Overbooking – a balancing act for the budget chains

02 November 2006
Overbooking – a balancing act for the budget chains

The revelation by an undercover investigation that Travelodge overbooks bedrooms came as no surprise to the hotel industry. Tom Bill investigates how hotels cope with the pressure to maintain occupancy

Premier Travel Inn (PTI) bosses weren't cracking open any Champagne after last week's BBC Watchdog programme exposed rival Travelodge for overbooking bedrooms.

They kept a lid on their Schadenfreude because, as PTI chief operating officer Paul Flaum says: "Everyone in the industry does it, right up to the Ritz."

He believes the reason there aren't more hotels being exposed by investigations is because they either don't push their luck or have systems that are sufficiently well oiled not to turn overbooked guests into whistle-blowers.

In contrast, Flaum describes Travelodge's overbooking policy as "very aggressive". "We don't get the level of issues that I saw on the Watchdog programme," he says. "I can't remember the last time a PTI guest was overbooked."

Centralised policy

Travelodge, which has a centralised overbooking policy, concedes it made mistakes but refuses to reveal what percentage of its rooms it is prepared to overbook. It rejects the suggestion that it is aggressive in its approach to booking rooms. A spokesman says: "Only one in every 10,000 of our customers has not received our normal high level of service."

But one former Travelodge manager said overbookings can exceed 10% of roomstock. They said the 136-bedroom Birmingham Central site would double-book 15 rooms (11%) at busy times, while two other hotels in the region would overbook by between 6% and 10%. Travelodge denies the claims.

Whitbread-owned PTI leaves decisions on how many rooms to overbook to its general managers, who monitor booking trends, phone guests to ensure they are coming, and ensure a Plan B is in place, according to Flaum.

"We don't have a fixed limit on how many rooms to overbook," he says. "Our managers know they must do whatever is needed to make sure guests have a good stay."

Despite the assurances, Flaum remains concerned that PTI will be hit by some of the mud thrown at Travelodge. A staff memo issued the day after the Watchdog programme stated: "You are very likely to receive more guests than usual over the next few weeks asking queries about our out-booking policy. It's critical that we do not receive similar press coverage."

So how far up the market does the policy of overbooking spread? The Ritz was quick to dispute Flaum's suggestion that it overbooks. General manager Stephen Boxall insists it would be too much of a risk to the five-star hotel's reputation.

"There's a question of prestige at the niche leisure end of the market," he says. "Higher-volume hotel groups and corporate hotels are more driven by bottom lines, and there is an obvious business need there."

Dorchester general manager Christopher Cowdray agrees and says budget hotels' inability to enforce the 24-hour cancellation policies of top-end sites contributes to the problem. "If guests can cancel up to 6pm on the day of their stay, hotels will understandably get nervous if they get to 5.30pm and 30 rooms are still unfilled," he says.

However, other five-star hotels in London admit that while they do not systematically overbook rooms they are keen to avoid confrontations in the lobby when it does happen.


Anne Scott, general manager of the Sheraton Park Tower in London, says: "An overbooked room is a very personal piece of news for a guest. It happened to us during the Farnborough air show last year but we headed any problem off by phoning guests 10 days before to make arrangements at other hotels."

She says it is important for managers at neighbouring hotels to co-operate with each other and not cash in by putting up prices for overspilled guests, although she concedes that it could be more difficult for budget hotels, which are often located beside motorways.

There is also the legal question to ponder. According to Clive Zietman, litigation partner at Manches solicitors, the law is on the side of the guest. "You don't need to have prepaid to enter into a contract with a hotel," he says. "Technically, an overbooked room, like an overbooked restaurant table, is a breach of contract."

But he adds that the prospect of a guest taking legal action is "highly theoretical" given the small sums involved.

Disgruntled punters are more likely to approach a journalist or sound off on the internet. An online search throws up hundreds of unhappy guests, and many have contacted Caterer since last week's Travelodge story to say they would never stay in one of its hotels again.

According to Flaum, the hotel industry's tradition of not taking prepayments is at the root of the issue. "You wouldn't walk into a John Lewis to buy a television and ask if you could pay for it in a week's time when you first use it," he says.

So why do hotels still work like this? "Because we're a lovely, traditional industry," Flaum says, with more than a hint of irony.

By Tom Bill

E-mail your comments to Tom Bill here.

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