The Overbooking Policy

Hotels may offer some excuses that they have to oversell to make up for the losses from the growing number of guests who make reservations but never keep them. The main reason for overbooking is ‘No shows’, it means people who make bookings but fail to honour them.

Some hotels routinely accept more reservations that it has rooms and then sends the overflow guests to a closely hotel or the bad case: second-rate motel, telling them they can take it or leave it. What’s more, some of the hotels do not offer guests to adjust the rate, then guests could not get hotel vouchers or other forms of credit that are impossible to redeem.

In academic theory the “no-show” reason we can include ‘Early departures’ and’ late cancellations’ these two items. The best overbooking rate is marginal revenue that equal to marginal cost. What we need to considered in overbooking policy are four items: Estimate cancels, estimate no shows, early check-out and extension check-out.