What would you do if a guest arrived, found out we had oversold, and that we did not have any rooms?

Every service industry, including hotels, overbooks their rooms to ensure full capacity. The interviewer knows that this is a possible scenario that you might face. They need to know that you have the skill set to deal with what may be an irate customer. Reassure the hiring manager that you can remain calm and find a workable solution for the guest.