When it comes to hotel companies’ recent attempts to tweak consumer behavior by encouraging early, prepaid bookings while discouraging last-minute cancellations, the carrot appears to be working far better than the stick.
Hilton Worldwide and Marriott International are among hotel companies that have tested stricter cancellation policies, charging the guest at least one night’s stay if the reservation is changed or canceled after a certain deadline.
However, hoteliers have found little proof that such policies have curbed guests’ booking behavior.
A strategy that appears to be more effective over the long term is to offer discounts for purchasing early, nonrefundable bookings. This prepay solution is being embraced with increasing frequency by hotel operators under chains such as Marriott, Hilton and InterContinental Hotels Group (IHG), especially at the property level.
As of last week, New York’s Marriott Marquis was offering prepaid, nonrefundable rooms for late-September weekend dates at about a 15% discount. The hotel gives guests a one-day grace period after the booking before enforcing the nonrefundable policy.
Likewise, the Hilton Los Angeles/Universal City was taking about 12% off the standard rate if customers bought nonrefundable, prepaid bookings for late-September stays.
“Our agents understand that prepayment does not necessarily mean nonrefundable,” — Erick Rodriguez, Travel Leaders Group
Some independent hotels are being even more aggressive with prepayment discounts. A recent booking query at the Ampersand Hotel, a member of Small Luxury Hotels of the World in London’s South Kensington neighborhood, revealed a discount for nonrefundable, nontransferable bookings of 20%, or about $70 a night.
“Prepaid rates have been around for a long time,” said Marriott vice president John Wolf. “Each hotel sets and loads the rates. We don’t control that.”
As for IHG, spokeswoman Ada Hatzios said, “IHG offers advanced purchase-type rate offers where guests are entitled to a discount compared to the standard rate, based upon availability. Rates vary by hotel, brand and market. It is nonrefundable, requires full or partial prepayment and is charged to your credit card between the time of booking and day of arrival.”