Cancellation Fees ARE Hurting Your Business…I Guarantee it!

Have you seen the Expedia commercials that have aired the last couple of days touting NO fees for changes or cancellations? It’s almost true…from Expedia’s point of view.  If you hit their website, (“dot-coooommm”…they have built their brand to include a little jingle), you will note

  • “…unlike other travel sites, we won’t charge you a penalty.  There are NO Expedia change or cancel fees on hotels, cruises, cars, and virtually all flights and packages.”     [BUT:]
  • “Please bear in mind that while we [Expedia] won’t charge change or cancel fees, some suppliers [e.g. hotels] may impose non-refundable rate plans or fees that Expedia is required to pass along.  Such fees are highest when cancellations occur within 48 hours of your scheduled travel dates.”

Even though the hotels still have their cancellation fees, they have, historically, been quite liberal with their policies.  Usually a call before 6 pm on the day of arrival is sufficient to avoid a charge.

BUT THAT IS NOT THE IMPORTANT POINT HERE!

The expectation is being set in the consumer’s mind by Expedia that change and cancellation fees are flexible and do not have to be tolerated by the traveler.  Their caveat is on their website, but the commercials reflect NO fees for changes or cancellations…and that is what the travel market hears.

We innkeepers have been using cancellation policies and fees since the beginning of time.  We use such language as “we are a small property and changes and cancellations affect our business greatly”.   True…but the potential guest doesn’t care about you.  Here are some actual quotes from inn websites here in the Mid-Atlantic areamy comments are in BLUE:

  • “Written notice of cancellation seven or more days prior to arrival, a $25 service fee will be charged.  No shows or cancellations within seven days will result in a full night charge or a 50% charge of a stay which is 3 days or longer”.  Written notice? Who does that?  and what if the inn can re-book the room?  Double dipping?
  • “A 50% deposit, or the cost of one night, whichever is higher, is required to confirm your reservation.  Deposits for stays of 5 or more days are non-refundable“.  If a guest booked for 5 days, then changes plans, this guest could be penalized $600!  Why would I book there?  Any cancellation will cost the guest at least a  full night fee.  Ouch!
  • “If you cancel less than 21 days in advance of reserved date, deposit [50%] minus $25 fee if room rebooked.  If not rebooked, you are 100% responsible”.  21 days?  WOW!  No wonder people are waiting till the last minute to book…nobody can plan that far our with certainty…and 100% responsibility is too high a cost (and scarey!) for long term planners.

SO WHAT’S AN INNKEEPER TO DO?

It’s time to reconsider what YOUR policies are doing to you.  I GUARANTEE YOU ARE MISSING RESERVATIONS WITH STRICT POLICIES that penalize guests.  If they see these kinds of statements on-line (and they are almost ALWAYS on-line),  they will click into a different direction.  You won’t even know you missed them.  Here are some thoughts for consideration:

  • Do you even have to have a cancellation policy at all? Inns with strong corporate travel know that they cannot have penalties at all, except, maybe, for a no-show.  When a corporate traveler cancels at the last minute (their plans OFTEN change on short notice), these inns, holding back their disappointment at the lost sale, say with a smile in their voice “Sure, Dan…we’ll see you next time!”.  The goodwill reaps repeat rewards in the long run.  So why damage your leisure travel relationships with punishing policies?  Don’t you want them back someday too?
  • Are you using your cancellation policy as a profit center? The “if we can rebook the room” caveat is a hoax.  If you can’t rebook the room, it’s NOT because of the guest’s cancellation.  It is because of travel demand in your area.  And, if you intend to NOT relinquish the hoax,  I hope that you make more of an effort to rebook the room than to sit by the phone to wait for it to ring.  You will lose that guest as a repeater…is it worth it?
  • Is there a competitive advantage to being the ONLY inn in your association or region that does not have a strict cancellation policy? Guests shop around and will stop searching when they hit a site that meets their needs.
  • Is your cancellation date WAY TOO LONG?  Is 21 days too much?  (maybe NOT for a special event such as a college graduation or a wedding booking?).  Can you be selective on WHICH events or weekends are critical to have a strict cancellation policy and identify the rest of the year with a punishment-free policy?
  • If a guest cancels, is the $25 or $50 “service fee” really that important to you?  Is it really worth putting a sour taste in your guest’s mouth about your inn?  Do you really need behavior deterants?  Are they really worth it?
  • If you are thinking out of the box enough to relax your policies…promote it!  Put it on your website…in your next newsletter…in your next email blast to past guests…on the directories on-line.  Let people KNOW you are guest friendly! Expedia is.

The expectation is out there.  Expedia is reinforcing the mindset that change and cancel fees are for the convenience of the lodging facility…not the guest.  This is NOT the kind of economy that will tolerate financial punishments for every-day travel decisions.  We innkeepers know the importance of relationship-building and the value repeat guests bring us.  Don’t send the mixed message of financially punishing guests with a hospitable smile on your face.

Scott

4 thoughts on “Cancellation Fees ARE Hurting Your Business…I Guarantee it!

  1. I could not disagree with you more re cancellation policies. If we didn’t have a policy which we stick to we would sit here many weekends with unrented rooms. It is sad, but you are right that the potential guest doesn’t care about the innkeeper. No cancellation policy means they would not hesitate to tie up a room for weeks (or even months for special events) and cancel a day out or even the day of if there were no penalites. My policies are in place to exclude that person who isn’t serious about staying here but is going to book rooms in several places while they wait to see where the best weather is. (Yes, that actually happens.) If haveing a cancellation policy steers that type traveler to another inn, I’m better off.

  2. Hello, Ashley; For the special events you allude to, I agree wholeheartedly that having a strict policy makes all kinds of sense. At our inn, the college graduations, alumni weekends, homecomings, etc. were always sacrosanct with a firm policy. But, for the rest of the year, COULD you be chasing away a SINCERE booking, or causing longer-term, non-repeat harm, by charging a SINCERE guest a (huge…in this economy) penalty for a REAL reason on their part?

    It probably boils down to the inn’s satisfaction with their occupancy performance. Some inns may not need to relax their policies…others may be starving for business and are willing to consider changing their paradigm. Scott

  3. Interesting….Expedia just charged me a $159.00 cancellation fee 10 days out…..They said the Hotel was charging them….I then called the Sheraton and they stated that as long as I cancelled more than 24 hours out there was no NADA none Cancellation fee PERIOD….so I will never use Expedia again for any kind of travel EVER…..

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