Glossary

In the travel context, overbooked refers to a situation where more reservations are accepted than there is available capacity, most commonly associated with flights, hotels, and other forms of accommodation or transportation. This practice is based on statistical predictions that not all guests or passengers will show up. While overbooking helps to maximize occupancy and revenue, it can lead to situations where there are not enough seats or rooms for all confirmed bookings, requiring providers to offer compensations or alternative arrangements to affected customers.

Description

Overbooking is a common practice in the airline industry, where carriers sell more tickets than available seats on a flight, anticipating that some passengers will cancel, change their plans, or not show up. Hotels and car rental companies also engage in overbooking for similar reasons. When more customers show up than expected, the service provider must find a way to accommodate the excess, often leading to compensation offers, rebooking on later flights or bookings, or upgrades to higher service classes or rooms.

Application Areas

• Air Travel: Airlines may overbook flights and have to offer voluntary bumping to later flights, upgrades, or compensation to passengers who cannot be accommodated.
• Hotel Accommodations: Overbooking in hotels can result in guests being relocated to similar or better accommodations, often with additional compensations such as free services or discounts.
• Car Rentals: Similar to airlines and hotels, car rental agencies may overbook, leading to upgrades or alternative arrangements for affected customers.

Well-Known Examples

• Voluntary Bumping on Overbooked Flights: Airlines often ask for volunteers to give up their seats in exchange for compensation and a seat on a later flight. This process is managed through a bidding system or fixed compensation packages.
• Walking a Guest in Hotels: When a hotel is overbooked, the process of finding alternative accommodations for guests is sometimes referred to as "walking." The hotel typically covers all costs associated with the transfer to a different hotel.

Treatment and Risks

While overbooking is a standard industry practice designed to ensure that services run at full capacity, it can lead to customer dissatisfaction and logistical challenges when managing oversold situations. Travel providers must balance the benefits of overbooking against the potential for negative customer experiences and the operational costs of compensating bumped passengers or guests.

Similar Terms

• Bumped: Refers to passengers who are denied boarding due to overbooking, despite having confirmed reservations.
• No-Show: A term used for passengers or guests who do not arrive for their flight or hotel booking, which is a factor considered in overbooking strategies.

Summary

Overbooking in the travel industry is a strategy used by airlines, hotels, and car rental companies to maximize occupancy and revenue, based on the expectation that a certain percentage of bookings will not materialize. While this practice can lead to operational efficiencies and reduced costs for providers, it also poses the risk of inconvenience to travelers, who may be compensated or reaccommodated in the event of being unable to receive the originally booked service. Awareness and understanding of overbooking practices can help travelers make informed decisions and navigate potential disruptions to their travel plans.