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How Hoteliers Should Handle Overbookings?

Overbooking carries both risks and rewards as this is a revenue management strategy practiced in the industry. It is a strategic approach to lessen losses from no-shows, cancellations, early check-outs by maximizing occupancy and revenue per room.

But if this is not executed properly, it can backfire and cause long-term financial losses and damages to the property. It’s often a challenge for small and mid-sized hotel owners to oversee their room inventory on their own website and select Online Travel Agencies (OTAs).

Hoteliers should therefore have a proper overbooking strategy in place and with the right response, it will also lead to the recovery of the guest’s satisfaction.

Determine which guests to relocate. This is best treated on a case-by-case basis. VIPs, groups or families, or individuals who are staying for multiple nights should ideally get the priority to stay.

Short-term business travelers might be more flexible. Some hotels will qualify guests based on rates, for example, a guest who booked through an OTA and bringing in $100 might be better to move than a guest who booked directly for $400.

Determining “how many times your guests have been to your property, and how much they’ve spent. Guests who stay at your property regularly might not mind relocating if you incentivize them with rewards points”.

Guests who have never stayed at your property before are also good candidates to move because their expectations are lower.

What is Overbooking in a Hotel?

Hotels overbook to mitigate losses from no-shows, cancellations, and early check-outs, and to increase revenue with clients who overstay or walk in.
Pros and Cons of Overbooking Hotel Room:

Pros:
✅It helps the hotel achieve full occupancy, maximizing revenue
✅It produces long-term revenue and profit increases
✅It’s a low-risk and common strategy in hotel revenue management
✅Compensation is usually cheaper than keeping a room empty
✅Rules of refusing to be walked are predetermined and also acceptable

Cons:
✅Can potentially lead to a bad guest experience
Decreased customer loyalty
✅Negative reviews on social media
✅Additional costs for guests to be walked to other locations
✅Reservations must be carefully monitored to control unintended or excessive overbooking

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Partner with Local Attractions to Build Guests Packages

Did you know hotels can advertise certain services without having them onsite?

For example, hotels don’t actually need to have an on-site golf course to advertise that they have a golf course on their hotel’s campus and to include it on their website and booking channels.

Instead, hotels can partner with local businesses and offer discounted rates or upsell guest packages that include free golf trips, spa visits, waterpark tickets, shuttle services, and more.

Partnering with local businesses to offer guest experiences and packages provide a new channel for those businesses to drive customers, creates new hotel ancillary revenue channels and upsell opportunities, and is a facilitator in building relationships with other independent tourism and entertainment businesses that open the door for future partnerships and opportunities.

Sell Home Decor, Supplies, & Merchandise in a Hotel Gift Shop

Do you receive positive feedback from guests on your hotel’s decor? Use this as an opportunity to open a home decor store and gift shop in your hotel. Here you can sell anything that makes your hotel unique or that guests rave about.

Examples of things you could sell in your hotel’s store range from:

✅Local art that you use to decorate your hotel
✅Home products such as hand soap and shampoo you use in guest rooms
✅Home decor found in your hotel’s rooms such as sheets and curtains
✅Unique products found in your hotel’s town such as local beer, food, and more.
✅Products featuring your hotel’s branding such as t-shirts, hats, postcards, and shot glasses.
✅Gift cards for your future visits to your hotel.