Overbooking and Walking Guests on a Peak Saturday
A 120-room hotel in Ooty is at peak season. On Saturday, 12 rooms are out of order because of a plumbing failure, leaving 108 sellable rooms. The reservation system shows 118 guaranteed arrivals for the night, including a wedding block of 40 rooms on a signed contract at ₹6,500 per room and a corporate account that sends 300 room-nights a year. At 18:00 the front office has checked in 100 rooms; 4 guaranteed guests have not arrived and cannot be reached, and 14 more are due on the 23:30 train. The hotel has 8 rooms left. A nearby partner hotel 4 km away has 6 rooms at ₹5,200 plus 5% GST, with a complimentary shuttle. The duty manager can authorise up to ₹1,500 per relocated room as compensation. Two walk-in guests are waiting at the desk offering ₹9,000 for any room.
1. At 18:00, how many rooms must be relocated? Show the calculation, and decide the order in which you would relocate the wedding block guests, the corporate guest, the late train arrivals and the walk-ins. Justify.
Read the worked answer
Sellable rooms = 120 − 12 = 108. At 18:00, checked-in = 100, no-shows = 4, still due = 14. Expected occupied = 100 + 14 = 114. Oversold = 114 − 108 = 6 rooms, exactly the partner hotel's block.
Relocation order:
- First: the two walk-ins. They have no reservation or contractual protection. The ₹9,000 offer is attractive, but accepting it while walking confirmed guests would be a service failure.
- Second: late train arrivals on flexible rates if the corporate guest and wedding block are protected. Relocate only as many as needed after using the partner hotel's 6 rooms.
- Do not walk the wedding block. It is a signed 40-room contract, and separating wedding guests creates transport and event problems.
- Keep the corporate guest if the rate is guaranteed; a 300-room-night account is valuable. If the rate is non-guaranteed, relocate this guest before any wedding guest.
With 6 rooms needed and 2 walk-ins available, relocate the 2 walk-ins and 4 late flexible arrivals. If that is not enough, ask the partner hotel for extra rooms before touching the wedding block.
2. Draft the key points of the conversation with a relocated wedding guest and state the compensation within the ₹1,500 limit.
Read the worked answer
Key points:
- Apologise without blaming the plumbing; state clearly that the hotel cannot provide the booked room.
- Confirm that the partner hotel is 4 km away, has a complimentary shuttle, and that a room is held in the guest's name.
- Offer to move luggage and provide a room at the partner hotel; if the guest needs to change for the wedding, arrange a day-use room at the original hotel.
- Cover the partner hotel charge (₹5,200 + 5% GST = ₹5,460) and do not charge the guest the original room rate.
- Add compensation up to ₹1,500 in cash or credit for inconvenience, plus shuttle.
- Give the guest the duty manager's direct number and offer to move them back the next morning if a room becomes available.
- Call the partner hotel in front of the guest so they hear the confirmation, and record the mobile number.
Do not offer a free future night without authorisation; keep the offer within policy and document it.
3. Recommend an overbooking formula for the next peak Saturday, using the hotel's 4% no-show and 2% cancellation history.
Read the worked answer
Expected releases = no-shows + cancellations. With 118 reservations: 4% = 4.7; 2% = 2.4; total = 7.1 rooms.
A workable rule: allow overbooking only up to about 50% of expected releases when out-of-order rooms exceed 5% of inventory. With 12 rooms out of order, that is about 3 rooms, not 7 or 10. On a normal day with no out-of-order rooms, allow up to 7 rooms over.
Use net sellable rooms, not total rooms, in the formula. Review weekly against actual no-shows and walk records; if walks exceed 1 per 100 arrivals, reduce the allowance. Track walk costs, including partner-room rate, transport and compensation, so the revenue manager can see whether the overbooking gain is real. A formula that ignores out-of-order rooms is how this Saturday's six walks happened.