“Overbooking” or being “walked” are terms few people were familiar with unless they had spent time working in the hospitality or airline industries. That was until a video of a bloodied doctor being removed from an overfilled United Airlines flight spread like wildfire.
What is overbooking? Why do hotels and airlines overbook? How do you deal with it? These are but a few questions that came to people’s minds recently when United made the headlines by forcefully dragging a passenger off a fully booked plane against his will.
What is overbooking?
Overbooking as a practice has been around for many years and it’s used by revenue managers across many different industries. In the hotel industry, hotels will often sell more rooms than they physically have or if, due to maintenance issues, certain rooms become unavailable for use.
Why was overbooking a relatively unknown term prior to the United incident? Because, when done correctly, a guest wouldn’t even think twice about it and there would be no bad publicity.
Why overbook?
An empty hotel room is a perishable product. You only get one chance to sell that room for any given day, so if you are forecasting to be 100% full, the last thing you want is to end up with an empty room due to last-minute cancellations or no-shows. Many revenue managers and even general managers have targets to hit, and that includes filling the hotel when there is an opportunity to do so. That’s why overbooking is practiced and will continue to be practiced.
How to deal with overbooking?
Overbooking should be based on algorithmic decision making. It’s never a good idea to just base it on “gut” feeling. You need to look at historical booking patterns and demand and those metrics to determine by how much you should overbook. A good revenue management system like Duetto is able to provide that. Once you have determined the number of rooms to overbook by, this needs to be clearly communicated to the operational staff so that they can then start making preparations.
Preparations for overbooking should include:
- Printing an arrival list and flag all one-night stays for the day you are wanting to overbook
- Ensuring all bookings are guaranteed; if there are non-guaranteed bookings try and call them to ask if they are still coming and inform them that their booking is not guaranteed after a certain time (depending on the terms and conditions of the hotel)
- Flag all third-party bookings as potential book outs
- Ensure that potential book-outs flagged are not repeat guests or part of your hotel’s loyalty program
- Focus on the lowest-rated reservations where possible
- Call surrounding hotels in your same star category to determine availability and even block some rooms if needed. It’s also a good idea to have an overbooking partnership agreement in place.
Doing the actual “walk”:
- Make the guest feel like he is getting a better deal
- Pay for the taxi ride to new accommodation
- Offer the guest use of your phone and/or free WiFi to connect and alert family
- Offer compensation in terms of a discount for a future stay or a free meal when they next come (if booked directly with hotel)
Additionally, it’s important to plan in advance – the more time you have to arrange everything the better, and that would definitely help avoid situations like what we saw with United Airlines and the poor doctor.
