A “walking” scam: how hotels profit from overbooking

I’m just curious… how am I supposed to do research on the niceness of a hotel while I am standing in a Hotel lobby, and the walked-to hotel isn’t exactly across the street?

SirWired

As a 20 year hotel industry vet, I’d like to point out that the practice of “walking” is not a scam. For one, the only way a hotel can sell out IS to overbook. (The airlines have practiced this for years.) A hotel’s revenue management team knows the “magic” number to sell to in order to achieve a sell out. (this would be the director of sales, rooms division director, front office manager, revenue manager, GM) A hotel room is a essentially a perishable commodity – it expires and the opportunity to capture that guest and yes, revenue, does have a time limit. As a hotel revenue team, our job is to sell each and every guest room and function room in that building. Hotels are not non-profit organizations, they are businesses that provide a service (lodging, food, meeting space). Folks no show and also cancel at the last minute, so your “sell to” number gets you to the sell out – NOT having a number of reservations equal to the number of guestrooms in the building. Also, when in an oversold situation, hotel staff does monitor the situation closely and also review upcoming reservations for any duplicates/triplicates and confirm with those guests to insure correct reservation numbers/ house counts. While repeat, loyal guests and group guests are the last to be walked, often we will contact guests we have great relationships with to see they could help us and if they don’t mind being walked for a night and upgrade them on their next stay. The first guests to get walked are yes, the Priceline folks. After all, if the first concern is only price, with no brand or property loyalty, then why not walk that reservation? Show me loyalty, I will show you loyalty back. And yes, Priceline gets a credit on their invoice in this case – it’s up to the guest to pursue refund matters with Priceline, not the hotel. In case of an oversold number that does NOT look like it will “wash,” hotels will secure rooms at a neighboring hotel for that night to walk to and give the guest the option of returning to their original hotel for the remaining nights or staying at the new property at the original rate. The guest is not paying for the night’s lodging at the new hotel nor for their original reservation, the first hotel is. Guess what – if the second hotel has extended a lower rate, the whopping $10 “gained” is being spent in the form of extra staff to deliver apology letters and cost of amenities to the returning guests or frequent guest points (which do cost a hotel $) or even the cost of additional staff on the desk because it is an oversold evening. The actual consumer rate at the second hotel may be lower on line through the third party channels, but that not the rate they are billing the first hotel for the room the walked guest is staying in. (If you think you are a savvy consumer and do some searching on Travelocity or Orbitz to find out the hotel’s “current” rate, you are dead wrong – the hotel has sold inventory to them and the internet sites price accordingly it on a number of factors, combining their own sales goals and the market conditions.) Basic economics apply with hotels – supply and demand – more demand higher price, less demand, lower price (ex: Chicago – consider room rates in January versus room rates in June)
As far as the “scam” of pricing for walking to a nearby hotel. If you are oversold, it’s a pretty much a given your neighbor hotels are as well, especially in the major cities and smaller resort areas. So the hotel who has just walked your butt is not certainly NOT getting a discount from hotel #2 for your new home for the evening. They too need to maximize their revenue, they are not helping their neighbor all that much even if it’s a brand “sister” hotel.
With regards the situation in Naples: there are so many missing pieces to the story, that’s it is borderline defamation to call walking a “scam,” using Ms. Weiler’s tale as an example. I’m sorry she had difficulties, but not a great example of the whole process of walking b/c of the use of a third party to book the reservation. 9 times out of 10 your rate is cheaper if you book direct and while yes, great packages do exist through the third party channels, they benefit the seller and not the property and can get messy for the traveler when there is a situation such as an oversell. For those who are curious: I’ve worked for Hilton, Starwood and Wyndham properties in the course of my career in major cities and also resort areas over the last 20 years, so I think I have a pretty good take on this subject.

Poor “Chicago Hotelier” denies “walking” is a scam, then goes on to explain how and why hotels overbook – practically forcing the practice of “walking”. And of course, he/she adds the “please feel sorry for me” to the diatribe because it may in fact cost the hotel money to implement the “walking” (letters, other reservations, etc.). Gosh, it cost them money to deny a reserved room? My heart REALLY goes out to them, but not the stranded/downgraded traveler who did everything by the book. And of course, the ultimate excuses: . . . “well the airlines do it too, you know”, and “well it IS a business, after all:, and “we DO monitor [a sellout] situation closely”. By the way, every time I make a hotel reservation, there’s a cancellation policy which will charge me one (or more nights) cost if I cancel within a specified period. So how does the hotel lose money if you “no-show”? Please! All the words I read netted down to one word: GREED!

Maybe the answer would be to lengthen the cancellation deadline as they used to do in Europe ( not sure if they still do). Try cancelling a hotel 24 hours before you are supposed to show up, you will have lost your money. Just like airlines do once your ticket is bought unless you pay the premium to do otherwise.

I have been walked twice and its been okay with the second hotel but do not like the idea of being moved after I have spent lots of time choosing the correct hotel for me, irrespective of how I bought it.

Where else as consumers are we penalised for not buying at full price for an item or in a certain store.

@ Chicago hotelier:

The only way I can anwer you is by invoking the infamous Seinfeld clip out his car reservation.

http://www.youtube.com/watch?v=WeHG-8rfqKM
(if the link doesn’t work anymore, just search for “Seinfeld car reservation” on any clip site)

In other words, as a customer with a reservation, I have no dealings with the intricate business of other customers not showing up and you as a manager having to over-book. I have a reservation, and I showed up, with my money. Just to put it in profitable terms: *I showed up with money to keep you in business*. That means it’s your time to uphold your part of the reservation which is to lodge my for the agreed amount of money. When a customer made a reservation, and then shows up, according to plan to use the product, it is not a good time to tell the customer that actually you didn’t think he’d show up, and don’t want his business anymore. That shows that you are untrustworthy (you are breaking a reservation), incompetent (you can’t keep the number of bookings equal to the number of reservations) and – worst of all – not truly interested in the business of the customer at hand. The last is an insult and opposed to your job in keeping your business profitable. I also wonder why the customer would have to feel sympathetic towards your profitability when you don’t want his business.

By over-booking and walking people, *you* are punishing the folks who show up for the fact that *you* as a hotel manager were *incompetent* in estimating the number of people that according to your bean-counting would not show up. You can hide behind your computer models and experience all you want, but the fact is that those models and experience are *false* when you have to walk people. You are forgetting in that case that statistics only apply to large numbers, not to individual cases.

Last, in this forum, you should not feel that there is anybody feeling sympathetic towards airlines for overbooking.

I like my idea so much, I am writing my congressman.

Is chicago hotelier seriously, without a hint of irony, expect us to feel sympathetic for the costs the hotel incurs for walking a guest?

“We’re entitled to make a little money via walking a guest cause walking a guest costs money.” There’s so much wrong with that logic, I think my head exploded!

No — you’re not entitled to make a little money off kicking out confirmed reservations. You deserve to lose both lots of money and future guests and if there’s fairness in this world, your job.

Well this may seem like I’m piling on, but as someone whom has worked in the hotel business since the early 90′s I have to comment. I’ve worked for Hilton Hotels for a number of years, specifically as an Executive Night Auditor and Overnight Manager. So if anyone I’ve walked more than my share of late arriving hotel guests. If anyone can comment on this ariticle from inside the industry, then I can.

The writer of this article fails to be fair or balanced, and uses a very big stroke of the brush so to say in the writing of his article. “Walking” as it is known in the industry isn’t inheriently a scam, but like most anything can be perverted into a scam. In the example cited in the case of Susan Weiler, if she believes that she was scammed then she might have actually been. But what would have been fair would have been for the author to have added the following…

Make a distinction between the reputable and the non-reputable hotel. No reputable hotel wants to walk anybody. Yes they, or at least the major brands, use complicated software and analyize statistics about previous periods of traffic to judge how much, if any, a hotel should over book. Sometimes we get the number right and sometimes we don’t. Sometimes management leaves well enough alone and sometimes they think they know better then the computer and/or the front line employee who’s there as the night’s events progress. No employee of a reputable hotel wants to over book only to look forward to getting yelled and screamed at by a late arriving guest. Trust me, I’ve been yelled and screamed at many times through the years (show me someone whom actually enjoys getting yelled at). I don’t like walking guests anymore then a guest likes getting walked. It destroys their experience with us and undoubtedly impacts negatively in a guest’s loyalty to us.

Hotels over book, that’s a fact of life. We over book, yes like the airlines eluded to in the comments posted, because we want to take into accounts cancellations and noshows. We are in business like any other business – to sell a product and make money. Hotel rooms have a nightly expiration date. Rooms are not like many items in a grocery store that a grocer can purchase from a suplier and then let sit on a store shelf until they sell weeks, months or even years later. Ever read the expiration date on a box of cereal or a canned item? Seeing 2012 isn’t uncommon anymore. Hotel rooms have to have electricity provided to them, water, someone to furnish them and clean them. These folks want to be paid regardless of whether or not the room was used. The electric company isn’t going to give a hotel a per room discount on the number of rooms that didn’t sell on a given night. They still want their money at the end of the month.

Now, if you are walked, by a reputable hotel at least, then yes you should most definetly be taken care of. At least in the cases when I’ve walked guests, you should be sent to a comparable property first, a property a step down from your level of service only if nothing else can be found. It should be a known brand that the guest will trust, not some hole in the wall brand that no one has ever heard of. Your night should be paid for by the hotel walking you. Complimentary transportation should be provided if needed to get you to your new hotel. And if you’re taken there in the hotel shuttle, the driver should walk you to the desk and make sure that everything is okay before leaving you. An offer should be made to return the guest to your hotel the next day. And whether or not you return you should recieve a prompt apology from mangement the next business day. Personally when walking a guest I’ve gone so far as to offer meals, free cabs the next day if I know a guy, and even cash money straight from the drawer among other things.

When walking a guest, the discount third parties like Priceline, Hotwire and Expedia are going to be the first to go. And why shouldn’t they? These guest have little if any brand loyalty, and often don’t even have control over which brand they stay with. So why should I or my hotel show them any loyalty over a guest who’s paying a fair rate and has stayed with our brand if not hotel itself repeatedly? Also, when a hotel guest is walked the hotel walking the guest looses money on that guest in what we have to pay to the new hotel to accomodate that guest and in what that guest would have paid to us in the form of their room rate. So sure, we’re going to minimize that as much as possible. The guest’s reservation with us should be cancelled or modified for that first night, and if its a discount third party site that booked the reservation then we’ll likely credit the site and the guest will then have to contact them then for a refund. If asked, we’ll sometimes contact them on your behalf and ask them to credit you minus any booking fees the third party may have charged.

A non-reputable hotel can pervert walking into a scam. Sure they can. Anything can be manipulated until so. Different hotels, different parts of the country and even different parts of the world have different ways of doing business. Some hotels, a lot really, genuinely care about their guest and some don’t. If like Susan Weiler you think you’re being scammed then you owe it to yourself to speak up. Speak up to the person at the desk, to mangement, to your travel agent, to your credit card company or anyone else that will listen. Read the manner in which you’re being walked. Is the employee actually apologetic or does it seem like an act? Look at where you’re being sent to. If you’re going from a five star property to a two star property with no compensation or credit that you can actually use and you think something is going on then speak up! But also understand that with regard to rates, that they are tiered and subjective. Many different rates can be had from many different booking avenues for the same room. Some hotels, and some hotel desk clerks, see the rates offered by a computer as gospel. Others see them as a guide and are willing to haggle. I’ve easily taken fity dollars or more off a rate to book a guest over the phone or in person just because it’s late and I want their business. So you could be the victim of a rate scam. or just happened upon the hotel or desk clerk that chooses to interpret the computer as nothing more than a guide.

I couldn’t help but stare at the near end of this article when it got to “…what to do if your walked…” The author must live in some pristine world is all I have to say. As I’ve said before, no desk clerk at a reputable hotel wants to walk anybody. It’s just such a bad thing to do to someone. But there are things I’ve told many a friend that they shouldn’t do when they are walked, just about everything this author told people they should do.

Don’t yell and scream at us. Again, we don’t like the situation anymore then you do.

Don’t ask us repeatedly if we’ve got a room in the back that isn’t being used. Yes we do have rooms from time to time that are out-of-order, and if they’re useable then we will put them back into sevice if we haven’t already done so. But no, we do not have a way of magically creating a room. Many people have pleaded that I provide them with a room. But I can’t violate the laws of physics. If I only have 248 rooms to work with and you’re reservation number 249, then you’re out of luck.

Speak up about your hotel that you’re being sent to. What do we think of it? Is it full service or limited service? You’ve never heard of brand XYZ? Then let us know that you want a brand that you’ve heard of. Give us enough faith that in all but the utter worst travel periods, a Hilton is going to walk you to a Marriott or a Hyatt and not a Motel 6.

Don’t threaten us, however professionally, and don’t try to influence your situation by bad mouthing us to other guests in the lobby. Again, we don’t like your situation any more then you do. Again, we can’t magically create a room for you. And often, desk clerks don’t respond well to threats. I’ve given more free stuff and compensation to walks that work with me as opposed to those whom work against me. How do you react to folks whom threaten you?

You can confirm your reservation all you want. But just because you say that you are indeed coming, doesn’t mean we’re going to mark you as “unwalkable.” Cause everyone whom travels regularlly is also calling us to let us know they’re coming. You do signifigantly decrease your chances of being walked, and increase your chances of getting the type of room you reserved, by arriving early. Don’t expect that you can work all day, spend time with the family, and then make that late flight that doesn’t get in until 11pm or mid-night (and that’s if it doesn’t arrive later cause of an airline delay). Hotels overbooks for a number of reasons. And the rooms are going to go as the night progresses until the hotel sells out. And what do they say about how the early bird gets the worm? Try working a half day instead.

In summary, I really had to comment after reading this article. I’ve been in the hotel business for a very long time, I know the in’s and the out’s. I’ve worked for good hotels and hotels that seemed to need help. I’ve worked slow travel periods and periods when I couldn’t check people in fast enough and the phone would never stop ringing. While yes most anything can become a scam, walking in of itself isn’t. It’s like having to say “no” to your kids. If you’re a good parent, then you want to give them everything. But sometimes you just can’t and have to say so, no matter how much you don’t want to.

K Blanco
Dallas, TX

I booked lodging for 2 nights in NY at a 4 points Sheraton ($400/night). When I got there I was told the hotel was overbooked, was given $10 for a cab, the name of another hotel, and an envelope. Being my first time in New York and actually my first travel for business I found this strange, but shrugged it off (it was late and I was tired).

I got to my new hotel which seemed alright in the lobby, but the room was smoking (I had asked for non-smoking in my previous reservation). The room was small, the area was downtown (my previous in chelsea), the internet was out, the hallways were disgusting. Lets just say I was happy to get out of there.

The next day I went to the 4 points Sheraton which now had a room. The internet worked and I looked up the other hotel… $180/night. I subsequently complained about my experience at the front desk — here’s where it gets interesting. I was told I would be refunded one nights stay ($400) and creditted 8,000 SPG points.

*I called the following Monday to make sure the credit was going through — “yes you should see it on thursday”
*I called Friday — Accounting manager was out sick
*I called the following Monday — “Oh it may have been held up by your bank give it a few days”
*I called my bank — “We would never hold a credit to your account”
*I called Tuesday — “I did put it through, here is the confirmation number” She rattles off a 15 digit number so fast I don’t have time to react, she says “I will email it to you as well.. goodbye”
*I call Starwood Hotels (instead of the hotel directly) — They have garaunteed that it will be resolved within 5 days.

The real question is.. did they really think they were going to get away with it? OR.. was this just a case of lazy workers + paper piles + misplaced/forgotten stuff?

Since this was resurrected I guess I”ll weigh in.

I have no problem with overbooking. We know that there will be no-shows and last minute cancellations. OVerbooking allows the hotel tomaximize its revenue.

In my mind there are only two issues. The first is the criteria in which the hotel decides who will be walked. The second is the compensation for being walked.

Regarding the criteria. It makes sense the Priceline/Hotwire guests should be walked first. Not because they are low revenue guests, but because the opaque nature of the booking means that they care less about the specific location than others.

And compensation is appropriate. Many hotels will comp you the first night when you are walked. In addition, if you are part of the loyalty program, you get additional benefits. Marriott gives gold members $100 plus the first night free if walked, and gives play meners $200 plus the first night free is walked.

Hardly seems like a scam.

I didn’t read everyone’s comment but there is one big thing that is being missed in this discussion, though I’m certain none of the consumers really care. When you guarantee a reservation with a credit card, the hotel is guaranteeing you lodging for the evening. The catch to this is that it does not mean that it guarantees you a room in the hotel. The typical hotel management groups will not charge you for the night (of course) and pay for your night at a “comparable” hotel along with any transportation costs. Obviously a comparable hotel is not always available since most hotels in a close radius to a hotel will be sold out as well due to compression in the area. Basically meaning that if you can’t book hotel A, you’ll book the next closest, causing the local hotels to fill up.

It’s not a scam and the hotel would prefer to not have this happen since it is not a good customer service move. Unfortunately due to the overbooking policy of management groups though it does happen since it is impossible to guess exactly how many reservations will not show up/check out early…

Once again a hotel is a business and like any business their job is to maximize revenue. The naivity of the consumer to think that a hotel should be different from any other business is just silly. Sometimes a little bit of understanding should be in order on both sides, the hotels should provide excellent service in those situations and the guests should understand that the front desk agent in front of them has nothing to do with the situation and is stuck with the unenviable task of delivering the bad news to you.

Write a letter to the general manager and express your dissatisfaction with their revenue management policies and perhaps you can actually make a change at the property level where they will be hesistant to overbook in the future.

-a veteran hotelier

@J

When you guarantee a reservation with a credit card, the hotel is guaranteeing you lodging for the evening. The catch to this is that it does not mean that it guarantees you a room in the hotel.
————————

Hogwash. That’s just hotel self-serving doubletalk. When I book a room at hotel X, I expect to be placed in Hotel X, otherwise I might as well go to Priceline. I understand if Hotel X is unable to honor the booking due to unforeseen circumstances, and I’m fine with overbooking, but to suggest that the agreement is that I’m just contracting for a room somewhere is ridiculous.

I’m a hotel manager and this is NOT A SCAM. Thank you K. Blanco, Chicago Hotelier and J for your insightful rationale, they are 100% right. I would just like to reiterate. It’s something that no front desk agent or Manager wants to tell a prospective guest, but it is the nature of the game. Not all business practices are perfect. Third party reservations are usually the ones to be walked first. And just because a hotel has a cancellation policy, it doesn’t mean we cash in on it. We had five no shows one night and when I attempted to process the cancellation fees the next day none of the credit cards worked, the all declined! Over $2000 of revenue lost. It’s very rare that a hotel “profits” from walking. It normally costs the hotel more. If you are ever faced with this situation as a traveler do not threaten the front desk agent or the manager, this will most certainly land you in the nearest motel 6 (or equivalent). We are able to deal with most all forms of anger and dissatisfaction; yelling, snide remarks, and general rudeness, please do not bring in threats into the equation or make a “scene” as one suggests, this is generally selfish , classless practice and futile way to get your point across (don’t make others feel uncomfortable and yourself look embarrassed). We will work with you to ensure that you will be comfortable in the other property and take exceptional care of you if you are returning. The world is not perfect. Unfortunate things happen.

I’ll be honest, I work front desk at a hotel in Minneapolis, MN. I had to walk a guest who was having her bachelorette party tonight. I felt absolutely terrible about it and I still feel terrible about it. In the situation, I had no choice. I had to send the girl to another hotel. I wish the practice of overbooking was not a reality. It’s terrible for the guest and for the person having to walk the guest.

Just remember – don’t take it out on the front desk person. They are only the messenger. Take it out on corporate. They’re the ones enforcing the practice.