Questions On The Hospitality Industry - 1544 Words

2. Overbooking Overbooking is a familiar practice in the hospitality industry, at times a hotel can be overbooked to balance lost revenue and other times the hotel can be overbooked as a result of a miscommunication. All hotels experience no shows, last minute cancellations, and reservation that need to be changed to a later date. In practice, effective managers know that all the reservations that have been confirmed for a specific date may not be used and in order to make up for the lost revenue one must overbook the hotel. This hotel is overbooked at least 6 rooms for six consecutive night. Effective managers should know when to avoid overbooking, Jessica explains â€Å"For high occupancy dates like holidays, Valentine’s Day specifically, a†¦show more content†¦Jessica explains, â€Å"On high occupancy days when you have same day cancellations and you overbooked your hotel, a manger can decide to charge the penalty and also accommodate the next guest in line†. In essence, when a hotel is overbooked not only can revenue be maximized but the hotel can also gain large profits. For example, a hotel is overbooked and a guest cancel the same day he is due to check in. Management then charges the guest the penalty fee for the cancelation and that leaves a â€Å"confirmed† room unoccupied. The room is then occupied shortly due to overbooking and the profits are as follows: profit from cancelation penalty plus the profit from the overnight accommodations. However, just like everything else in the business world, overbooking has its advantaged and d isadvantages. When a manger fails to forecast occupancy properly and all confirmed reservation do in fact check-in can lead to a â€Å"walked† guest. â€Å"Walking a guest† is explained as the practice of turning people away who have booked and confirmed their reservations. When a hotel walks a guest, Toh explains that â€Å"They [the hotel that is overbooked] must meet the following expectations: accommodating the guest in a similar room at a hotel of the same caliber and covering the costs of transportation†. This practice incurs costs such as overnight accommodations at another hotel for the guest and transportation costs. Hotels typically have negotiated rates with