Question

A practice in hotels to take more bookings than the total available rooms is called:

• A. Overbooking
• B. Reservation by mistake
• C. Skimming pricing
• D. Waitlisting
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Hint:

While overbooking helps maximize a hotel's occupancy and revenue, it carries the operational risk of having to “walk” a guest (transfer them to a comparable nearby hotel at your cost) if all booked guests actually arrive.

Answer 1

The Correct Option is A

Step 1: Understanding Inventory Management in Hospitality:
Hotels frequently deal with guest cancellations, changes in travel plans, and unexpected “no-shows” (guests who hold reservations but do not arrive on their scheduled check-in date).

Step 2: Defining Overbooking as a Revenue Strategy:
To prevent losing revenue on empty rooms, hotels use predictive mathematical forecasting models to sell more rooms than their actual physical capacity. This systematic business strategy is called Overbooking.

Step 3: Comparing Alternative Terms:

• Reservation by mistake (Option B): Refers to an error made by a reservation agent or system.
• Skimming pricing (Option C): A pricing strategy where high rates are set initially to target premium, less price-sensitive customers.
• Waitlisting (Option D): Placing guests on a waiting list when the hotel is fully booked, confirming them only if a cancellation occurs. Thus, Option (A) is the correct term for this industry practice.