What is a hotel cancellation policy?
A hotel cancellation policy defines the rules for canceling or changing a reservation, and what fees or penalties may apply. One of the most important elements of this policy is the cancellation deadline, i.e., the timeframe in which guests must cancel in order to avoid a fee.
The policy dictates what that fee is, whether or not it's a refundable or non-refundable rate, and the hotel's no-show policy. It also outlines whether modifications like date changes are possible, along with specific terms about group or long-stay bookings, as they tend to be stricter or have longer notice periods.
Why is a hotel cancellation policy so important?
A hotel cancellation policy is important because it's a key part of the booking confirmation process. By making the fine print clear in all stages of your booking process, you ensure transparency and encourage guests to cancel in a timely manner if their travel plans change, allowing you to rebook the room.
Cancellation policies also help determine room rate, enabling hotels to charge different prices depending on the flexibility guests need for last-minute cancellations. They hold guests accountable for their hotel reservation and discourage hotel bookings made without genuine intent, making them a great tactic to reduce no-shows.
What is the typical cancellation policy for hotels?
The cancellation policy type will depend on the type of property (luxury, boutique or budget), where it's located, the dates (peak season has stricter policies), and the rate type (flexible or non-refundable).
The most common cancellation policy is a flexible cancellation policy in which guests have between 24-48 hours to cancel before check-in. If guests cancel after that window, the first night stay is charged, and no-shows get charged fully.
Different types of hotel cancellation policies
Beyond the flexible cancellation policy, there's a non-refundable policy in which guests will pay a reduced or discounted price but receive no refund if they cancel after booking.
Some hotels even offer a free cancellation policy that allows guests to cancel up to the day of arrival, usually by a specific time, without incurring any fees. This policy is more common in off-peak seasons or for hotels popular amongst business people, whose plans can change suddenly.
For long-stay or group bookings, hotels usually require between one week and 30 days notice for cancellation, and even partial deposits depending on the hotel. With more revenue at stake, it's one of the stricter cancellation policies.
What should be included in a hotel cancellation policy?
A hotel cancellation policy should be concise, fair, and easy to understand. All of the terms should be clearly outlined at the time of booking. The confirmation email should also clarify if and when guests can modify and/or cancel their bookings.
Cancellation deadline
Your policy should specify how far in advance a guest must cancel to avoid being charged or only getting a partial refund.
Cancellation fee or penalty
You should state the clear consequences should a guest cancel after the deadline. You should also bear in mind that third party booking sites like Hotels.com, Booking.com or Expedia might have their own booking policies on top of your hotel's policy.
No-show policy
A no-show policy is important to have in place in the event that a guest doesn't show up on check-in date.
Non-refundable options
Some hotels will offer non-refundable hotel room rates in which guests pay but cannot cancel or receive a refund.
Special reservations
You will need a section designated to group reservations and special events as they usually require a longer notice period, such as a minimum of 14 days in advance.
Modification policy and how to cancel
This is where you should state whether guests can change the booking dates and under what conditions. Should guests want to cancel completely, it's important to specify how to do so.
Refund timeline
When refunds are applicable, it's important to state how they will be processed and during what time window.
7 tips for dealing with hotel cancellations
1. Be strict but allow for exceptions
Cancellation policies should be strict and well-defined to avoid confusion, but it's also a good idea to allow for goodwill exceptions in the case of an emergency, family loss, or other extenuating circumstances. After all, this is a people-centric industry, and you don't want to put them off wanting to come back to your hotel in the future.
2. Be clear
It's key that your policies are clear to avoid confusion. They should also be consistent across booking sites.
3. Send reminders and confirmations
It's a good idea to send reminder and confirmation emails, specifying the type of booking policy before check-in so that guests know what they need to do should they change their minds. Include rebooking links or cancellation links within the email to ensure guests can rebook the room should plans change.
4. Have a waiting list
When it's peak time, it's a good idea to create a waitlist, that way if a guest cancels last minute the spot can be filled quickly.
5. Take deposits
For long stays or group bookings, and potentially during peak season, it can be a good idea to take prepayment or at least a partial deposit. If you have no-shows, you'll at least have their deposit. For most guests, deposits represent a commitment, so they're also less likely to cancel. It's a win-win.
6. Train up your staff
It's a good idea to have training protocols to ensure that your staff are trained and empowered to make decisions, such as exceptions, if possible. Make sure that even if the guest cancels they are enticed to come back in the future through positive interactions with your staff.
7. Automate
Leverage your hotel PMS or booking engine to update availability and send cancellation confirmations. This will not only help reduce workload for your front desk but also make it more likely that the guests re-book.
Conclusion
Now you know the different types of hotel cancellation policies and what you need to bear in mind when creating your own. Remember, flexibility and good will are the key to any hotel cancellation policy. Whether it's due to an emergency or a sudden loss, making exceptions and viewing your guests as people, not numbers, can improve guest experience and build brand loyalty.
Download our guide 'Understanding the Modern Guest'
.webp)