Overbooking is an essential part of any effective Revenue Management Strategy. Certainly there have been times when a property may have been overbooked with no real strategy in place however if demand is managed carefully during peak demand periods Overbooking (with hopefully minimal relocations) can bring large amounts of additional revenues to a property.
This is because the demand for this peak period is used to support and build occupancy on the surrounding days. Instead of closing out the peak day in all booking systems we use a combination of restrictions to supress arrivals on the peak day but allow it to overbook for long stay bookings that will raise our overall weekly occupancies and revenues.
Naturally we need to be aware of our business mix on the peak days. If there is a lot of group / contract rooms we may not get much wastage and these are very hard to move. There are many things to consider with this strategy however if managed effectively and having an effective guest relocation process in place the rewards can be many.