Customer perspective on overbooking: The failure of customers to enjoy their reserved services,accidental or intended? |
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| Institution: | 1. School of Management, University of Science and Technology of China, 96 Jinzhai Road, Hefei, Anhui, 230026, PR China;2. School of Economics and Management, Zhejiang Sci-Tech University, 928 Second Avenue, Xiasha Higher Education Zone, Hangzhou, Zhejiang, 310018, PR China;1. Purser, Cabin Crew Operations, Korean Airlines, 1370, Gonghang-dong, Gangseo-gu, Seoul, 157-712, South Korea;2. School of Business, Korea Aerospace University, 200-1, Hwajeon-dong, Deokyang-gu, Goyang-city, Gyeonggi-do, 421-791, South Korea;1. University of Coimbra, School of Economics, Av. Dias da Silva, 165, Coimbra, Postal Code 3004-512, Portugal;2. University of Coimbra, School of Economics, ISR – Institute of System and Robotics, Av. Dias da Silva, 165, Coimbra, Postal Code 3004-512, Portugal;1. Università degli Studi di Napoli “Federico II”, Via Claudio 21, 80125 Napoli, Italy;2. Università degli Studi di Napoli “Federico II”, Piazzale Tecchio 80, 80125 Napoli, Italy;3. Università degli Studi di Napoli “Federico II”, Via Cinthia 21, 80126 Napoli, Italy;4. Università degli Studi di Salerno, Via Ponte Don Melillo 132, 84084 Fisciano, Salerno, Italy;5. Technische Hochschule Ingolstadt, Esplanade 10, 85049 Ingolstadt, Germany |
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| Abstract: | Overbooking is widely applied in the service industry to hedge against undesirable situations, such as cancellations and no-shows. However, during the implementation of overbooking, service providers may turn down some customers when the number of arrivals exceeds their capacity on the target date. Therefore, this paper examines overbooking from the customers' perspective to offer them a clear perception on the possibility for their reservations to be denied by the service provider. By establishing a Stackelberg model between a service provider and an online travel agency, we explore how optimal overbooking strategy is developed by the service provider. Afterward, by analyzing the obtained optimal overbooking pad, we calculate the probabilities of denied service under different levels of monetary compensation that is paid to denied customers. A higher monetary compensation guarantees a higher chance of successful service. This paper also provides customers with some reference when booking services. |
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| Keywords: | Compensation Denied service Overbooking Reservation Service provider |
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