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Case Study—Things Go Bump in the Night

Two weeks before her niece’s wedding, Esther Barnes negotiated a room rate with th
e Panda Bear Inn. She received a reservation confirmation number for a double ro
om for two people for two nights. When Esther and her husband arrived at the Pan
da Bear Inn, much to their dismay, they were told that their room was not availa
ble because the Inn had overbooked and they would be put up in a different hotel
only five miles away.
They had been traveling most of the day and were very tired. Mrs. Barnes felt a
little better when she was told that the Panda Bear Inn would pay for the room a
t the Lion’s Gate Inn. Driving another five miles didn’t seem too much of an inconve
nience. However, when the front desk manager told her that the Panda Bear Inn wo
uld not host the Barnes’ for the two nights at Lion’s Gate, she became a little irri
tated. The manager further explained that Panda Bear Inn had openings for the se
cond night and the Barnes’ would have to return to the Inn for the second night.
Since Esther wanted to retain the room rate she had negotiated, she agreed and t
he Barnes’ left to stay at the Lion’s Gate for their first night in town. After chec
king in at the Lions’ Gate, they had to completely unpack and ready their clothes
for the morning breakfast at her sister’s house. The next day, they had to leave t
he family function and return to the Lion’s Gate, repack their belongings, check o
ut, and drive to the Panda Bear Inn. Once there, they again checked in, unpacked
, and rushed to get ready for the late afternoon ceremony and the evening recept
ion.
The next morning Esther and her husband felt like they spent more of their time
packing and unpacking than they did visiting and celebrating with their relative
s. During their trip home, Esther told her husband that their experience reminde
d her of getting bumped off a flight by an airline—but, in this case, they were no
t compensated for their inconvenience. She also questioned the legality of overb
ooking. She quipped, “What good is a confirmation number, when there is no guarant
ee of a room?” Esther decided to write a letter to the corporate headquarters of t
he Panda Bear Inn hotel chain.
Do no–shows and late cancellations justify overbooking? Do the operational advanta
ges of overbooking outweigh the inconvenience to guests? Were the Barnes’ treated
properly? How would you feel if this happened to you?
Consider an analogous situation. Imagine going to your hair stylist for a late T
uesday afternoon appointment. You expect to be there for two hours. You are very
excited because that evening you are going to an important business function wh
ere you will meet many significant people in your field. However,
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when you arrive, you are told that Eva, your favorite hair stylist, is overbooke
d and the salon has arranged for you to have your hair done at the XYZ Salon, a
half hour away. They explained to you that Tuesdays average three cancellations,
so the salon always overbooks. On your Tuesday, however, there were no cancella
tions. Would you consider this acceptable behavior on the part of the salon?
Case Commentary: Utilitarianism
The act utilitarian point of view on the Barnes’s situation asks, “Was the greatest
good achieved for the greatest number of people?” Possibly—the only ones inconvenien
ced were Mr. and Mrs. Barnes. The hotel owners certainly achieved their greatest
good, at least in the short run. They made the most money possible by having so
ld all the rooms. However, allowing guests to think their rooms are guaranteed w
hen they really are not, may have numerous harmful consequences for the hotel ow
ners, both short term and long term. The corporation is using the guest to achie
ve the highest possible profit for that day, while paying less attention to the
guest’s needs and comfort.
What are the consequences if a hotel develops a reputation for consistently over
booking? What are the consequences if employees see overbooking as management’s in
considerate treatment of guests? Employees often take their cue from their super
visors. The housekeeper might decide that the bathroom looks “clean enough” for gues
ts. The bellperson might decide to charge a guest for calling a taxi.
An act utilitarian considers all of the consequences of the action. There are al
so consequences to never overbooking: lost revenue for the hotel owners and empt
y rooms denied to travelers in need of lodging.
For act utilitarianism, deciding the morality of action involves a balancing act
: you weigh the total benefits against the total harms likely to result from a s
pecific act. You are ethically obligated to undertake the action that results in
the greatest net benefit for all concerned.
In the case of overbooking, the many factors you must balance can make the calcu
lation fairly complicated. If a hotel only overbooks by X percent of rooms, and
the X percent overbooking rate very seldom results in any guest being “walked,” the
net harm is relatively small. Since the benefits of a full hotel are many, act u
tilitarianism may find this level of overbooking ethically acceptable, because t
he benefits outweigh the harms.
However, it is also a question of how injurious the harms are. If a guest denied
a room because of overbooking is greatly harmed (forced to travel a great dista
nce for alternative accommodations, or forced to accept inferior accommodations,
etc.), then the weight may swing in the direction of making overbooking unethic
al. Another factor that would affect the balance (and, hence, the morality of ov
erbooking) is how much overbooking is practiced. If, instead of X percent of roo
ms being overbooked, three times X percent are overbooked, and this higher rate
means that guests are frequently denied the rooms they reserved, then the amount
of harm increases significantly. Thus, act utilitarianism may condone a certain
level of overbooking but not higher levels. It is all a matter of Front Office
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examining the amount of benefit and harm done, and choosing the course of action
most likely to maximize the net benefit for all concerned.
Rule utilitarianism applies the principle of “greatest good” to rules of conduct, no
t to individual acts. So the question is: can a rule allowing overbooking be mor
ally justified? It is apparent that rules allowing frequent denial of reserved s
ervice would not produce “the greatest happiness for the greatest number,” and thus
they would be considered unethical. But it is quite possible that “mild” forms of ov
erbooking, those that result in very few denials of reserved service and/or in s
mall inconveniences, would be judged ethically acceptable.
Case Commentary: Kant’s Categorical Imperative
Kant would view overbooking differently from the utilitarian perspective. He wou
ld be primarily concerned with the individual rights of the person denied what t
hey were promised. If the hotel had overbooked because there had been a natural
disaster in the area and they were trying to accommodate as many people as possi
ble, Kant would maintain that this might be acceptable because of the motive beh
ind the action. The overbooking was done out of a sense of duty to one’s fellow ma
n; it, therefore, may be the right thing to do. However from a Kantian ethical p
erspective, it would be much harder to justify overbooking as a routine business
practice ensuring higher daily profits.
Consider the two formulations of Kant’s categorical imperative that we have studie
d. First, we should act in a way that whatever rule we follow, we could will thi
s to be a universal rule. Since a reservation is a promise to deliver a service
(room, airline flight, etc.), denial of that service is breaking a promise. As w
ith all forms of promising, Kant would condemn breaking the promise because brea
king promises destroys the very basis of making a promise in the first place. It
is self–contradictory to make a promise and break that promise; hence it is irrat
ional and immoral. Thus, the first formulation of Kant’s categorical imperative wo
uld condemn any overbooking that actually resulted in the denial of a promised s
ervice.
The second form of the categorical imperative stipulates that one must not use p
eople for his or her own purposes. On the face of it, the practice of overbookin
g appears to do just that. Guests are used to ensure higher profits for the corp
orations without regard for the humanity or autonomy of those guests. Essentiall
y, the guest has been “used” because he or she was, in effect, lied to when the rese
rvation was made.
To illustrate this, consider the following situation. You arrive at your destina
tion hotel after ten very long hours of traveling including a number of airplane
changes, delays, bad weather, and lost luggage—only to find out that your room re
servation was not honored. Imagine that you had guaranteed your late arrival and
even called just a few hours earlier and were assured a room. Now imagine that
you have to taxi to another location and you have the further inconvenience of i
nforming the airline to deliver your lost luggage to this other destination. Wou
ld you feel used? Would you have been degraded from the status of a human being
to that of a “thing” used for someone else’s convenience? 100 Chapter 9
There may be, however, another way that overbooking could be made compatible wit
h Kantian ethics. If the guest or passenger is made aware, at the time the reser
vation is made, that a “reservation” does not actually guarantee a room or flight, o
nly a very high likelihood of its availability, then no promise has been made. N
o deception would have occurred in the event of denial of “reserved” service. The gu
est or passenger would not have been “used” because he or she was aware in advance t
hat there is at least a slight possibility of denial of service. He or she would
then be able to rationally make a decision about what to do, and no deception o
r denial of humanity has occurred.
These appear to be the only circumstances where Kant would find overbooking to b
e morally acceptable. This is an example of a practice where Kantian ethics is m
uch stricter than utilitarian ethics, which may find overbooking ethically accep
table in a larger number of circumstances than would Kant.
Case Commentary: The Ethic of Justice
Justice ethics states that we should treat each other fairly and asks us to look
at the situation from behind the veil of ignorance. Imagine that you do not kno
w if you were to be the front desk manager (who earns a bonus based on profit an
d daily occupancy rates) or if you were to be the weary traveler who discovers t
hat the “guaranteed” room reservation was, in fact, not guaranteed. If everyone invo
lved in making the decision were both rational and interested in their own well
being, many of the more permissive forms of overbooking would not be tolerated.
A rational person would set up rules protecting the interests of the traveler, s
ince he or she may end up being that traveler. Even if mild forms of overbooking
were to be allowed, a justice ethic would place strong and effective restrictio
ns on the practice.
Compensatory justice would also dictate that the wronged guest must be compensat
ed for the loss and inconvenience. Some suggest that a guest might expect a free
night at a nearby hotel of the same or better quality, a free phone call to not
ify friends or family of the hotel change, and a free upgrade on a future visit.
Is this enough compensation for the traveler? Is this fair to the traveler? Wha
t if the person never expects to be in the area again? What good would the futur
e upgrade do? In considering what is fair, you must ask questions such as: what
has the hotel lost and what has the guest lost? What is the compensation costing
the hotel? What is the denial of a room costing the potential guest?
Case Commentary: Aristotle and the Ethics of Virtue
Virtue ethics would view the hotel as a human community and ask how well does th
e hotel contribute to the development of the character traits of its employees?
The traits or virtues include honesty, integrity, tolerance, fairness, and coope
ration. Overbooking raises concerns about how well a hotel fosters honesty, inte
grity, and fairness if it does not keep its word to its guests. Any enterprise t
hat engages in overbooking needs to be sure that this practice is honest and ope
n and it does not promote an ethic of deception or irresponsibility Front Office
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in its employees. Virtue ethics requires businesses to foster values that relate
to the way it interacts with its community. A business has to display a solid e
thical culture in order to be respected by its community.