The Impact of Overbooking on Hotels’ Operation Management

Abstract

In order to optimize operational efficiency and increase their profitability hotel managers put emphasis on implementing successful operational techniques. Overbooking is seen as an important Revenue Management tool in the hotels’ operation management and is one of the commonly used revenue strategies implemented in the hotels’ management practices. In this regard, the current report aims to discuss and outline the main characteristics of overbooking and its impact on the hotels’ operation management. Moreover, it analyzes and presents the consequences of successful or inappropriate overbooking management decisions because depending on the way the overbooking is planned and managed it can have positive (increased long-term revenue, better management capacity, etc.) and negative (loss of room revenue, decreased customer loyalty, loss of hotel reputation, etc.) influence over the hotel’s profitability. The paper also evaluates several publications as overbooking is a commonly discussed topic in the academic literature. In addition to the literature and theoretical background, the report examines overbooking from practical point of view and reviews its implementation within the hotel industry.