The Walking Dread

Many hotels struggle to achieve a perfect sell-out – and often avoid overbooking to evade the ire of the front desk. The bane of any front desk manager’s existence? The walkers. After all, walking a guest is never an extremely pleasant experience for any hotel (or any guest). But within the Sanctuary of Revenue Strategy, it’s often considered a necessary evil.

Consider this all-too-common scenario: A comic book convention is taking over your city and you’ve been sold out for over two weeks. There’s not a single room left within a 60-mile radius. Your forecasted revenue numbers for the week are completely killing last year’s actuals. But as the morning reports rolled in, your hotel only finished at 96% occupancy opening day.

Now you and Lucille could fly off the revenue handle, or you could see an opportunity to sharpen your tools and technology and re-polish your overbooking strategy. The practice of overbooking weaves art into science to calculate risks against their rewards – and today’s advanced revenue technology helps you analyze and produce decisions for a customized overbooking strategy that’s built for your hotel.

Below are some considerations and insights your revenue technology can provide to maximize your strategic overbooking opportunities every week:

  • What is the expected transient wash for each of your market segments?
  • What is the expected group wash? Are you expecting typical or atypical wash patterns? If a group is expecting atypical wash, does their history or any market intelligence give you an opportunity to adjust your overbooking to accommodate for it?
  • Is there market compression that will make it harder and more expensive to walk a guest? If so, should your overbooking allowances over that time frame be more conservative than normal? Or is the compression internal, and walking a guest is easier and you can afford to be more aggressive?
  • What are your booking windows for transient business? Can you use your technology to analyze them at various days to arrival? This can help you understand your ability to replace group rooms cancelled a few days to arrival.
  • When are your group cut-offs and how well are group blocks managed at your hotel? Are you consistently managing groups by days-to-arrival and adjusting overbooking accordingly?
  • How is your room type overbooking strategy established? Are you deploying room type overbooking strategies only when you’re expected to sell out? Deploying room type overbooking strategies over non-sold out periods can be an effective way to maximize your property yield in both need and busy periods.
  • Is your room type overbooking strategy static all year long, or are you deploying different strategies by day of week or season?

Consider a hotel who only overbooks their base room type all year long. Assume this hotel has brutally cold winters and struggles to find business to fill their weekends during the winter months. However, they do remain consistently busy with corporate travel during the week. How can they adjust their overbooking strategy to accommodate for their distinct day-of-week needs? Perhaps their base room type is open for generous overbooking on the weekends (keeping their hotel as competitively priced as possible), but a conservative strategy is employed during the weekday to encourage bookings into upgraded room types. If that new strategy helps them book just five upgraded room types every weekday at a $50 upcharge, they’ve pulled in an additional $65k in annual revenue by selling the same amount of rooms.

You can use your revenue technology to produce and deploy similar overbooking strategies for each of your hotel’s room types – by day of week, by season, or during special event periods – to capitalize on the revenue opportunities your hotel might be missing out on.

And at the end of the day, it’s critical to focus on your net max revenue. The aggressiveness of your overbooking needs to be balanced with an understanding that your net revenue for a night can be impacted by high or frequent walking of guests. Sometimes, it may be a better net revenue result to be one or two rooms short of a sell-out than to pay for several walked guests.

It’s also extremely important to evaluate how well your front desk handles guest recovery. One of the greatest opportunities afforded to any front desk is the ability to take a guest problem (such as being walked to another hotel) and convert it into guest loyalty. Is your hotel staff properly supported and trained to accommodate walking guests? Perhaps guest recovery is supported by amenities, complimentary room upgrades or no-walk/VIP statuses for future reservations.

In today’s world, it’s not enough to book a reservation for every room your hotel has to sell – and not overbooking can result in lost revenue and missed occupancy at your highest ADR.  And when overbooking is established strategically through analytics, you can better understand the wash and cancellation patterns of your market segments – planning ahead to overbook with exceptional revenue results.

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