Hotel Revenue Glossary · Strategy

Overbooking

Intentionally accepting more reservations than available rooms to compensate for expected cancellations and no-shows. The goal is to finish the night at or near 100% occupancy without having to turn away (walk) any guests.

Why it matters: Managed overbooking is a legitimate revenue strategy that can recover thousands of dollars in otherwise-lost revenue. But overshooting is costly — walking a guest damages loyalty and incurs compensation costs. The key is accurate cancellation and no-show forecasting.

Worked example: A 130-room hotel is full for Wednesday, and that day of week has been losing about 5% of its arrivals inside the last 24 hours. You accept 136. Four fall away, 132 turn up, and you walk two. At A$310 each in alternative accommodation, transport and goodwill that is A$620, against four extra rooms sold at A$244 - A$976. Net A$356, and the review those two guests may write is not in the number.

Common mistake: Overbooking the house without checking room type. Six over on a night that is fourteen suites short is a different risk from six over on standard kings - you will be walking the guests who paid the most. Set the limit by room type and by arrival pattern, not by the total house.

All glossary terms Wash Factor No-Show Rate Walk (Walking a Guest)