enough for overbooking to pay off.  You need to target that 10% of the time that it will pay off and this can be very tricky to do efficiently.  Every hotel is different and you need to find what works best for you, but you need to ensure that you are overbooking when it is likely you will have non-arrivals – overbook when you have promotional room only rates (out booking BB or DBB guests are generally much more difficult) taking up most of the hotel as these are by far the least likely to arrive.  Overbook when you have a conference of 1000 delegates all wanting rooms – chances are some will no-show.  Overbook when you only have transient guests in – transient 1-night guests are easier to displace than 3 or 4 night guests pr VIP clients!

  • Ignore the maths

    I have already said ignore last year.  But I have to stress that a mathematical equation cannot predict the behaviour of people.  Whilst maths and science have been able to predict how the universe will behave, they have not yet been able to determine with 100% accuracy how an actual living, breathing person will behave!  You can compare similar periods of time, similar promotions and similar events, but you cannot guarantee anything. So if you are going to overbook, then limit how many you overbook by to at least do some damage limitation, if nothing else!

  • Analyse your statistics correctly

    I have said ignore the maths and ignore last year, and I stick by that, but if you absolutely MUST use statistics, please ensure you use them correctly.  Bear in mind that one of the greatest flaws in any statistic is that it can be twisted to however someone wants to portray or interpret it – For example, imagine the headline ’1 in 5 people HATE hotels’ – this is vastly different to ’80% of people LOVE hotels’ – this is the same survey, with the same responses, just results portrayed differently!  The same thing happens in any statistic you read – you may see 10 no-shows a night, but someone else sees that 5% of the bookings for that day did not arrive, or even that only 95% of guaranteed bookings arrive.
     
    Unfortunately human nature causes a bias to whatever you want to see.  If you want to see a reason to overbook, the statistics will provide it!  When it comes to analysing no-shows, do you ever look at market segments they are linked to, rates and groups they are linked to, prices they were paying, why they didn’t arrive, what was going on in the area, flight delays etc….. you could go on for hours!  My point is that without actually figuring out a profile of a ‘typical’ non-arrival for a night, you cannot work out whether anyone is likely not to turn up – if you know historically that 10% of your advance purchase rate guests do not arrive, then overbook by 10% of however many advance purchase rate guests are in each night – if there are 100, overbook by 10, if there are 50, overbook by 5 and so on….

Right – enough jabbering, but I think I have covered almost everything I can think of.  I have always been honest with my dislike of overbooking, and have always been honest (in the most part) with guests who have been out booked – overbooking is a gamble, and you can never get it ‘exactly right’ as that is an impossibility without a really good time machine/future predictor!  I urge all revenue managers to spend one day with reception when the hotel is overbooked – you will see just how hard they work when dealing with moving people to alternate hotels.  To give you an idea they have to:


  • - Check availability for EVERYWHERE locally – lots of phone calls

  • - Negotiate rates with other hotels to get as close to your selling rate as possible

  • - Decide if rooms are to be held, or take a chance that rooms will not sell in the other hotel

  • - Decide who to potentially out book – higher rates cost less, lower rates less likely to start an argument

  • - Review arrivals – make sure VIP’s and special requests are retained in-house

  • - Decide whether to out book now or wait to see if everyone arrives

  • - Ring everywhere and check availability again

  • - Negotiate room release times at the other hotel

  • - Arrange payment clearance for the other hotel

  • - Contact and inform the guest (if guaranteed to need to out book)

  • - Deal with any complaint and negotiate any compensation packages

  • - Action refunds or compensation payments to the out booked guest

All this usually whilst dealing with telephone queries, emails, in-house guests, general administration and the 100 other things that pop-up during a shift.  The point I make here is that over booking is not just a statistic and should not be seen as such; it has a human impact on real people!  You can make a lot of money if you overbook accurately, and can lose a lot if you overbook incorrectly.

About Matt Shiells-Jones

Matt Shiells-Jones

Matt Shiells-Jones is International hospitality writer, industry contributor and specialist; Author of ‘How to be a Hotel Receptionist’ and the upcoming ‘Big Book of Hotel Standards’, available on 

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