An Analysis of Overbooking and Impacts on Customer Behavior Within the

Introduction This report seeks to investigate and analyse the main characteristics of overbooking and the impacts this can have on a hotels management systems and customers. It examines the consequences of both successful and ineffective overbooking management decisions depending on the way in which it is managed and the effect this can have on the hotels profitability of the hotel. It also looks at the effect that overbooking has on customer behaviour and loyalty and legislations that have been passed in the USA. Existing research on yield management analyses’ overbooking and how this can be implemented effectively within hotels, some researchers have then expanded upon this to incorporate effects on profitability, customer service and service recovery. Secondary data was collect through journals, books, hospitality related magazines and hospitality news articles in order to gain framework for the research topic. Literature Review Companies throughout the hospitality industry a keen to implement the most successful techniques in order to make the best of their efficiency and increase their profitability and yield management, including overbooking strategies which is important in the operation of a hotel to maximise revenue and are increasingly putting these in to practise throughout the company (Hwang et al, 2009), an unoccupied room in a hotel offers a revenue opportunity, whether or not the no show customer has paid for it. Overbooking forms a part of a hotels yield management, also known as revenue management and can be defined as â€Å"the application of information systems and pricing strategies to allocate the right capacity to the accurate customers, cost and time† (Kimes et al, 2003: 30), by expanding on this term it ... ...a donnybrook.†: Hotel Management Magazine, New York. Noone, B. & Kimes, S. & Renaghan, L. (2003) â€Å"Integrating customer relationship management and revenue management: a hotel perspective†: Cornell University, Journal for Hospitality Research. Simon, J. (1968) â€Å"An Almost Practical Solution to Airline Overbooking†: London, Journal of Transport Economics and Policy. Sulistio, A. & Kyong, K. & Byya, R. (2008) â€Å"Managing cancelations and no-shows of reservations with overbooking to increase resource revenue†: Washington, CCGRID '08 Proceedings. Talluri, K. & Van-Ryzin, G. (2004) â€Å"The Theory and Practice of Revenue Management†: New York, Springer Todorov, A. & Zhechev, V. (2010) â€Å"The impact of overbooking on hotels’ operation management†: Unknown, Unknown. Vickrey, W. (1972) â€Å"Airline Overbooking: Some Further Solutions†: Journal of Transportation and Economic Policy.