In part two of our interview, we continue the deep dive into cancellations with Daniel Foreman and Connor Vanderholm as they explore effective oversell strategies. Learn how to confidently oversell rooms to ensure full occupancy, even with last-minute cancellations. This episode equips you with best practices for setting oversell limits, managing operational expectations, and balancing the risks and rewards of overbooking, ensuring you can maintain high occupancy rates without compromising customer satisfaction.

To wrap up our series on the sellout, let's tackle the most hotly debated topic when it comes to buttering the bread and sticking a perfect landing: an oversell strategy.

By this point we’ve looked into various factors that go into a sellout, and we now have a better grasp of when guests book based on demand drivers, when they are likely to cancel, some ideas on how to price, and the implications of market segmentation.

But what is that final flourish we can put on our strategy to ensure that our chances of hitting a sellout go from “likely” to “almost certain”?

I recommend thinking of an oversell strategy as sellout insurance. By overselling just a few rooms, you greatly increase your chance of operationally executing a perfect sellout.

But how do you know if you need an oversell strategy in the first place? A sellout efficiency report is a great place to start.

This is a report you can run quite easily by using Business Intelligence.

Navigate to your hotel’s day-by-day section, export your data for a sizable time frame (preferably the past year or 6 months), and export.

Next, analyze the data and look for dates where you reasonably could have sold out, but didn’t.

For my example hotel I’m being pretty lenient since this is a larger hotel (>200 rooms). For the purposes of this report, I’m setting a “technical sellout” at 97% occupancy. What this means is that any date where we reached 97% or higher is considered a technical sellout (a date we could have sold out). Perfect sellouts are those dates where we reached exactly 100%, with no rooms left to sell, the most desirable outcome.

Over the past 6 months, the example hotel reached a sellout 10/23 times, or ~ 43.5% of the time. While I won't immediately declare this to be a good or bad sellout efficiency, there is certainly some degree of improvement to be made here, and a more aggressive oversell strategy is the most immediate fix.

If you listen to the podcast you’ll catch this quote, but I really like this point that Connor brings up about sellout efficiency:

I love having this conversation with new hotels… I love it, because if I’m having that conversation about sellout efficiency - it’s likely that they have so much opportunity to sell out, and they’re likely already doing really well. Connor Vanderholm

When to implement an oversell strategy in a hotel

When might an oversell strategy be useful?

Let’s say that you are planning your next sellout night and you notice that your market mix is skewed heavily toward retail market segment reservations.

Perhaps you’ve analyzed the cancellation rate of the various segments you have on the books, and know that retail rooms have a much higher tendency to cancel, especially in the final 3 days leading up to arrival.

To top it all off, perhaps the day of week in question is a weekday, a day that you know tends to have more cancellation pressure.

Maybe rates in the market are starting to decline as well, offering additional incentives for guests with flexible cancellation policies to jump ship and rebook at another hotel with a lower rate.

Days such as these are perfect for implementing an oversell strategy - but we wouldn’t know this unless we had done all of our due diligence using Lighthouse Business Intelligence!

Getting buy-in to implement an oversell strategy

As many revenue managers can attest, overbooking strategy is a bit of an oxymoron. From a button-pushing standpoint, it's one of the easiest strategies we can implement.

In some cases, it's as simple as typing in a single number and pressing save, but from the standpoint of getting buy-in from your operations teams, and winning them over to this strategy, it is one of if not the most difficult strategies to execute.

While we’ve focused so much on data in this series, in an ironic twist, we will end the series with some soft-skills.

Connor summed it up nicely in the podcast episode:

Hotels… they hate [overbooking]… they just do, so the only way that you’re going to convince them to oversell the hotel, which is super necessary for their own benefit, is for them to like you. That’s why our #1 KPI at Topline is: Do our hotels like us? Connor Vanderholm

In my experience, one of the ways you build this rapport with clients is by being open and transparent with your decision-making and the data you use to reach those decisions.

Put yourself in the shoes of an ops team member - what would you rather hear from your revenue manager in your morning standup on the night of the big event:

  • I feel like we can get away with an overbooking of 3 rooms tonight.

Or

  • Tonight our retail mix is a bit heavier than normal at 30 rooms. The last 10 nights that we’ve had strong occupancy like this, we lost at least 10% of our retail rooms the day of arrival due to cancellations. An overbooking limit of 3 rooms gives us the best chance to hit 100% tonight.

While our friends in operations will never enjoy the prospect of potentially walking a guest - the second scenario at least indicates that the revenue manager has put in the effort to analyze the data and come up with a solution that benefits everyone.

In this case, it’s quality data that allows us to create an action that in turn builds team rapport.

It takes lots of these little repetitions to make it happen, but it can happen over time.

Key Takeaways:

Let’s summarize some key takeaways and identify actions to incorporate an overbooking strategy for consistently achieving the perfect sellout!

  • If you aren’t already using an overbooking strategy, set a date on your calendar maybe a few weeks out, maybe a month out, and let the team know that starting on this date, you will start incorporating an overbooking strategy.
  • For any potential sellouts that happen before this go-live date, start communicating (and overcommunicating) with your team exactly what your oversell strategy would be for high occupancy nights, and the reasoning behind these decisions.
  • Track your sellout efficiency and display it somewhere obvious, like on the whiteboard in the back office so the team can see as you make improvements, and feel more comfortable with the whole overbooking process.

That brings us to a close for our perfect sellout journey! A huge thank you to all the guests who participated, we hope that you found some fresh new take-aways that will help you butter the bread the next time you get the chance!

About Lighthouse

Lighthouse (formerly OTA Insight) is the leading commercial platform for the travel & hospitality industry. We transform complexity into confidence by providing actionable market insights, business intelligence, and pricing tools that maximize revenue growth. We continually innovate to deliver the best platform for hospitality professionals to price more effectively, measure performance more efficiently, and understand the market in new ways.

Trusted by over 65,000 hotels in 185 countries, Lighthouse is the only solution that provides real-time hotel and short-term rental data in a single platform. We strive to deliver the best possible experience with unmatched customer service. We consider our clients as true partners—their success is our success.

www.mylighthouse.com

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