Underbooking meaning in hospitality

Underbooking means having fewer reservations or bookings than capacity. That’s when the number of guests or customers is less than the available rooms, tables or space. Underbooking can happen in any hospitality business, hotels, restaurants, bars and event venues.

Underbooking is a big problem in the hospitality industry because it affects revenue and operational efficiency. When you underbook, it means unused capacity and lost revenue. Empty rooms in a hotel or vacant tables in a restaurant means missed opportunities to make money. And underbooking can also lead to overstaffing where labour costs exceed the actual guest count. That’s a budget buster and can affect the overall financial health of the business.

Let’s use a fictional example to illustrate underbooking. You’re the manager of a busy city centre restaurant with 100 covers. It’s a Friday night, your busiest night, but you only have 50 bookings. You’ve scheduled your full team, 6 waiters, 3 bartenders and a full kitchen crew. As the night goes on you realise you’re underbooking. The empty tables are visible and your staff are underutilised. You now have to manage costs while maintaining service to the guests that are there. This is what underbooking can look like and how it can impact your profitability for the night.'