Overbooking is an accepted hotel and airline practice. Many question the practice from various standpoints, including ethical and moral. Industry executives argue that there is nothing more perishable than a vacant room. If it is not used, there is no chance to regain lost revenue. Hotels need to protect themselves because potential guests frequently make reservations at more than one hotel or are delayed and, therefore, do not show up.

The percentage of no-shows varies by hotel and location but is often around 5 percent. In a 400-room hotel, that is 20 rooms, or an average loss of approximately 52,600 per night. Considering these figures, it is not surprising that hotels try to protect themselves by overbooking.

Hotels look carefully at bookings: Whom they are for, what rates they are paying, when they were made, whether they are for regular guests or from a major account (a corporation that uses the hotel frequently), and so on.

Jill Reynolds, the front-office manager at the Regency La Jolla, had known for some time that the 400-room hotel would be overbooked for this one night in October. She prepared to talk with the front-desk associates as they came on duty at 7:30 in the morning, knowing it would be a challenge to sell out without "walking' guests. Seldom does a hotel sell out before having to walk a few guests.

The hotel's policy and procedure on walking guests enables the front desk associates to call nearby hotels of a similar category to find out if they have rooms available to sell. If it is necessary to walk a guest, the associate explains to the guest that, regrettably, no rooms are available because of fewer departures than expected. The associate must explain that suitable accommodations have been reserved at a nearby hotel and that the hotel will pay for the room and transportation to and from the hotel. Usually, guests are understanding, especially when they realize that they are receiving a free room and free transportation.

On this particular day, the house count indicates that the hotel is overbooked by thirty rooms. Three or four nearby, comparable hotels had rooms available to sell in the morning. Besides walking guests, Jill considers other options-in particular 'splitting" the fifteen suites with connecting parlors. If the guests in the suites do not need the parlor, it is then possible to gain a few more "rooms" to sell separately; however, rollaway beds must be placed in the rooms. Fortunately, eight parlors were available to sell.

Discussion Question

1. If you were in the same situation, what would you do?