Overbooking: the Practice and the Law

Abstract

Overbooking in hotels is a strategy designed to respond to the problem of lost revenue due to no-shows and late cancellations. Most legal authorities agree that when overbooking results in walking guests, a breach of contract occurs. Under certain circumstances, it may constitute fraud or misrepresentation as well. In addition, certain overbooking practices likely fall under the ambit of state consumer protection statutes prohibiting unfair and deceptive acts and practices. Overbooking practices need to be scrutinized to bring them into compliance with these statutes, so as to protect individual hotels, management companies, franchises, and the industry as a whole from the specter of potential class action lawsuits possible pursuant to many consumer protection statutes.

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