What Is an Overbooking Strategy in Hotels and What Are Its Advantages?

Hotel overbooking is a common practice in the hospitality industry. You would find many hotels following this strategy for their hotels. It does have numerous benefits but you have to be smart in how to implement it. Though overbooking in hotels in common, they have to really manage their guest experience in relation to the profits they are making through this strategy. This means they need to stalk up on their supplies through hotel suppliers such as D ZEE Orlando. They have to order now and not wait till the last moment to see how many guests actually show up.

If you don’t know what is an overbooking strategy in hotel and what are its advantages, don’t worry. Here is a short guide to help you understand it and how your hotel can benefit from hotel overbooking.

Understanding Overbooking in Hotels

To put it simply, we can say overbooking is when all the hotel guest rooms are booked to full capacity; but some rooms are double-booked at the same time. This means the hotel is at its full capacity of reservations to achieve 100% occupancy in case one guest cancels, the other one will show up. This is done for a certain period of time to maximize occupancy and increase the revenue been earn through rooms.

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Why is Hotel Overbooking a Common Practice?

Not all guests show up even after making their bookings for a few months back. Hence, when hotels have overbooked their rooms, they can get in touch with the backup guests and confirm their travel plans. It is a common practice to help hotels recover from losses in case of cancellations, early check-outs, and no-show guests.

If hotels have not overbooked and a guest doesn’t fulfill their commitment, they would incur heavy losses.

Advantages of the Overbooking Strategy

Hotel overbooking has numerous benefits and you can make the most from it if you plan your strategy right.

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Maximizing Revenue

Overbooking helps hotel reach their full occupancy rate, which directly impacts the revenue of the hotel. Even with cancelations, no-shows, and early checkouts, you have a way to earn revenue and increase profits.

Long-Term Business

Overbooking in hotels allows you to earn long-term revenue and increase the profits been earn as you already have bookings for a significant period of time.

Low-Risk Strategy

Even if someone cancels, you have a backup plan already. Everything plan and forecasted so there are fewer chances of the strategy incurring a loss.

Compensation

An empty room is of no use to the hotel, even if there is a cancelation you are at least earning some revenue in form of the cancelation fee.

Conclusion

It is not that difficult to understand what is an overbooking strategy in hotels and what are its advantages. You just need the right plan of hotel overbooking to guarantee the benefits been reap through this strategy.

You would find many overbooking in hotels and they have mastered how to make the most of it. It doesn’t take much other than being smart about it.

What is your understanding of what is an overbooking strategy in hotels and what are its advantages? Would you be using the hotel overbooking strategy for your hotel? Let us know in the comments below.

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