As we know, overselling (or overbooking) is a technique used in Revenue Management to offset
anticipated cancellations and no-shows (wiki has an article on this subject). In other words, if you
expect 2 cancellations and 1 no-show – you oversell by 3. That’s the optimal behavior that
maximizes revenue. Pretty simple, right?

Source: www.hospitalitynet.org

Most popular mistake that leads to walks is picking the wrong time to overbook. As mentioned above, overbooking is designed to offset cancellations and no-shows. Let’s ask ourselves: what is the main difference between those two occurrences? It is timing.

• cancellations can happen at any point in time, starting from 56 weeks before arrival (standard allowed lead time for transient bookings) until the end of the cancelation deadline
• no-shows always happen on the last day

Thus, we need to separate 2 different overbooking techniques: those that address cancelations and those that address no-shows.

When anticipating cancelations, in order to maximize your revenue to its highest potential, overselling needs to happen at the peak of demand.