Indies look for flexibility in cancellation policies
Indies look for flexibility in cancellation policies
20 SEPTEMBER 2017 12:20 PM

Owners of independent hotels said they’re unlikely to change their policies in light of moves by the major brand companies toward tighter cancellation windows. 

REPORT FROM THE U.S.—While several hotel brand companies have had success with stricter cancellation policies aimed at better controlling their guestroom inventory, owners of independent hotels lean toward more freedom in their cancellation policies, sources said.

Dawn Gallagher, chief sales and marketing officer at Crescent Hotels & Resorts, has mixed feelings about the recent cancellation-policy changes at brand companies. Like Hilton President and CEO Chris Nassetta, Gallagher has seen a rise in last-minute cancellations. But, while Crescent monitors it, there currently is no blanket policy for its portfolio, she said.

Each hotel within Crescent’s Latitudes lifestyle collection has its own policy, which allows the property to decide what works for its unique selling point, Gallagher said. Some have a 24-hour policy, while others have a 72-hour policy, she added.

“We will always look at each independent hotel individually to do what is best for each hotel,” she said. “We look at the policy annually; however, if we did see a continual upward trend of cancellations at a specific resort, we would revisit sooner. Currently all policies in effect in our Latitudes division are working well.”

Richard Millard, chairman and CEO of Trust Hospitality, said his company also does not have an overarching cancellation policy across its portfolio. For example, at urban hotels like in New York, he suggests guests give at least a 24-hour notice of cancellation.

He described that as not so much a policy, but more of a moral statement.

The Jefferson in Washington, D.C.*—part of Preferred Hotels & Resorts’ Legend Collection—has a 24-hour cancellation policy, and GM David Bueno said he has no intention of revising that anytime soon, despite what the brands are doing.

“I know big brands are changing it to 48 hours, like Marriott (and) Hilton, but we have not thought about having a more strict cancellation policy for now,” he said.

Simply put, the 24-hour policy is what works for the Jefferson and its clientele, Bueno said. The hotel has a close relationship with its guests, he said, and he does not want to implement anything that would damage that or deter them from choosing to stay at the hotel.

“For us, keeping a closer relationship with our guests is very important for our business,” he added.

While Bueno’s team has noticed and talks about what the brand companies are doing with new cancellation policies, they have concluded that being more flexible gives the Jefferson a competitive advantage.

Bueno acknowledged that the hotel’s luxury guests tend to make last-minute decisions on trips, but any drop from late cancellations usually is made up by spontaneous bookings.

Guests who cancel less than 24 hours in advance of their stay are charged a fee which amounts to the rate of the room plus tax, he said.

Will the airline model work for independents?
Trust Hospitality’s Millard said he does not think independent hotels should adopt the airline model of charging for a change fee.

“I don’t think we have the clout to do that,” he said. “It’s a different business model. If you’ve got a product that people want to stay at or that they need to stay at, they’re going to adhere to the rules because they want to go there.”

He added that to change an airline reservation, it sometimes costs more than the ticket itself.

“We (hotels) don’t even hesitate when somebody calls and says, ‘I want to change my reservation.’ We don’t charge them for that,” he said. “But the airlines do.”

Some owners of hotels within Crescent’s portfolio feel differently, Gallagher said.

“Owners agree to the stronger cancellation policy as it is less volatile and it assists with proper forecasting and strategy meetings,” she said. “Also, most owners wonder why it took the hotel business too long to adapt, as the airlines have had stricter policies for a long time.”

Hotel-guest communication is key
Just like the brands, independents have policies that are generally forgiving when guests have to cancel due to an emergency.

Typically, Gallagher said, weather-related or family emergencies are valid reasons to waive the penalty, but that’s looked at case by case.

Millard added that hotels need to explain to their customers what the policy means. If the hotel doesn’t, it’s at fault, he said.

“You have to explain what they’re getting themselves into and make sure that they know it,” he said.

*Correction 21 September 2017, a previous version of this story misidentified The Jefferson, Washington, D.C.

1 Comment

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