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OVERFLOW OPTION is it a clever idea?

What is an overflow option?

An Overflow Option is used in overbooking situations – it is your backup plan for when you book more people than you have rooms for.

It is quite common within the tourism industry, whether that be with hotels or airlines, to have Overflow Options.

Usually, overbooked Stays will arrange accommodation for their guests in another Stay.

Why do hoteliers do it?

Mainstream hoteliers often incorporate an Overflow Option into their business models to avoid under-booking and ensure as much full occupancy of rooms and therefore, maximise profits. 

Overbooking rooms is somewhat like a security blanket – while many guests, particularly leisure clients, actually end up staying in the rooms they have booked, not everyone who books actually ends up able to make their booking.

Business guests are more likely to have last-minute itinerary changes for instance. In this case, if a guest doesn’t arrive, then the hotel may lose revenue.

If you allow overbookings, however, you can fill that room with your second booking.

Now, if the first guest also arrives then you will find yourself in an overbooking situation.  You will have 2 bookings for the same room.

So, you can easily handle the situation if you have an Overflow Option and offer the guest a replacement stay at your overflow hotel option.

You have accommodated both your clients and enhanced your reputation at the same time, even if you have to pass some money onto your overflow hotel.  A good reputation will stand you in good stead for future business.

As a Stay owner or manager maybe there’s something we can learn from the hotel industry?

What are the risks?

One thing to consider is a huge risk should overbooking occur on a mass scale.

There will be times when it makes sense to limit the number of guests you overbook, if any, to avoid client dissatisfaction and tarnishing your stay’s reputation. Think about when that convention is in town and all your overflow Stay partners are also full.

An overflow option is usually a nice security option, not something to exploit to the point where there are more overbooked guests than there are cancellations.

How does it build a business?

  • If rooms are constantly at maximum occupancy, expected revenue will be much higher had an overflow option not been considered.
  • Increased revenues allow for the ability to re-invest and attract outside investment.
  • Data-sharing with other Stays enables better business practices. Obtaining more data on more clients allows a Stay to better anticipate bookings and cancellations.
  • This data can be used when designing overflow options, better protecting a Stay from an overbooking disaster.

How does it build better client relationships?

When designing your Stay’s overflow option, it is inevitable that you will network with other hotels, stays and businesses in the local area to accommodate an increased number of guests.

Good business practices help you build strong business relationships in the town operates.

Moreover, when collaborating with other hotels/ stays or other business owners, a hostile competitive environment can be avoided whilst bettering business practices via sharing information, data and services.

An overflow option truly allows you to secure higher revenues and accommodate your guests’ needs – after all, that’s what the tourism industry is about.

Here at Nomad Stays, we encourage our Stays Community members to explore these business practices.

Whether that be sharing information, building community networks or incorporating new technology into your business, there is something for everyone to gain with the overflow option.

We hope that this guide has helped you understand the importance of incorporating an overflow option into your business model!

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