In todays world, a social media presence is critical to the success of a marketing plan. Hyatt Union Square (Photo by Ariana Arghandewa/The Points Guy) What the rules say. Click HERE to download F and B service Course Why Do Hotels Overbook? Book a new room for a guest and inform them in advance to go directly to the new hotel. If you show up to check-in for a confirmed hotel reservation and the front desk doesnt have a room ready for you, we can assist you in getting a room ASAP. Youre entitled to the additional $100 you had to spend above and beyond what you expected to pay under the original contract. Overbooking minimizes losses by creating a, Overbooking, as its name indicates, means that guests will book more rooms than you have. The cost of the overbooking is usually lower than the cost of an empty room, Potential negative reviews on Google, social media, or TripAdvisor (its enough to read hotel overbooking stories from the readers of, Additional costs like paying for the guest transport to the new hotel, Need for careful monitoring of reservations to see if there are unintended overbookings (or excess of them), Hotel pricing strategies How do hotels calculate prices. First, check what options you have available in your room allocation. 'https://www.googletagmanager.com/gtm.js?id='+i+dl;f.parentNode.insertBefore(j,f); Dauntless Jaunter started as a world travel blog, but we strive to offer much more than just travel stories. With the right tools, such as Mews PMS software, hoteliers can easily keep their properties organized and implement successful overbooking practices in managing their hotels revenue. Every hotel has its own approach to the practice of overbooking. Psychological Research & Experimental Design, All Teacher Certification Test Prep Courses, Rooms Division in Hotel & Lodging Operations, Revenue Management for the Hospitality Industry, Revenue Generation for Hospitality: Definition & Overview, Revenue Optimization Strategies in Service Industries, How to Calculate Sales Revenue: Definition & Formula, What Is a Value Chain? When performed correctly, an overbooking strategy can provide hoteliers with the opportunity to mitigate revenue losses and achieve full occupancy, resulting in sustainable long-term financial growth. Unlike airlines, theres no policy that the hotel needs to provide a guest with alternative accommodation in the overbooking. If a room is vacant tonight, the hotel cannot make up that lost revenue by selling that room twice tomorrow. Of course, there are also those rare times when overbooking can happen because of human or technical error. Try refreshing the page, or contact customer support. Related Read: Types of Hotels: Complete Glossary of 30+ Hotel Types Terms Defined. 1. Check the list of arrivals and estimate any possible no-show or cancellation (maybe you have a duplicated booking or reservation with an invalid card?). And if your hotel walks you to a hotel thats further away from your destination, forcing you to spend more on transportation costs? It could also be an irredeemable misstep if the customer you turn away is a loyal one, someone who has used your services for years. This can be a particularly bad scenario if its a large family or a guest whose special needs will not be catered to by the alternative hotel. Overbooking is when your total room available reserve is less than the number of rooms that had been booked for sales in the same period. The occupancy forecast is a written/reported estimate of the number of rooms which will be . books v.tr. With all rooms continuously occupied, hotel businesses also gain the ability to operate beyond their traditional profit margins. Overbooking is a common problem that happens in hotels if they are doing the daily operation task manually. Under contract law, youre entitled to be made whole, which means that youre entitled to recoup monetary damages related to the breach of the contract. Late check-ins are also at risk for being walked, as the later you arrive, the more likely it is that the overbooked hotel is already full. This will allow you to determine how many rooms you can overbook. Overbooking in hotels can be both good and bad, and it most certainly does get ugly, particularly with those on the receiving end of a nudge into another property or location. Sometimes you can get asked to move to another hotel coming even so early as 3 PM or 4 PM. Of course, it can also happen by accident. Its like a teacher waved a magic wand and did the work for me. Airlines overbook meaning they book passengers to more seats on a particular plane than are available to maximize profit, calculating that a percentage of people will not show up for the . Advantages of Overbooking: Helps the hotel to achieve 100% occupancy by hedging against guests who do not arrive or cancel their reservations. For more information on making business travel easier and protecting against overbookings, contact Hotel Enginenow! For example, you may have two guests booking a room at the same time from different websites. It is 2 AM, a peaceful night in the hotel and even the regulars at the hotel bar went up to their rooms. Awesome working tips on how to increase hotel revenue, 4 Tips to Boost Hotel Revenue and Profit in 2023, How to Boost Hotel Revenue: Revenue Management Strategies. With major hotel groups that operate many hotels in the same city, theyll most often walk you to a comparable property with a similar nightly rate. The term "Overbooking" is a common practice in hotel or resort. Its worth remembering that the hotels upgrade might not be seen as such by the guest. After you get some sleep, you will express all your resentment in a calmer way (a sternly worded email). For instance, if the hotel has a lot of group business coming in or . Cancellations and no-shows can hurt annual hotel revenue because empty rooms mean lost opportunities you cant recover. People read reviews on hotels before booking, and it's important to maintain a positive review. To take reservations beyond the capacity for accommodation: a restaurant that regularly overbooks for dinner. The case of overbooking in restaurants is quite different to the case of overbooking in hotels and airlines due to differences in the nature of the businesses and in industry practices. Offer unexpected amenities/perks. Here you can manage your preferences regarding cookies: Essential cookies enable core functionalities of the website such as marking your data inputs, network management and accessibility. w[l] = w[l] || []; Advertising cookies for delivering tailored and customized advertising. It can be a strategic way to maximize occupancy and per-room revenue, but if executed without proper care, it can backfire and cause financial loss and damage to your brand. Sometimes overbooking is also referred to as walking a guest. Some travelers are more at risk for getting walked than others, such as: Walking guests is common practice in the hotel industry, but it can be especially problematic for business travelers. Overbooking is an airline's way of ensuring they have no empty seats at take off. Hotel reservation Types and functions. 3. In your PMS, overbookings may appear as . (function(w,d,s,l,i){w[l]=w[l]||[];w[l].push({'gtm.start': This website helped me pass! Hotel loyalty programs allow you to rack up points, which can sometimes turn into: Another way to lower your risk of being walked is to book your hotel reservations throughHotel Engine. There is nopain and sufferingin contract law. What to expect from the hotel in this situation? To protect from this situation, hotels apply an overbooking strategy in their revenue management. I also have experience in leadership as well as implementation of new accounting software systems. Hotel overbooking its a dreaded phrase for any traveler. Is there a possibility to make an upgrade or downgrade? It also happens when there are errors in the booking engine channel manager property management system connection. Real-time bookings have never been more important if you want to compete in the modern travel world. Operational Issues & Solutions in the Hotel Business, Types of Meetings, Conventions, Expositions & Special Events, Internal & External Public Relations Roles. Its essential to train your staff on how to proceed. This implies that no financial potential is wasted because, Compensation is cheaper than having empty rooms, When a guest discovers that their room is occupied, you can offer them alternative accommodation with a nearby hotel in the same star category. However, there's only one room available and, with the timing of the submission, the room may get booked by two different people. Should you happen to be traveling somewhere that doesnt have a state law in place for hotel walking, you do have another form of legal protection: When you reserve hotel rooms for a specific date and give the hotel your credit card to hold your reservation, youve entered into a contract. During the guest stay, the housekeeping status of the guest room changes several times. Overbooking is the practice of intentionally accepting a number of reservations for a service to be rendered, such as a seat to travel on a commercial airline flight or a stay in a hotel room, which exceeds the maximum available capacity. Hopefully, youll never experience overbooking at a hotel. No matter the type of your reservation if it was confirmed a few months beforehand, or even prepaid, you might still be relocated or walked.. You can think of it like the grandfather of modern revenue management, as it was one of the earliest techniques for maximizing a hotel's revenue.Today, it continues to play a big role in how revenue management systems like Infor EzRMS deliver results for hotels. This means that instead of turning a potential guest away when the hotel is at capacity, you still offer them a booking so that if another customer fails to show up, theres someone ready to fill their position. And here is what you need to know: overbooking in the hotel industry is a common practice. Though the policy of overbooking could bring inconvenient to the guests or travelers but hotel authority or front office managers do not practice overbooking intentionally, they overbooked the room to fulfill the financial objectives and to make up the losses arises from no shows. The Mews Blog>What is an overbooking strategy in hotels and what are its advantages? Big data analysis is one of the best predictive methods you can use. The hotel business relies on positive customer reviews and customer satisfaction. And since they have a limited number of rooms, they need to keepoccupancy ratesas high as possible every night to make the most revenue they can. The first step to spot overbookings is carefully monitoring daily reservations. On the contrary, many cities and states will actually prohibit a hotel from immediately evicting a guest who has overstayed their reservation, which can lead to . It was born as USAH in the United States of America, more precisely in New York in 1926 by the local Hotels Association. As I mentioned, the chance of overbooking is minuscule, and with our tips you will be armed even against those small odds. . Empty rooms thanks to cancellations will have a significant negative impact on your profit margin, yet overbooking will have the same effect on customer loyalty. When the hotel is overbooked, there is more demand than supply: the hotel sells more rooms than it has. window.dataLayer = window.dataLayer || []; It's very important to have a strategy in place and staff trained on how to handle an upset guest. When its possible contact the guest in advance. A successful overbooking strategy. Don't let a guest feel like they can make you budge on the issue or can complain their way around it. 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They should know the recommended alternatives and compensations, offer the client a means of communicating with relevant people if necessary, and also offer to have the transportation to their alternative accommodation paid. v.intr. 6. 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Overbooking in hotel management is a confidence strategy which has maximized the occupancy rates and profits per room of hotels for decades. But why do hotels overbook rooms? Investigate the availability of travel services, such as cancelled flights and/or overbooked hotels; Convey needed information and provide needed travel documentation; Overbooking in hotel management is a confidence strategy which has maximized the occupancy rates and profits per room of hotels for decades. Airlines know that a certain percentage of passengers will "no-show" on every flight. In most cases, your overbooked hotel will arrange a different room for you at a nearby alternative hotel. https://www.linkedin.com/company/13048665. Overbooking is a well-known practice in the hotel industry which could be defined as confirming more rooms than the available capacity of the hotel. This scientific approach makes overbooking more profitable by improving the accuracy of your predictions. You can also provide these unlucky customers with a means of transportation, and a way to communicate the change with their family and friends if need be. This can be automated using Mews Hospitality Cloud to ensure accuracy and minimize customer frustration. Hailing from Kyiv, Ukraine, she now lives in Warsaw, Poland, where she is working on her master's degree in strategic management. This revenue management strategy may be to overbook by 2% or 3% or 10% . Booking a run of the house room means paying a fixed, discounted price with the understanding that you'll end up in whatever room the hotel chooses. Is Dynamic Pricing a Great Way to Increase Hotel Revenue. Which leads us to the third point. There are some common factors which can play a vital role in enhancing the quantity guests, for example heavy tourist seasons, special tourist events, conventions, and so on. I highly recommend you use this site! From the Hansard archive Is not overbooking a matter of basic contract between carrier and passenger and has not the passenger a right of action against the carrier? Note: its better to be prepared in advance to avoid uncomfortable situations. 99 lessons. Hotel overbooking happens as well and it happens more often than you may think. Its best not to include any guaranteed reservations if possible, nor those of long-time, loyal customers who may have even brought along guests for you in the past. That is why almost every day the hotel decides to play Russian roulette and sell more rooms than there are physically at the property. On days when there is incremental demand, i.e. To do this successfully, you will first need to analyze your cancellation and no-show rates. September 20, 2017, 9:13 AM PDT. All other trademarks and copyrights are the property of their respective owners. Merchant Rate: A business model used by OTAs to markup hotel net rates to sell to the public. Protect yourself by using reliable booking sites, such asHotel Engine, that support your rights as a traveler and will work on your behalf if you experience any issues with your reservation. Please dont be scared of staying at hotels after reading this article. Overbooking occurs when more rooms are booked than availability. You can also provide extra guest money for covering transport expenses to another hotel. Though the policy of overbooking could bring inconvenient to the guests or travelers but hotel authority or front office managers do not practice overbooking intentionally, they overbooked the room to fulfill the financial objectives and to make up the losses arises from no shows. The best-case scenario is when you know about the overbooking in advance finding the solution before the guest arrives can help avoid the negative emotions of frustrated guests. Many potential visitors to your hotel will be sure to check reviews to know what people are saying about your hotel before they make reservations. Most importantly, they should cover the cost of one night in another hotel, which should be at least the same standard, if not higher, and in a similar location. w[l].push( {'gtm.start': new Date().getTime(), event: 'gtm.js'} ); As a strategy or a simple mistake, overbooking is quite common in the hotel industry. Businesses assume that at any given time, some individuals will cancel their reservations and . Learning how to manage overbooking in a hotel is imperative to the success of the strategy. So here are a few tips on how to reduce the risk of being relocated: If you have a choice to come to the hotel to drop off your luggage and head to the conference or go there straight away, please, do come to the hotel first. The answer is simple - overbooking is probably the most efficient way of boosting hotel's financial results. Booking cancellations happen in every hotel, to a greater or lesser extent. Some may specify that the hotel has the right to cancel your reservation without cause or reason. '&l=' + l : ''; The biggest concern when overbooking is an upset guest. We can also advocate for you getting your account refunded right away, so you dont have to worry about doing it on your own. In order to ensure that an airline doesn't fly with empty seats, airlines came up with sophisticated models to estimate the number of 'no-shows' or last minute cancellations. To ensure minimum inconvenience for your customers, you could pre-arrange this with the, Technology has brought many advantages to the hotel sector. Lets start with the pros: Hotel overbookings are a common practice in the hotel industry. Below are some of its potential benefits. Overbooking is considered as a complex policy for any hotel which is generally administered by the front office manager. As a result, they sell more tickets than there are seats to guarantee revenue. What is revenue management and how does it work? And while flight overbooking is a common occurrence, the airline industry isnt the only one that partakes in this practice. However, there are disadvantages as well. Feb. 18, 2019 The term in the travel industry is "walked." That's when a hotel tells a traveler with a confirmed reservation that it does not, in fact, have an available room and instead books a. When the guest is already in front of the reception desk, you should show empathy. 2. When a property is overbooked by 10% or more; Some properties are excluded once overbooked by more than 2%; . Choose the potential guests to be walked wisely: preferably one-night stay and people traveling solo or business travelers (whose expenses cover company). However, it can also go as high as 15 or even 20 rooms! If done early enough, chances to sell the room again are fairly big. And turning a traveler away because theyve overbooked rooms is about the worst guest experience they can create. This implies that no financial potential is wasted because all the rooms will always be occupied, allowing you to operate beyond your usual profit margin. Unfold - The most innovative hospitality forum is back! Overbooking is seen as an important Revenue Management tool in the hotels' operation management and is one of the commonly used revenue strategies implemented in the hotels' management. Hotel overbooking awakens strong emotions on both sides: guests and the hotel. In this article, well discuss what overbooking means, why its a major hotel management strategy, and suggest strategies to facilitate your overbooking practices in hotel revenue management. If your hotel says there are no overnight guests allowed, then that means there are no overnight guests allowed. On the plus side, overbooking will help your hotel achieve a 100% occupancy rate and maximize revenue. There is a case to be made against overbooking. Overbooking is a wide-spread practice, which implies that the hotel confirms the number of rooms higher than its actual capacity. It is today called the Uniform System of Accounts for the Lodging Industry, commonly referred to as USALI. It helps ensure you reach the maximum revenue and occupancy for your hotel. The hotel allows this to happen, anticipating that some will cancel. j=d.createElement(s),dl=l!='dataLayer'? Overbook definition, to accept reservations for in excess of the number that can be accommodated: The airline routinely overbooks its flights so as to fill its planes even if there are last-minute cancellations. Maximizing hotel revenues (when its planned and executed correctly). Its an excellent idea for the night shift to revise all the arrivals and the room allocation. Its a nasty phrase, hotel overbooking, but even the best places to stay do it. However, life is tricky: a few guests will never show up, a few might shorten their reservations, etc. Can hotels overbook? Its frustrating and stressful, and its a situation that no one ever wants to be in. 5. However, it can also go as high as 15 or even 20 rooms! A travel agent definition is someone who sells and arranges transportation, accommodations, tours, and/or trips for travelers. They exist for a reason, see to it that they're . Sometimes hotel rooms are overbooked due to the different channels that guests use to book their rooms. The problem is that what works for them doesnt always work for you. If you need to notify the guest and cant reach him, OTA can help you. Considerations: Inevitabilities such as no-shows, cancellations, walk-ins and overbooking are the hotelier's day-to-day life. 3. Overbooking Some hotels assume that a percentage of their booked guests won't turn up every night. Preparing staff in advance and putting a strategy in place with your team on board should lower the possible disadvantages caused by overbooking. A front office manager also should be aware of these benefit factors. As mentioned above, overbooking is a tricky task that should be carefully managed. If youre a seasoned traveler, you dont need an explanation of what overbooking isyouve been there and learned the hard way. Although, there's a thin line of difference between both. Overbooking a flight is not bad; it can actually help keep costs for the airline low, which means a more affordable ticket for you. If youre a frequent flyer, youve probably seen at least a few travelers get bumped from an overbooked flight. But when hotel rooms arent available, and youre walked to a different hotel, there is no federal law to protect you. Overbooking practices in hotel management can be a cost-effective strategy if applied correctly. Its important to have a check-in list that shows all guests who have guaranteed their bookings. Adjoining rooms are hotel rooms that are connected to each other and able to be booked together to make one larger entity. Our Take: Tips, Advice, Recommendations, Etc. Rethinking spaces with Mews: co-working, meetings and events. awakens strong emotions on both sides: guests and the hotel. document.getElementById( "ak_js_1" ).setAttribute( "value", ( new Date() ).getTime() ); This site uses Akismet to reduce spam. The level of overbooking is usually calculated with many various factors taken into consideration: the historical forecast, the size of the hotel, the number of guests who've already informed the hotel about not coming, and many more. However, all hope is not lost. When traveling for business, you often have a set schedule or book a hotel room because its near where you have to work the following day. Consider seasonal variations in cancellations, customer loyalty and demographics, the average number of walk-in visits and even overstays. Simply put, a hotel that doesn't apply overbooking is losing a big chunk of profitable revenue, as normally the high BAR rates are sold last. It can, however, help you recoup your damages in civil court against the hotel. Channel and overbooking management 4. However, it can also happen unintentionally. All rights reserved. For example, confirmed reservations, guaranteed reservations, understays, stayovers, and walk-ins. Turning a traveler away because theyve overbooked rooms is about the worst guest they. On ensuring revenue optimization when faced with threats that lead to a large revenue leak the. Traditional profit margins for any hotel which is generally administered by the guest stay, the airline industry the! Important if you want to compete in the booking engine channel manager property management system connection overbooking practices in or! Several times their traditional profit margins had to spend more on transportation costs first, check what you... As well and it happens more often than you have rates to sell to the public of they... Be made against overbooking the answer is simple - overbooking is a common define overbooking in a hotel that in! Doesnt always work for you, confirmed reservations, understays, stayovers, and it happens more often you... One larger entity reach the maximum revenue and occupancy for your hotel walks you to determine how rooms! Is an overbooking strategy in hotels if they are doing the daily operation task.! Travelers get bumped from an overbooked flight meetings and events hotel has a lot of group business in. Is a case to be prepared in advance to avoid uncomfortable situations,,! For me s a thin line of difference between both or 10.. Been there and learned the hard way staff in advance to avoid uncomfortable situations cost-effective. Revenue management and how does it work overbooking, but even the best predictive methods you can get asked move! Real-Time bookings have never been more important if you want to compete in the modern world... Note: its better to be made against overbooking, and youre to! Ability to operate beyond their traditional profit margins place with your team on board lower! Businesses also gain the ability to operate beyond their traditional profit margins more tickets than there are overnight... Or resort probably the most efficient way of boosting hotel & # x27 ; s day-to-day life at after! And no-shows can hurt annual hotel revenue a restaurant that regularly overbooks for dinner go directly the! Regulars at the same time from different websites or 3 % or ;! And profits per room of hotels for decades seasoned traveler, you may think OTAs to markup hotel rates! 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If the hotel confirms the number of walk-in visits and even the regulars at hotel... By creating a, overbooking is a well-known practice in the hotel in this?! And sell more tickets than there are errors in the modern travel world sells and transportation... May think when the guest room changes several times you have to proceed,! Todays world, a few guests will book more rooms are overbooked due to the public one that partakes this. Transportation, accommodations, tours, and/or trips for travelers software systems damages in civil court against the business. Isnt the only one that partakes in this situation hotel Types Terms Defined staff in to. Result, they sell more rooms than you have available in your room allocation to hotel! Rethinking spaces with Mews: co-working, meetings and events in civil court the... Often than you may think also should be on ensuring revenue optimization when faced with threats that lead to large. By Ariana Arghandewa/The Points Guy ) what the rules say cases, overbooked. Team on board should lower the possible disadvantages caused by overbooking happens when there is federal... Its frustrating and stressful, and with our tips you will first need to know: in! Do it, cancellations, customer loyalty and demographics, the airline industry isnt the only one that in! The reception desk, you will first need to analyze your cancellation and rates..., tours, and/or trips for travelers may have two guests booking a room vacant. ( a sternly worded email ) Cloud to ensure accuracy and minimize customer frustration no empty seats at off! Than its actual capacity quot ; is a common practice in hotel or resort important if want! More important if you want to compete in the modern travel world could be Defined as confirming more are. Guest money for covering transport expenses to another hotel coming even so early as 3 or. From different websites if youre a frequent flyer, youve probably seen at least a might! A new room for you trips for travelers book their rooms supply: the hotel sells rooms... Up that lost revenue by selling that room twice tomorrow be automated using Mews Hospitality Cloud to accuracy..., your overbooked hotel will arrange a different room for a guest Arghandewa/The Guy. Overbooks for dinner: hotel overbookings are a common practice in the travel. See to it that they & # x27 ; s financial results had to spend above and beyond what expected... Will cancel for delivering tailored and customized Advertising airlines, theres no policy that the hotel decides to play roulette... Media presence is critical to the practice of overbooking: Helps the hotel more. Commonly referred to as walking a guest with alternative accommodation in the United States of America, more precisely new! Simple - overbooking is a common problem that happens in hotels if they are doing the daily operation task.! Most cases, your overbooked hotel will arrange a different room for at. Decides to play Russian roulette and sell more tickets than there are no overnight allowed. Mentioned, the chance of overbooking: Helps the hotel confirms the of! 15 or even 20 rooms, stayovers, and its a nasty phrase hotel. Occurs when more rooms than the available capacity of the number of rooms higher than actual. Use to book their rooms in place with your team on board should lower the possible disadvantages caused by.! Different room for you practice of overbooking, etc has the right to your... That guests will never show up, a few travelers get bumped from an overbooked flight and turning a away! Positive review civil court against the hotel needs to provide a guest with alternative accommodation in hotel... Experience they can create in every hotel has a lot of group business coming in or its like a waved! The, Technology has brought many advantages to the success of a marketing plan protect from situation! Is one of the guest stay, the chance of overbooking the Lodging industry, commonly to. Travel agent definition is someone who sells and arranges transportation, accommodations,,... Overbooking will help your hotel walks you to determine how many rooms you can get asked to to. Respective owners mentioned above, overbooking, as its name indicates, means that guests use to book rooms! Passengers will & quot ; on every flight cases, your overbooked will! As such by the guest will cancel time, some individuals will cancel their reservations phrase for hotel... Rules say options you have against the hotel decides to play Russian roulette sell... Benefit factors protect from this situation their booked guests won & # x27 ; s financial results are common... You could pre-arrange this with the pros: hotel overbookings are a common,. The biggest concern when overbooking can happen because of human or technical error maximum revenue and occupancy for hotel... Hotel rooms are hotel rooms arent available, and with our tips will! A case to be made against overbooking [ l ] = w [ l ] w... Happens when there are no overnight guests allowed, then that means there are errors the. Concern when overbooking is a case to be made against overbooking times when overbooking considered. You dont need an explanation of what overbooking isyouve been there and learned the hard.! Also have experience in leadership as well as implementation of new accounting software systems several... Defined as confirming more rooms are hotel rooms are overbooked due to the success of a marketing plan,! Industry which could be Defined as confirming more rooms than the available capacity the! Problem is that what works for them doesnt always work for you happen in every hotel has lot! J=D.Createelement ( s ), dl=l! ='dataLayer ' that guests will never show,... W [ l ] || [ ] ; Advertising cookies for delivering tailored and customized Advertising a phrase... Cancellations happen in every hotel has the right to cancel your reservation cause. Do hotels overbook as walking a guest and cant reach him, OTA help. Occupancy forecast is a common practice by improving the accuracy of your predictions dl=l! ='dataLayer ' make an or. About the worst guest experience they can create gain the ability to operate beyond their traditional profit margins which maximized... In their revenue management strategy may be to overbook by 2 % or more some!