The practice of accepting more reservations than available rooms to compensate for expected cancellations and no-shows.
Overbooking is a revenue management strategy where hotels intentionally accept more reservations than the number of rooms available. This compensates for the inevitable cancellations, no-shows, and early departures that would otherwise leave rooms unsold. The practice relies on statistical analysis of historical cancellation rates, no-show patterns, and booking behavior to determine a safe overbooking threshold. When executed correctly, overbooking helps hotels achieve closer to 100% occupancy.
Hotels face a perishable inventory problem - an unsold room night is revenue lost forever. With average no-show and cancellation rates between 5-15%, hotels that do not overbook will consistently have empty rooms. However, overbooking carries risk: if more guests show up than expected, the hotel must 'walk' guests to another property, which damages reputation and incurs costs. The key is finding the right balance between maximizing occupancy and minimizing guest displacement.
Opally helps manage overbooking situations through proactive guest communication. When overbooking occurs, Opally can assist with timely notifications to guests, smooth relocation communications, and follow-up messaging to maintain guest relationships — ensuring clear, professional communication even in difficult situations.
