It is not surprising, therefore, that hoteliers try their best to protect themselves against such a situation using prepaid expenses, detailed cancellation conditions, collecting security cards, etc. However, in the struggle to secure your own interest you should be remembered that there is a guest on the other side of the whole situation, for whom the conditions of cancellation can be the most important element of the offer. Even more than the price, attractions in the package or the standard of the room. And it is not necessarily the guest who does not want to pay us - he wants to, but he also has his own conditions.
Below we have 7 tips for applying a wise cancellation policy that will protect the hotel against potential losses but will not discourage guests from booking.
1. A coherent cancellation policy in the channels
The popularity of the biggest comparison websites, such as Trivago, Tripadvisor or Google Hotel Ads, is based on the fact that the user can compare prices in different channels (OTA and hotel website) and make the best choice based on that.
The same applies to cancellation policy. When adding rates with different payment profiles at the intermediary channel, make sure that the same conditions also appear on the website of your hotel. Remember that basic offers (RO, BI) should be added in both variants - flexible and non-returnable. That way you will find the offer for guests sensitive to various factors - the price OR the possibility of cancellation.
2. Transparent cancellation conditions in channels
Don’t let your guest wonder why he can cancel his reservation at the same rate via OTA, e.g. 3 days before arrival, while on your hotel website, only 7 days in advance.
3. Attractive policy for last minute booking
Did you know that bookings created less in advance are much less likely to be canceled than those planned long before an arrival? The closer to the implementation date, the more confident we are about our plans and the smaller the risk that something will happen that will force us to change them.
Take advantage of this trend and on our website offer the possibility of booking a cheaper Non-Ref with the option of paying at the arrival to the hotel. Sounds irrational? No, if we are talking about coming on the following or even the same day. The risk of cancellation is minimal and it’s very convenient for the guest who, when booking when traveling, doesn’t have to log in to the bank, provide card details etc.
You can activate the terms and conditions from the selected offer by checking the box "Do not require prepayment for booking for the current day".
In the condition management panel, you can specify how much in advance and for what number of rooms they are supposed to work:
4. Avoid high prepayments and prepayments in general
While 100% non-refundable deposit in the Non-Ref offer with breakfast is common and acceptable, it is a risky practice in the case of more expensive package offers. Such high fees can block a reservation for several reasons:
- technical problems - card limits, bank account locks etc.,
- excessive financial risk for the guest in the event of cancellation,
- mental block - fear of making very high online transactions with a facility that we do not know yet.
What to do then, if the offer is for a high season (eg Holiday) and we need to properly protect ourselves? Offer installments! In Profitroom Booking Engine, you have the option of connecting prepayment schedules to offers - the guest makes a payment at the time of booking (recommended value is 30-40%), then two weeks before arrival, he pays another 20% and for three days (or on-site) - the rest. The amount and value of installments are set by you and reminders are sent to guests by the machine. It sounds like a solution to many problems, doesn’t it.
The prepayment schedule can be added from the level of a specific offer: "Manage profiles" → "Add new" → "Booking with prepayment schedule":
5. Differentiate booking conditions between seasons
Remember that the relationship between a guest and a hotel is a relationship in which sometimes one and sometimes the other party sets the conditions - it all depends on the season.
So remember, just like with prices, you also need to manage your cancellation policy dynamically. In the holiday package, you can afford more restrictive conditions, but in the low season it is worth to meet your guests halfway and give them the opportunity to book a flexible offer.
6. Remind about yourself and don’t be taken by surprise
A great way to avoid late cancellations or no-shows, is the constant contact with the guest from the moment of booking. Acknowledgment of the a booking or a Welcome Pack sent before arrival (eg by Profitroom CRM) builds a bond and a sense of loyalty to the hotel. In addition, we remind guests about the bookings so they don’t forget to cancel their stay - we give ourselves more time to supplement the occupancy.
7. Analyze, check data, and compare it
Every solid strategy must be based on data. Different hotels are characterized by different specificity, but it is worth investigating data such as:
- Booking window of canceled vs. completed bookings. Bookings created well in advance are canceled more frequently. Is it the same in your facility? Activate special conditions for those who book the last minute!
- Cancellations of bookings via OTAs. Bookings made by the hotel's own website are less frequently (even by approx. 15%) canceled than those made via intermediaries. Check if the booking conditions for your own website are at least as attractive as for brokers and increase the number of direct bookings!
- Price plans in channels. Is the most popular rate also available on your own hotel website?
Do you have additional questions regarding the cancellation policy planning in your facility? Contact us! Our Revenue Specialists are available for a chat in the Profitroom Suite Monday to Friday between 10am and 1pm.
Author: Sara Antoszewicz, Senior Revenue Specialist