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Overbooking is a hotelier's nightmare. It causes unnecessary stress for your staff and guests, and it can put a dent in your reputation. So, how can you avoid overbooking in hotels? Let's consider strategies that minimize the risk of overbooking.
First, you must understand the risks of overbooking – the impact on the guest experience and the financial consequences. Next, we'll show you how to avoid lost revenue.
Understanding the risks of overbooking
What are the top risks of overbooking? A negative impact on your brand, decreased customer loyalty, frustration on behalf of the guests, and lower staff morale.
Negative impact on brand
Word of mouth is one of the most significant marketing tools. Happy guests are the best brand ambassadors. However, if things don't go as planned, it can hurt your brand image and take lots of time and energy to recover. Negative reviews can also sway guests from booking in the first place.
Decreased guest loyalty
It's well known that overbooking impacts guest loyalty. Your regular guests have high expectations and may feel like they can't be loyal to a brand that can't deliver the booked service. First-time guests are also less likely to book again if they end up feeling disappointed by the overbooking.
Lowered staff morale
Your staff represents your hotel. When they need to regularly handle overbookings, they may feel frustration and job dissatisfaction because dealing with upset guests is quite stressful. These experiences can lower staff morale and even lead to high turnover rates.
The impact of overbooking on guest experience
The impact of overbooking on the guest experience can be due to operational challenges. Dealing with upset guests, offering compensation, or finding alternative accommodations is stressful for everyone. It can put a strain on resources and even affect guests staying at your hotel.
If the guest opts for a room upgrade or compensation, their experience is tainted from the beginning. Meeting their expectations to make up for the inconvenience will be more difficult. In these cases, it's best to offer extra amenities and freebies. You should also regularly check in with them to ensure they're having a pleasant stay.
Financial consequences of overbooking
Although some hotels use overbooking to maximize revenue, it can certainly backfire. Some guests will refuse to accept any form of compensation like discounts, refunds, or a room upgrade. That means you lost them forever, and all the money spent on acquisition goes to waste. Even if an unhappy guest accepts compensation, these costs can affect your revenue.
There's also a financial impact of people sharing negative experiences at your hotel, which can deter new customers from booking and negatively affect your bottom line. You may have to invest in legal expertise to settle claims or invest extra money to repair your damaged reputation through PR and marketing. Learn more about crisis management practices.
Best practices for avoiding overbooking in hotel
Here's how to avoid overbooking in a hotel – regular inventory management, using a channel manager, analyzing historical booking trends, diversifying inventory, conducting regular audits of your operating procedures, and training your staff.
Regular inventory management
You should regularly update inventory across all channels – if you forget one channel, you put yourself at risk of overbooking. Try to accurately predict your hotel’s maximum and ideal capacity and the number of rooms available for each room type. Get in the practice of reviewing this regularly. Find out more tips for hotel inventory management.
Regular monitoring lets you adjust inventory based on real-time availability and cancellations.
Analyze historical booking data
Analyzing historical booking data is the first part of monitoring booking patterns. You can identify occupancy trends based on different periods. Understanding typical booking patterns lets you predict demand and adjust inventory to have rooms available should there be an overbooking.
Diversify inventory on distribution channels
Diversifying your inventory across different distribution channels is an excellent way to avoid overbooking. Instead of selling your rooms in one place, you can ensure there's no issue if inventory isn't updated quickly enough due to technical or human error. If each distribution channel only sells the allocated rooms, there's no risk of two distribution channels selling the same room. Check out the guide to hotel distribution channels.
Train your staff
Training your staff should be your priority. Provide special training for handling overbookings and teach staff to manage issues efficiently. They should also be comfortable with revenue management strategies and optimal reservation management skills.
Conduct regular audits
Auditing your reservation and inventory management procedures is a must. This way, you can find areas of improvement and ensure that you're following industry best practices while using the technology that helps you optimize bookings.
Use a channel manager
A channel manager ensures real-time sync of inventory and rates across multiple channels. This excellent tool helps avoid discrepancies in availability across the different booking platforms you work with, including your own.
Overbooking can greatly impact your hotel's reputation and bottom line. With effective reservation management strategies, a reliable PMS, and a channel manager that keeps track of reservations and updates availability in real time, you can avoid financial losses and mitigate the risks of overbooking. It all starts with embracing modern technology and prioritizing guest satisfaction.
Eva has over a decade of international experience in marketing, communication, events and digital marketing. When she's not at work, she's probably surfing, dancing, or exploring the world.
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