Is it Crystal Clear? How to Prevent and Manage Cancellations and No-Shows

Cancellation Policy

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.
Confirmations >> Consider introducing a system that sends out reminders and confirmations a day or two before the cancellation deadline. This is often done through OTAs (Online Travel Agencies), but it’s worth ensuring you also have a system in place to remind guests who make reservations over the phone, by email, or through your website. A guest may forget to make a cancellation, and sending a reminder or confirmation makes it easy for guests to respond and can make the difference between having a no-show and reselling a room.
Tracking Cancellations >> Some hotels require guests to cancel via the medium through which the reservation was made; however, this tactic potentially dissuades guests from cancelling at all. It’s not recommended. It is, however, highly recommended that you establish an easy and effective system for tracking cancellations. If a guest calls or emails to make a cancellation and they’re not logged properly, a legitimate cancellation will inevitably turn into a no-show. Similarly, if a guest requests a later check-in time and it’s not recorded, you will be in the midst of dealing with the no-show and may have already resold the room when the guest arrives precisely when they said. A good system for tracking and logging ensures that you and your staff do not waste time dealing with unnecessary chaos.
Emergencies >> It’s good to be clear about when you’re willing to be flexible with your policies. Emergencies – like illnesses or a death in the family – are obvious examples. While they’re unpredictable and the sensitive nature means that many will need to be handled on a case-by-case basis, it’s worth taking time to consider how you will handle emergencies so as to ease their disruption to the guest and your business.

Communicate with Clarity

Once you’ve taken the time to establish clear policies, it’s essential to communicate them succinctly and effectively. Most bookings are made online, so ensure your policies are highly visible on your hotel’s website and all your OTA pages. Check in and out times should be clearly specified. Ensure your cancellation deadline and fees are noticeable as part of the booking process. All booking systems should include an ‘opt-in’ check box that requires a guest to agree to your policies before confirmation. It may also be worth dedicating a page on your website that outlines further details of your policies, including what penalties may be incurred for curtailment and the specifics of how fees will be collected. Guests should have no excuse for not knowing what they’re agreeing to. This doesn’t mean that they won’t have excuses. They will. A myriad of them. You’ve probably heard many already, but it will be more difficult for guests to escape fees if you can point to where and how they’ve been clearly communicated.
No one wants to deal with the aftermath of a late cancellation or no-show. Awkward conversations are inevitable. Arguments are possible. This is the reason you need clear policies. If someone disputes a fee or policy, explain to them why they exist. While you may be forced to confront the potential perception that you’re gouging, communicating why you chose your policies may help to ease tensions. The best way to make these uncomfortable conversations effective is to set policies that you’re confident enforcing. When guests are given clear and reasonable parameters, they are more likely to respect your business, and if they respect your business they are less likely to pull a no-show.