Strategies for Satisfying Walked Hotel Guests
IndustryView | 2014
Even though reservation software can help avoid booking conflicts, hotel overbooking isn’t going anywhere. Hoteliers expect a few cancellations or no-shows every night, and will overbook to maximize occupancy and revenue. This means they’ll sometimes have to turn away, or “walk,” guests who have reserved rooms.
This doesn’t go over as well for those on the other side of the front desk: Guests often report their annoyance with overbooking practices online, and as we’ll see in the following data, this makes them less likely to return—and more likely to leave a damaging review.
As a way to mitigate negative results, hospitality companies have defaulted to an industry standard of providing a comparable room at a nearby property with free transportation. However, for many guests, this is merely the “bare minimum” they expect, and doesn’t completely satisfy them.
So, we performed a survey of 1,939 randomly selected U.S. consumers to find out just how they react to overbooking, and what hotels can do to prevent its negative impact.
We first wanted to determine how guests react to overbooking, regarding their likelihood to return to the same hotel. The results show quite clearly just how detrimental overbooking can be: Almost 80 percent of guests say they would be “much less likely to return” following an overbooking incident in which they were turned away from a hotel they had reservations at.
“I think, for them, it can feel like a rejection; like they’re not accepted, even after making their booking,” says Edwin Saldanha, head of sales at Staah, a New Zealand-based company that provides channel management and booking solutions for the hospitality industry.
Saldanha also has nearly seven years of experience as a revenue manager with Stamford Hotels & Resorts. He gives an example of how big a financial impact the loss of a guest can be: Let’s say you have a corporate client who books 100 rooms a year for business travel. If your average nightly rate is $200, the hotel could lose out on a potential $20,000 if that customer were miffed enough by overbooking to never return.
He adds that while overbooking is an obvious pain point for guests, it’s something that will continue to occur, especially in larger hotels, because they know there will always be a certain number of cancellations and no-shows each night. The trick, he says, is to minimize them as much as possible, and be prepared to make amends when they do happen.
We’ve talked before about the importance of online reviews for hotels, and the effort it can take to recover from negative reviews. In response to being a victim of overbooking, nearly half of respondents—44 percent—say they would be “extremely likely” to leave a negative review, and 20 percent said they would be “moderately likely” to do so. Just 24 percent said they were “not likely at all."
Continuing his example of the financial impact of overbooking, Saldanha says, “If you’re looking at a leisure guest, they may not account for as much money, but you have to think about [whether] they will go over to TripAdvisor and start bashing the hotel—because that could be another $20,000 lost from losing rankings on the first page and taking the time to remedy that.”
A simple Google search of “TripAdvisor hotel overbooking” brings up several pages of two-star and single-star reviews directly tied to overbooking. While many of these may be unjustifiably harsh given a hotel’s situation, they still exist online, pulling these hotels down in rankings—and losing them revenue due to missed opportunities.
Demographically, we found that males were more likely to leave a negative review following an overbooking situation, with 57 percent of those who chose “extremely likely” being men, while 43 percent were women.
We also found that, of those who say that the “industry standard” procedure of a free comparable room at another hotel is unsatisfactory, 67 percent are male. In fact, one study shows that older males are actually more likely to complain online—which leads conveniently to our next piece of data.
Though only slightly, older guests—ages 55 and up—are the most likely to leave a negative review (reporting they were “extremely likely” to do so). Combining these demographic data, hoteliers can see that it could be riskier to walk an older male guest.
“[Older guests] have more time on their hands, and they have iPads now,” says Saldanha, adding that quick access to the Internet has made it easier for consumers to deliver voluntary feedback, when before, hotels had to actively solicit for comments.
Saldanha says it is at the discretion of the general manager on duty to determine which guests to walk, and sometimes they must make a decision based on the guest’s status as a frequent customer—or other factors, such as demographics that make a guest more likely to leave negative reviews.What are your thoughts on the findings from our report? Do you have additional insights to add? If so, please leave a note in the comments below.
More than 70 percent of respondents say they would not be completely satisfied with the standard procedure most hotels use to appease walked guests: paying for the night’s stay at a comparable room in a nearby hotel.
For 34 percent of respondents, this standard is the “bare minimum” they expect in return for being walked. Thirty percent say they would “appreciate more” from the hotel, and 9 percent say that a comparable room at another hotel “wouldn’t even come close” to satisfying them. Only 27 percent would be “completely” satisfied by the gesture. Demographically, we found that males were more likely to leave a negative review following an overbooking situation, with 57 percent of those who chose “extremely likely” being men, while 43 percent were women.
Travelers might often accept the industry standard, but they aren’t typically happy about it—and besides, offering customers the bare minimum isn’t the best way to increase loyalty. Saldanha acknowledges that the industry standard is generally effective, but that there are other techniques that help create a more preferable situation.
“In addition, you could offer a bottle of wine, maybe some dinner credit[s] or a free night, because you have to make them happy,” he says.
Fifty percent of respondents say the offer that would both convince them to return to the hotel and dissuade them from leaving a negative review after being walked is a free return stay. Another 26 to 29 percent say a $100 compensation would be most persuasive.
Compared to the impact of negative reviews or the loss of return business, Saldanha says a free night’s stay is the most cost-effective offer; it pleases most guests, and it isn’t a big expenditure for hotels, since the cost to service a room for new guests typically doesn’t exceed $35.
“It’s a reasonable offer,” he says. “The impact of negative reviews is huge, and the cost to hotels for a corporate client going back to their company and not recommending us again is huge, as well.”
Our data reveals that overbooking is enough of a hassle to drive away almost 80 percent of guests, and greatly increases the chances of a hotel receiving a negative review online—most likely from an older, male traveler. While most consumers find the industry’s standard practice to be, at best, acceptable as the bare minimum, most expect the hotel to do more. An extra offer of a free night’s stay can often convince them to return.
Saldanha says channel management solutions can help hotels maintain real-time room inventories and avoid overbooking altogether—but that many large-volume hotels will continue the practice. In his experience, he says, hotels can lessen the negative effects of overbooking if they can get in front of the problem.
“The damage is done, and trying to make them happy after the fact can be tremendously difficult,” he says.
If the hotel knows there will be a booking conflict ahead of time, Saldanha says, the general manager should take responsibility, contact the affected party as soon as possible to make them aware of new arrangements—and consider offering a free return stay or $100 compensation.
To further discuss this report or obtain access to any of the charts above, feel free to contact me at firstname.lastname@example.org.