An overbooking strategy includes intentionally creating opportunities for more reservations to be created than can be physically accommodated in a category or at the property and may form part of the overall revenue management strategy. 

RMS includes a number of features and tools that can be used to review, develop, and effectively manage an overbooking strategy with a focus on maximising occupancy or maximising revenue.

A strategy focused on maximising occupancy will have greater emphasis on filling rooms each night and less focus on the average daily rate (ADR).

This may include using Dynamic Pricing that automatically lowers rates on dates where occupancy is below set targets to encourage guests to book, using Advance Purchase Rates and/or Last Minute Rates to create attractive deals that increase occupancy, and/or using an overbooking strategy.

An overbooking strategy focused on increasing overall occupancy can use either Category Overbooking or Property Overbooking based on the operational requirements at the property.

A strategy focused on maximising revenue may focus on minimising revenue lost through cancellations and no shows or use a combination strategy of increasing occupancy to bolster overall spending at the property.

Reviewing trends of behaviour at the property for reservation lead time, cancellations and no shows, travel agent performance, allotment pick-ups, occupancy, and performance can assist with determining the most suitable overbooking strategy.

Category Overbooking

Category Overbooking is a feature that is only available when the category is setup as 'Book by Category' to enable creating more reservations in a specific category than can be physically accommodated.

Overbooking limits can be set on the category to manage the maximum number of excess reservations that can be saved in a category above the physical area count with the added option to protect against Property Overbooking.

Allowing one or more categories to be overbooked and using Property Overbooking Protection will limit the total number of reservations at the property to never exceed the total physical capacity at the property.

Only Overbooking Base Rooms

Only allowing overbooking on the entry level or standard category with the most availability and the lowest rate can improve overall property occupancy without negatively impacting the guest's experience by walking them on arrival.

Limiting overbooking to a specific category this way and not overbooking the total physical capacity of the property allows excess bookings in the standard category to be upgraded up to other room types. 

By leveraging a category that may not get booked out as frequently to accommodate the excess reservations in the lower category, overall property occupancy can be improved, and revenue can be obtained for the higher room type that would have otherwise remained empty.

This method can be used if the target is to maximise occupancy without overbooking the property and works best when the change of accommodation offered to the guest is of a higher value than the originally booked category.

Use 'Allow Overbooking' on the standard category with the desired limit set and use 'Do Not Overbook Property' to limit all reservations to never exceed the total physical capacity at the property.

Offsetting Last Minute Cancellations & No Shows

The Cancellation List and Reservation Lead Time reports can be used to review trends on reservation creation, cancellation, and no shows when developing an overbooking strategy with a target of maximising occupancy or minimising revenue lost.

Based on the strategy developed each category can have an overbooking limit set with the property overbooking cap used as a safety net to prevent the total number of reservations never exceeding the physical capacity of the property.

Use 'Allow Overbooking' on each category to be included with the desired limit set. To limit the total of reservations to never exceed the physical capacity of the property use 'Do Not Overbook Property'.

Oversell Allotments can used in conjunction with the category overbooking limits to change the number of excess reservations permitted during specific periods of time.

This method can be used if the target is to minimise lost revenue at the property with or without limiting overbookings based on the physical capacity of the property.

'Do Not Overbook Property' provides an automated safety net that prevents the total number of reservations ever exceeding what can be physically accommodated at the property. When not using this option the level of overbookings and allocation of areas must be monitored and managed prior to the guest's arrival to avoid walking guests.

Property Overbooking

Property Overbooking intentionally creates opportunities for more reservations than can be physically accommodated at a property and can only be used if all categories are setup as 'Book by Category'.

Property overbooking can be used when offsetting guaranteed allotments for Groups or Travel Agents with negotiated rates where the release back doesn't align with the average lead time for reservations or when performance of individual groups or agents are unlikely to fill all of their reserved allotment.

This method enables reservations to continue being made ahead of allotments being released and requires careful management to limit or prevent situations where guests must be accommodated elsewhere.

A combination of Category Overbooking and Oversell Allotments can be used to enable creating more reservations than can be physically accommodated at the property.

A Maximum Property Oversell value can be set to limit the total number of reservations made at the property from ever exceeding a certain amount.

Property Overbooking Protection

The option 'Do Not Overbook Property' can be used in combination with Category Overbooking or Oversell Allotments to limit the total number of reservations to never exceed the total physical capacity of the property.

When used with Category Overbooking or Oversell Allotments the total number of reservations permitted for any date will be limited to the total number of physical areas at the property.

If Property Overbooking is used a Maximum Property Oversell value can be set to limit the total number of reservations made at the property from ever exceeding a certain amount.