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Overbooking Level Calculator

Work out overbooking level instantly with clear inputs, formula shown and shareable results.

About Overbooking Level Calculator

Overbooking is a newsvendor problem: the critical ratio compares the cost of an empty room with the cost of walking a guest. Where walking is expensive relative to lost revenue, the optimal overbooking level is well below the expected number of no-shows.

Formulas

Critical ratio

Critical ratio = Lost revenue per empty room / (Lost revenue + Walk cost)

Overbooking level

Overbook = Expected no-shows x Critical ratio

Worked example

With the default values below, Overbooking Level Calculator returns Rooms to overbook of 4. Change any input above and every figure here is recalculated in your browser.

Inputs used

Rooms available
120
Expected no-show and cancellation rate
9
Cost of walking a guest
14,000
Revenue lost per empty room
9,000

Results

Rooms to overbook
4
Total rooms to sell
124
Expected no-shows
10.8
Critical ratio (newsvendor)
0.3913

Step by step

  1. 1Values used
  2. 2Critical ratio
  3. 3Overbooking level
  4. 4Rooms to overbook= 4
  5. 5Total rooms to sell= 124
  6. 6Expected no-shows= 10.8
  7. 7Critical ratio (newsvendor)= 0.3913

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or compounding frequency into account.
  • Figures are rounded for display to 4 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

What is the true cost of walking a guest?

The alternative accommodation, transport, compensation and the lasting reputational cost. It is usually several times the room rate.

Should overbooking vary by night?

Yes. On a night with no alternative accommodation available in the market, the walk cost rises sharply and overbooking should fall to zero.

Related Calculators

Overbooking Level Calculator – Calculate Rooms to overbook