Overbooking – Why do hotels overbook?

The reasons hotels overbook are the same as for airlines. There is an added wild card to the hotel business because they have “walk up” business, and people that decide to stay longer or shorter than their booked stays (usually without any financial penalty).  Hotel bookings typically have less stringent cancellation penalties than airline tickets, simply because, their average occupancy percentage is quite a bit lower than the load factor (percentage of seats sold) on airlines these days.  It is more of an issue with peak periods and very popular hotels.

Many hotels allow you to cancel individual reservations (not as part of a package) up to the day of arrival before 4 or 6pm with no penalty.  Even where a deposit is required, it is often one night’s hotel rate, and seldom the whole thing.

Generally hotels go to great lengths to accommodate their guests when in an overbooking situation.  Just saying “sorry” doesn’t quite cut it when the alternative might be sleeping on the street.  Hotels work together in these situations and will transfer guests to an alternative property with no extra charge – it will be debatable whether the property is similar enough to satisfy your needs.

The Travel Industry Act and its Regulations specify that a wholesaler must offer a “similar” hotel – not the same, not equal…”similar”.  This is because so many hotels have unique features that cannot be equal.  This typically means the same star rating, in a similar location and setting, offering similar services.  If we at tripcentral receive a call that one of our customers is overbooked, we are looking for a similar or better accommodation (but that is not specified in the regulations) or for flexibility.

Rarely will you find yourself going to a different hotel when you have pre-booked a package, and even rarer would be that you didn’t find out until you arrived in destination.  The regulations prohibit tour operators from this practice, if they know or should have known of the overbooking situation.  Their destination representatives should be available for assistance.

If ever you are in a situation of hotel overbooking, it is best to contact tripcentral.ca directly by 1-800-665-4981 and contact customer service.  If we are past normal business hours, please leave a voicemail or contact us by email.  It is easier to resolve these situations in the moment than after the fact.