Overbooking in hotels, restaurants and airlines


'Osteria De Medici is a high-end restaurant located in the downtown core of a large Canadian city. The establishment has loyal customers with very little walk-in traffic, so the management of reservations becomes key. On peak days such as New Year's Eve, Mother's Day and Valentine's Day, the restaurant would have vacant tables even though they were fully booked with advance reservations. Restaurant's management must determine if overbooking is an option, review the implications in overbooking and develop a model to determine a reservation schedule'.
Overbooking these days has become a marketing strategy for every business, mostly we will see these kind of overbooking in hotels, restaurants and airlines. I say Overbooking is a must for Osteria De Medici or any kind of business that have a policy of reservations and which will have the risk of cancellations and no-shows. Mostly in hotels like Osteria De Medici a high-end restaurant, the concept of overbooking is important and it requires a fine sense of balance between guest service, operational procedure, and revenue optimization. For example, many time when we had a get together with my friends we call a restaurant and make reservations and then later on when we are on our way to restaurant, sometimes we change our minds to go to another or maybe we cancel for some emergency. At this point the restaurant will lose the customer and it's a time waste to hold the reservation for the people who don't show up. Here the business will go in loss. So I Say over booking is good in all aspects.

Mainly, firm takes over booking when they have enough space and sells more than they have. It is depends on the characteristics of a business where customer can cancel or no show is allowed, the cost is relatively less than compared to service denied than booking and when the capacity can be controlled and can be halt, and bookings are accepted for next time.
The implications of overbooking would be that the restaurant management do not only tolerate competitive advantages, but also create a new system and service. The main implications would be the financial loss factor, where there is a chance of huge revenue loss due to decline of the customers and it may tend to business risk. With bionomical model, the probability that there are exactly i number of customers among the B reservation holders, where p is the is probability of reservation is
('([email protected])) p^i (1-p)^(B-i).

'The analytic model, the simulation, the lab tests, and the field results all consistently tend to support the conclusion that user transaction performance begins to degrade at a level well below 100% utilization due to resource overbooking. The key contribution of this work is a simple analytic expression to quantify that relationship between service levels (K), workload CPU intensity (P), hyper-threading (HT, D), aggregate VM utilization (??), and CSP overbooking (OB), namely
RT = 1'P + P/(1'??PD'OB/HT) < K.' (Hoeflin and Reeser,2012)
('([email protected])) p^i (1-p)^(B-i

Dietz.A., Osborn, N. G., and Sanli, T. (2013), Factoring Upgrades into Overbooking Decisions for Hotels and Casinos, SAS Institute, Cary, NC.
Hoefiln, D. and Reeser.P (2012), Quantifying the performance Impact of Overbooking Virtualized resources, At&T labs.

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