An Analysis of Overbooking and Impacts on Customer Behavior Within the Hotel Industry

2386 Words10 Pages
Introduction This report seeks to investigate and analyse the main characteristics of overbooking and the impacts this can have on a hotels management systems and customers. It examines the consequences of both successful and ineffective overbooking management decisions depending on the way in which it is managed and the effect this can have on the hotels profitability of the hotel. It also looks at the effect that overbooking has on customer behaviour and loyalty and legislations that have been passed in the USA. Existing research on yield management analyses’ overbooking and how this can be implemented effectively within hotels, some researchers have then expanded upon this to incorporate effects on profitability, customer service and…show more content…
Early studies on overbooking present in the work of Simon (1968), Falkson (1969) and Vickrey (1972) outlined how to manage the cancelations regarded with overbooking, in more current times it has now become more of a matter of the impacts on a hotels performance. The concept of overbooking can be defined as “confirming more reservations that the hotel’s available physical capacity to provide the service” (Ivanov, 2007: 107) and its objective is to improve the profits and instead of selling each room once, profit can be increased by selling it a number of times (Birkenheuer, 2009). The way in which hotels enhance their profits by overbooking is simply taking more reservations than they can actually hold, and in the case that a guest is a no show they can sell this room on to other guests which they have overbooked to, but in other circumstances, when all guests arrive to the hotel, the hotel offers to transfer guests to another property in close proximity to their original hotel-this is where revenue is enhanced for the company. "Hotels intentionally overbook because they will never get the opportunity back again," Noone et al (2003: 272). Many hotels “walk” their customers to comparable hotels but I some cases others put their guests in to much cheaper accommodation and earn themselves a profit by paying the lower discounted rates to the second hotel and keeping the left over cash from what customers

More about An Analysis of Overbooking and Impacts on Customer Behavior Within the Hotel Industry

Open Document