Overbooking Practices in Hotel Revenue Management
Businesses that accept reservations must cope with the problem of no-shows - customers who make a reservation but fail to honor it. Hotels can protect themselves from the revenue-losing no-shows and generate increased revenue by overbooking. This course teaches how to strategically overbook and how to manage issues associated with overbooking, as well as how to evaluate groups and determine which rates to charge.
This course explores the components of a successful overbooking strategy including no-show forecasting, no-show rates, arrival uncertainty, pricing policies, and cancellation forecasts. It explores the risks of overbooking and presents strategies to minimize costs and mitigate customer impact.
To fully realize a property’s revenue potential, managers must be able to manage group reservations. This course teaches participants how to create a group forecast and explores yieldable and non-yieldable business and incremental group costs and revenue opportunities. It introduces models to calculate displacement costs and contribution margins to determine which groups are most profitable.
Participants use Microsoft Excel to practice overbooking and group-management techniques.
Who Should Take this Course?
This course is designed for hospitality managers, general managers, revenue managers, and other hospitality professionals responsible for the financial performance of their organization.
Participants who complete this course will be able to...
- Develop an overbooking approach
- Manage issues associated with overbooking
- Evaluate groups
- Determine appropriate group rates
Module 1 - Introduction to No-Shows
- The Problem of No-Shows
- Managing No-Shows
- Assessing and Addressing No-Shows
Module 2 - No-Show Data and the Overbooking Decision
- How Many No-Shows?
- The Chances of a No-Show
- Forecast the No-Shows
Module 3 - The Pros and Cons of Overbooking
- Cost of Overbooking
- When Overbooking Leads to Overselling
- The Cost of Not Overbooking
Module 4 - The Overbooking Ratio Method
- Components of an Overbooking Policy
- Overbooking Ratio Method
- Using Excel for Overbooking
Module 5 - Group Management Decisions
- Groups and Group Decisions
- Group Blocks
- Group Value
Module 6 - Calculating Group Rates
- Rate and Contribution
- How Does Group Size Influence Rate?
- Using Excel for Simple Displacement
- Using Excel with Multiple Contributions
Module 7 - Group Forecasting
- The Importance of Group Forecasting
- Group Forecasting Methods
- Sheryl Kimes, Prof Emeritus, School of Hotel Administration