In the hotel industry, overbooking refers to accepting more reservations for a given date than there are rooms available in the entire establishment or in a specific room category. This practice aims to maximize occupancy rates, especially during peak periods, by accounting for last-minute cancellations and no-shows. Overbooking is generally implemented up to the no-fee cancellation deadline, which is when cancellations are most frequent.

It’s worth noting that in situations where reservations are non-refundable and prepaid, cancellations are less frequent, making overbooking riskier. Indeed, refusing a room to a guest who has booked can lead to significant dissatisfaction, potentially resulting in customer loss and negative reviews. This can be mitigated by overbooking in high-capacity hotels, where the late cancellation rate is more stable, or by limiting bookings to certain room categories rather than the entire establishment, thus offering upgrades in case of overbooking.