It’s happened to every hotelier. The afternoon begins well, the transition between check-out and check-in is proceeding, rooms are being cleaned, last minute details arranged, special requests organized, and you’ve even personally handwritten a welcome note to leave on the desk of a high-profile guest. Then, the phone rings or the hours tick by. There’s been a late cancellation or no-show, and now you’re left scrambling to decide how long to wait, how to resell the newly available room, how to shuffle staffing schedules, and how to procure the no-show fee without incensing the absent guest.
Hoteliers constantly navigate the balance between guest perception, staff needs, and a hotel’s bottom line, but that separation is heightened by cancellations, which innately pit the needs of the client against the needs of the hotel. Guests want freedom (google ‘hotel cancellation policies’ and you you’ll be met with blog after blog of how to avoid them), but hotels need security. While cancellations and no-shows are impossible to eliminate, two strategies can help prevent, manage, and alleviate the operational and financial disruptions they cause.
Establish Clear Policies
It’s important to have written policies for last minute cancellations, no-shows, and curtailments (when a guest cuts their stay short). These three situations are different and require distinct approaches. Each policy should be fair to the potential guest and hotel alike. Demanding full payment upfront would be considered unfair by most people, but it’s equally unfair for a guest to cancel at any moment. However, finding the middle ground between these two extremes can be difficult. So, what should you take into consideration when making these decisions? Your policies should fit your hotel. Consider the size of your property and your local market. How many rooms do you have? What are the consequences of cancellations on your operation? What policies do comparable hotels implement? While it’s not always recommended to model yourself on your neighbors, comparisons can help determine if your policies are too harsh or lenient.
Common Practices
Cancellation Window >> Most hotels set a deadline for when a guest can cancel their reservations without incurring a penalty. The most common deadline is 24 hours prior to check-in. However, you should make the decision that makes the most sense for your business. Some hotels set a 48 or 72-hour deadline, and during peak periods some hotels require guests cancel a week prior to their booked stay.
Deposits >> To take a deposit or not to take a deposit? It’s a contentious question. They have their merits and pitfalls. On the one hand, deposits ensure an earnest booking. A guest is unlikely to shrug off a reservation without proper notice if they’re already invested. On the other hand, deposits can deter potential guests. One extra moment of hesitation in the booking process can make the difference between a confirmation and a closed browser. For many, deposits make sense during peak times. When you’ve received a last-minute cancellation, how many times have you thought, ‘I could have sold that room ten times over!’? But also, if your hotel relies on repeat and loyal guests, you may want to think carefully about their reactions before implementing a new rule for deposits. However, whether you take deposits upfront or not, it’s recommended to require a guest to give their credit card information upon booking and standard to charge a fee for no-shows or cancellations made after the deadline.
