Photo: Fairfield Inn & Suites New York Manhattan Central Park
Balancing the business needs of hotel operators on the one hand and guests on the other can be tricky on a variety of fronts, none more so than when a guest must cancel a reservation at the last moment.
In most high-demand markets, 24-hour cancellation policy has been the standard. This provides leeway when guests’ plans change due to illness, family emergency, inclement weather or a host of other reasons. Traditionally, hoteliers have been eager in such circumstances to release guests from their reservations.
Lately, however, a growing number of hotel brands have switched to a 48-hour cancellation policy. Typically, they cite the rise of booking technology that allows for dynamic pricing as the reason. In today’s Internet world, for example, when desirable Hotel A sees it has a block of unsold rooms coming up, it can drop its rates dramatically in the hope of generating a spike in demand that will help fill that excess inventory on the upcoming nights.
Meanwhile, across town, a guest was reservations at less-desirable Hotel B might see Hotel A’s decision to discount its more desirable rooms. That guest easily could cancel the Hotel B reservations within the 24-hour window advance window, then book Hotel A across town.
The management of Hotel B finds this very frustrating. The good will they extended by offering a 24-hour cancellation policy has been abused, in their minds, by a guest who neither is ill nor facing a family crisis. It’s a scenario they can encounter numerous times on a given night. Managers of such hotels may try to sell their suddenly vacant rooms by giving the inventory to a third-party online agent at a steep discount.
As hosts and business leaders, it’s easy to be torn between what’s best for guests and what’s best for the bottom line. While we wait to see if the 48-hour policy makes an appreciable difference, industry watchers continue to ponder “what is fair and equitable?”