A consummate hotelier and revenue management leader shares his outlook on overbooking
Given Johnathan’s extensive hotel experience and revenue wisdom, I felt extremely fortunate to have the opportunity to speak with him recently all about the hot-button issue of overbooking.
Jeff Roark: As a revenue professional, did you ever struggle to overcome fears of overbooking?
Johnathan Capps: I’ve been a little spoiled. One of my first owners in the industry came to me as a revenue manager and told me to “have fun” with his hotel and push the limits. That gave me freedom to experiment with overbooking and pricing strategies early on. So, I don’t think I have much fear of overbooking, especially now.
The term overbooking gets a bad rap. When you say “overbooking,” you can see the reluctance in a GM’s face, but it’s an issue of connotation. For example, if you say someone’s “frugal,” some may see that as a negative—they’re cheap—while others may see it as a positive—they’re financially responsible. So, first we need to help the industry see overbooking in a more positive light.
Roark: What’s Charlestowne’s approach to overbooking, or overselling as some may prefer to call it?
Capps: You have to look at it from the owner’s perspective—to make the most money for the hotel at the most opportune times. And how do we do that? As a revenue management team, we put in an overbooking process to strategically oversell where possible and when possible while doing it within the guidelines and standard operating procedures our organization has agreed to.
Roark: With 44 hotels, does Charlestowne’s overbooking strategy differ from property to property?
Capps: Each property’s strategy is certainly unique. Your strategy really must consider market and location dynamics. We have a hotel in Sewanee, Tennessee by the University of the South. There are no similar hotels within one hundred miles, so the walk strategy there is tight. Compared to a property in Nashville or Atlanta or even Charleston, where we have a good amount of hotels, we have a lot more flexibility.
Roark: Can you share some of Charlestown’s approaches to balance and awareness relating to overbooking?
Capps: We’re not a rogue revenue management group. We’re not going to go in, run all over a GM and front office, turn on overbooking, and leave them to deal with it. Guest reviews have a major impact on revenue strategy and price positioning.
Our priority is to get everyone on the same page and work interdepartmentally. That means bringing in the GM, the front office manager, and the other staff affected by what would be an overbooking situation. We show them the metrics and how the systems and procedures will maximize revenue. For instance, we look at the booking curve of the hotel over the last six months with a 10-percent cancellation rate, so even if we oversold it by five percent, we are still protected.
A good practice is to look at the timeline of all key points of the guest experience, not only the overselling process. That means from booking to cancellation to overbooking to CRM. We look at the pre-arrival and upgrade communication because it’s a reminder to the guests about cancellations. And then we look at when the front desk or other staff members are going to move inventory around and shuffle reservations. When all those things can work in synergy, this whole process can run smoothly and effectively.
Roark: That’s great. Communication is critical to bringing your people and processes on board to profitably execute an overbooking strategy. What about technology? By utilizing the IDeaS G3 RMS and RoomKey PMS integration, how do you see Charlestowne’s overbooking discipline changing?
Capps: On the very pro side of overbooking, IDeaS and RoomKey take us away from a manual environment, enabling us on a daily basis to automatically look at things like channels and seasonality. With these data analytics systems talking to each other, we can get down to the granular level that people will miss or be delayed in acting on. There’s a lot of efficiency that’s going to come out of this.
People tend to look at overbooking as maximizing occupancy, but I think it’s about maximizing revenue performance. Often, when you’re overbooking, it’s when ADR is highest, so the revenue opportunity is that much greater.