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Cancellations and No-Shows: Prevention Strategies for Hotels

Empty Hotel Room

With changing protocols and regulations, the pandemic has made flexible hotel cancellation policies necessary. Guests expect them and hotels have implemented them to remain competitive and provide good customer service. A top hotel trend for 2022, flexible cancellation policies are an expectation that won’t be going away anytime soon. But let’s be honest: you don’t have to like it. Short-notice cancellations and no-shows are far from awesome. In addition to the lost booking and revenue, there’s the extra staff that didn’t need to be scheduled and a loss of potential guests that may have stayed should there have been room. 

So while we can agree a flexible ‘guestcentric’ cancellation policy is essential, it’s equally essential to prevent or reduce cancellations and no-shows from occurring. Here’s our comprehensive list of hotel cancellation prevention strategies!

1. Encourage rebooking or voucher/gift for a future stay

When a guest cancels their reservation, provide the option to rebook for a later date instead or to choose a voucher or gift card for a future stay. You could further entice guests to accept this offer by incentivizing them with a value-add offer for that future stay, such as a bottle of wine or free room-service appy, for example. This technique became popular within the hospitality industry during the pandemic, as many guests are willing to support smaller businesses in this way.

2. Focus marketing efforts on local travel

While travel opens up, regulations and protocols are still very unpredictable, especially where air travel is concerned. Your constant supporters throughout the pandemic have been regional, from staycationers to those close enough to travel by road. While we all want to see a return to international travel, local guests are less likely to be impacted by changing travel regulations and thus less likely to cancel or miss their booking. Get creative with your staycation offers to support this strategy.

3. Drive direct bookings

Focus on driving direct bookings rather than relying on OTAs, which is a big trend for 2022. Statistically, OTAs have higher cancellation rates than direct bookings. One theory explains it’s due to the personalized connection felt directly with a hotel versus an impersonal OTA. With direct bookings, you’re also better able to push rebooking or vouchers as an alternative to cancelling a booking.

4. Upsell for greater investment

Upsell value-added packages or amenities during booking. Those who upgrade will have more invested with your hotel and therefore are more committed to their booking. This is especially true for guests who have booked at multiple hotels before deciding where they would prefer to stay—the presumption is that guests will stay where they have the most invested. This works especially well with a PMS that has the functionality to sell add-on activities, items, and services.

5. Build excitement with pre-arrival emails

Use pre-arrival emails as an opportunity to generate excitement and build anticipation for upcoming stays. Booking confirmation, reservation reminders, and invitations to register and check in online are the main emails to send to guests in advance. 

Remind guests of their selected room and your hotel, along with amenities they’re sure to enjoy. It’s also a good opportunity to upsell extras as well as foster guest loyalty and connection, especially by personalizing communications, which is made possible via automated email tools offered by your PMS or CRM integration. Segment your customer database to send guests relevant and enticing offers that seal the deal. 

Pro tip: for stays well in advance, send an email with a lot of lead time—the reminder may jog their memory to cancel with enough time for you to fill the room again. 

Pre-arrival emails make it nearly impossible for a guest to claim they forgot about their stay! Bounced emails? Ensure to follow up with phone calls! No-shows can also be greatly reduced with advance online guest registration and check in.

6. Overbook

Overbooking is a tricky maneuver but it can work with a contingency plan in place! The idea is to book more rooms than you have, in anticipation of cancellations or no-shows. To understand if this will work for you, check your PMS reports (such as WebRezPro’s monthly booking report) to analyze reservation trends. You’ll be able to study when cancellations are occurring and if overbooking makes sense for you. Note that this is particularly tricky for hotels with fewer rooms than big corporate brands. 

Should you try this strategy, work with a partner hotel that can provide rooms in a pinch should you have guests and no room at the inn! We’ve seen this working best when overbooking occurs for standard rooms only. If you oversell, upgrade guests to a larger room—who can complain about that?

Should your hotel have a cancellation or no-show fee?

Yes and no. With enough lead time, absolutely. But with a no-show? There’s no excuse. Use the credit card you have on file to charge your no-show fee—at your discretion. Make every attempt to contact the guest first. Be firm and crystal clear about your policy so there are no surprises or confusion. 

Prepare communication for these events in advance (for both verbal and written assistance) to help you handle cancellations and no-shows fairly, consistently, calmly, and with care. You’ll feel less put on the spot and will be able to maintain a calm and fair demeanor.

Should you take a page out of Airbnb’s book(ings)?

At the beginning of the pandemic, Airbnb issued refunds on all cancellations, no questions asked. Now they’re taking a harder line by saying pandemic-related cancellations are no longer unforeseen circumstances. It’s an interesting take because on one hand, it’s true. On the other hand, as we’ve seen with Omicron, things can change in an instant. Putting the guest in a “buyer beware” situation is a surefire way to erode loyalty and confidence. 

Manage hotel cancellations with a PMS

Cancellations and no-shows will never be awesome but they can be made easier with the right PMS. Every strategy mentioned in this article is possible with WebRezPro, from automated emails, online guest registrations, reservation trend tracking, upsells and packages, and gift vouchers. 

In this day and age, a PMS with the capability to track cancellations is essential. Whether guests cancel via your booking system or an OTA, email, or phone, a system that tracks cancellations and updates availability across all channels in real time will help prevent lost revenue. If you are faced with last-minute cancellations, use your PMS to push last-minute specials to fill rooms that would otherwise remain empty with flexible room reservation software and channel integrations. 

In a nutshell, go forth and offer guests flexible cancellation policies—but only with strategies in place to reduce their occurrence. When you’re supported by a trustworthy PMS, you and your guests can rest assured.