Overbooking Rooms in the Hotel Industry If one were to ponder the question of whether hotels should overbook their rooms the answer may appear to be quite simple. Why would a hotel owner want to book more reservations for rooms than they actually had available? This is an issue that has faced the hotel industry for a number of years. Contrary to what the average person may think about hotels overbooking their rooms, it has actually shown itself to be a noble strategy in achieving maximum profitability when done accurately. It is imperative that it is done in an appropriate manner so as to not give the hotel a corrupt name or lead to guest dissatisfaction.
Having a knowledge about overbooking and what impacts it can have on a hotel are key
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The hope is to have all the rooms on the property occupied on any given night; due to the fact of no-shows and cancellations hotels may decide to overbook. Though hotel overbooking can offer success to a vast array of hotels, it is clear that there are also some disadvantages that could spawn from it. In his article, “The Impact of Overbooking on Hotels’ Operation Management,” Vladimir Sashov Zhechev notes some of the possible consequences that could result from overbooking when all of the guests do actually show up that had a reservation. For example, if a customer has made a reservation at a certain hotel and arrives there only to discover that their room has been given to another guest who also had a reservation, it is only logical that the guest is going to be quite irate. It is now the duty of the hotel to arrange for that customer to have alternate lodging accommodations, as well as provide transportation for them to get to their other destination (Zhechev et. al Ivanov 7). Additionally, the hotel may offer the guest a free night on their stay or their next stay due to the complications they have just experienced. This now has ended up costing the hotel money that it will have to take as a
As international business and trade expand, there is no doubt that international connections will become more and more significant for the hotel industry. According to Zhang Zhen (2005), in the late decades, many hotels have received foreign customers one day or another. However, since the sector evolved, and with the advancement of technology and transportation systems, the industry’s structure has become more and more complicated in regards to management, dependency and ownership. Zhen further states that there are two main reasons why hotel chains started to look for occasions to ent...
The sample represents all U.S. regions and several different hotel location types, including city (47.7%), suburb (15.2%), airport (15.2%), and resort (21.9%). The total data presented here are from hotel managers (N = 98) and hourly employees (N=66) who completed a baseline survey followed by daily diary telephone interviews for eight consecutive days.
c) Owners of the Hotel Buildings – that they need to keep their facilities in tip top condition or else customers will be dissatisfied with their experience and demand their money back.
fixed costs to total costs. The high level of these costs stem from the fact that hotels must constantly be managed to achieve the most costeffective usage of resources applied to decor, equipment, preoperational expenses and finance. The aim of hotels is to fill their rooms as profitable as possible as a result some of the most important thing that the hotel industry must realize is that it must be able to market themselves and provide quality services so that customers will want to return back to the hotel. The demands of these two characteristics are very high and it requires a lot of effort. In terms of building a hotel, the capital requirements for a hotel project are so high that hotel cannot easily be traded and must remain as a longterm investment purpose. As a result the industry is subjected to large amounts of cost advantages or disadvantages based on the size of the hotel. Furthermore the success of a hotel is also sensitive to the location, management, and the quality and expertise of the staff which is vital to the functionality of the hospitality industry.
The economic theory of supply and demand dictates that an excess of supply (hotels) to demand (customers) leads to a lower price consumers are willing to pay. This creates inelasticity within hotel pricing and places substantial pressure on management to meet the pricing needs of customers while providing an attractive and unique service. Hotel services are also intangible in nature, placing increased burden on hotel owners to utilise all available rooms through discounts and deals.
Traditionally, the hotel industry has catered to the lodging, dining and other amenities of travellers or guests. The industry operates across the different value chain by offering services and facilities as per the preferences and paying capacity of guests’. Typically, players in this industry own assets and or franchise their brands or manage third party assets. The hotel business is highly capital intensive but at the same time highly competitive, this is due to the presence of a large number of players across the different value chain. The industry being highly regional in nature, the hotel business is directly impacted by overall economic or business activity and tourist movement
even if it is the customer’s first use of a new hotel. When this is in
Sturman, M., Corgel, J. & Verma, R. (2011). The Cornell School of Hotel Administration on
4. As the Hospitality industry’s major source of income is the meetings , conferences and ceremonies which are held in the hotels. So, hotels have different pricing strategies as per their requirements.
By implementing the above points, hotels are more likely to achieve and above all, guarantee customer satisfaction.
However, despite being so important, hotel websites are still not leveraged to draw maximum direct bookings. Majority of the hotels are largely and mainly dependent of third party booking agents to get reservations at their properties which is a costly affair. So, in this context, it is quite obvious to say that a hotel should adopt a smart web booking engine to turn its website into a potential source to generate enhanced booking which ultimately leads to profit maximization.
Rising number of complaints: overbooking the resort due to the communication problem between head office and the resort, and as a result the resort is understaffed and offering a low quality of service to the customer.
time and is therefore perishable. All hotels with a fixed number of rooms and transport operators with a fixed number of seats (railway, air carrier, bus companies, etc.) face the challenge of matching supply to the available demand. Excess capacity that is not sold on a particular day is lost and can never be recovered.
The Hotel industry has become very important in the past years due to immense traveling and growth of international business. Hotel industry not only plays an important role in the life of people but as well as the economy of the country. Development and advancement in the Hotel industry have rapidly been taking place and especially since the rapid change in technology, it is very important for hotels to be promptly keeping up to date. When the hotel industry is spoken of, there are many famous hotels but one hotel company that has been outstanding in growth and other aspects of business, like in Leadership, Teamwork (Employee turnover), Motivation (Customer retention and satisfaction, Goals and objectives, (changing the way hotel business has worked), and Change within the company; structurally inside and physically outside, adding elements, like entertainment, gaming, and outdoor activities, is the Hilton Hotel Company.
Thanks to these factors, pricing becomes one of the primary uses with which hotels attract customers. However, due to customers’ independent nature, there influence over industry players is limited. In the high-end segment of hotels, price influence becomes even less as hotels find it easier to differentiate themselves from the competition and customers become less price sensitive coming to expect higher prices as a symbolism of superior quality and services. Lastly, corporate business and tour operators can exert more influence due to their large purchases but this affect is of a limited nature and does not extend across the whole