Protection Overbooking: A Strategy for Mitigating Risk in the Travel Industry
Protection overbooking is a proactive strategy employed by airlines, hotels, and other travel companies to mitigate risk and increase revenue. This practice involves blocking space that is expected to be in excess of what will actually be needed, in order to protect against cancellations and no-shows.
The objective of protection overbooking is to strike a delicate balance between maximizing occupancy rates and minimizing the possibility of overbooking. By blocking a certain percentage of inventory from being sold, companies can reduce the chances of having to turn away customers or provide them with subpar accommodation options.
Protection overbooking is commonly used in the airline industry, where cancellations and changes in travel plans are common. Airlines will often block a certain number of seats on each flight to ensure that they can accommodate all passengers, even if some opt not to travel.
While protection overbooking can help companies minimize risk, it is a controversial practice as it can sometimes lead to the inconvenience of customers. However, when executed properly, it is an effective strategy for optimizing revenue and providing customers with a seamless travel experience.
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