Cancellation, loyalty policies ease in the near term
Cancellation, loyalty policies ease in the near term
21 JULY 2020 7:43 AM

As hotel brands re-evaluate near-term cancellation policies and guest loyalty status requirements amid the pandemic, sources said maintaining relationships and working with groups on a case-by-case basis is key.

GLOBAL REPORT—Many hotel brands and management companies are touting flexibility around guest cancellations polices and loyalty status amid the COVID-19 pandemic, but some are being cautious not to make any long-term decisions just yet.

Kathy Hood, SVP of sales and revenue management at Davidson Hotels and Resorts, said in exceptionally challenging times, it’s important to take care of customers’ specific needs while balancing the financial responsibility to owners.

Some of those guest needs include more flexible cancellation windows for individuals and groups as well as easing guest loyalty requirements, according to sources.

“We are very cognizant of the need to refrain from making long-term decisions while we are still in the middle of the pandemic regarding contract concessions, permanent structure changes to function space, cancellation policies, etc. That would have long-term implications to our owners’ investment,” Hood said via email. “We are also extremely committed to supporting the brands we represent by closely adhering to their guidance and temporary changes in policy.”

For the near-term, she said it’s key to be flexible with cancellation and attrition terms for 2020 business, with some additional flexibility in select markets continuing through Q1 2021 and beyond.

What the brands are doing
Hood said most major brands have waived cancellation fees on non-refundable transient bookings if cancelled or changed by 30 June 2020. Regarding group businesses and deposits, she said Davidson has seen a mix.

“In some cases, deposits are being held for future dates,” she said. “In other cases, the hotel has requested additional deposit funds to hold space for the future meeting, and some have offered partial deposit for securing an additional future meeting with the hotel.”

For special circumstances where the entire group was pre-paid prior to arrival, non-refundable reservations and pre-payments were either transferred to the newly established date or refunded if the event could not be rescheduled, she said.

“Our general approach is simple … when the industry does come out of this pandemic, clients will remember who worked with them and who did not,” she said.

Several brands had moved to 72-hour cancellations for transient business, she said. However, some brands are now temporarily loosening that standard.

She suspects once business travel returns to a normal state, these temporary cancellation policy changes will be lifted.

Asad Ahmed, SVP, commercial services, Americas, at Hyatt Hotels Corporation, said the company has been focused on listening to its guests, members and customers about what’s important to them.

“We have taken many actions to increase flexibility in an effort to ensure peace of mind for individual traveler reservations and group bookings,” he said via email.

Ahmed said policy revisions include offering a flexible cancellation policy through 31 July 2021, which allows guests to change or cancel a reservation up to 24 hours before their scheduled arrival free of charge; extending status for all elite World of Hyatt members globally without needing to requalify; pausing World of Hyatt points forfeiture through 31 December 2020; and allowing World of Hyatt Club Lounge Access awards with expiration dates between 1 March 2020 and 31 December 2020 to 31 December 2021.

Group reservations are dictated by contractual terms, but for groups are already scheduled, Hyatt is collaborating case by case to identify solutions that meet their needs, he said.

“We’ve also taken steps to incorporate additional flexibility into our contractual terms to give meeting planners more confidence when they book future meetings and events,” he said. “We are continuing to explore additional opportunities as the situation evolves, including adding language about pandemics into standard agreements.”

Prior to COVID-19, Ahmed said Hyatt’s cancellation policy included a 48-hour window prior to arrival without penalty, except for reservations booked with the advanced purchase rate or at select resort properties.

Lennert de Jong, CCO at CitizenM, said the moment it became clear that guests weren’t going to make their trips, the brand waived all cancellation fees for non-flexible bookings and returned money to bookers.

“We didn’t go for vouchers or transferring stays but instead took the full hit,” he said via email. “This is because … we believe in building relationships, not fighting with customers—especially during what is already a terrible time. CitizenM is in a unique position to be able to do this. We don’t have to extract fees from an owner because we are the owners.”

He said there’s been a lot of misinformation about hotel cancelations in the past, with people thinking provides free cancellations.

While cancellation policies “are in fact a competitive element of the pricing model, we have always looked for the optimum discount for people to commit their leisure stays (while) at the same time getting the premium business traveler in, with maximum flexibility” he said.

Flexible stays have always been part of CitizenM’s philosophy, and it will be some time before people can commit to events in the future, he said. Shorter booking windows and higher cancellation rates will be the norm, he said.

Eliot Hamlisch, EVP, loyalty and revenue optimization at Wyndham Hotels & Resorts, said through the pandemic the goal has been to provide flexibility whenever and wherever possible. That includes protecting loyalty members’ points and benefits.

Wyndham is reducing the number of nights required to qualify for each member level by 40%, he said, which will be granted for all qualifying nights through this calendar year. Member level status will be earned through 31 December 2021, he said. 

“The intent here is to reassure members that they can achieve that next member level even if they’re travelling less frequently this year, and encourages brand loyalty,” he said. “These changes are coming in addition to a number of other enhancements we’ve announced over the past few months including delaying point expiry through (30 September 2020).”

Hamlisch said the return on investment in enhancing the customer experience and flexibility will drive life-time value and deliver upsides for Wyndham’s franchisees. He said franchisees are critical to the business, and Wyndham has been focused on new ways to help them preserve cash, secure government assistance and welcome back travelers.

Wyndham updated its cancellation policy in early March to suspend all pre-paid and non-cancelable rates in addition to a 24-hour cancellation window.

“Even before we made that update … our hotels have historically had among the most generous cancellation policies in the industry, with a vast majority offering the option to cancel either 24 hours in advance or in many cases same day,” he said.

Keeping relationships, business on the books
Hood said preserving client relationships is everything.

“Each and every business opportunity is being evaluated based on its own merits, and ultimately the decisions are made using a close collaboration of property-level managers, along with regional and corporate teams a resource, to come up with the best options,” she said.

She said every customer has unique needs. Some are more cautious about the future while others are moving their 2020 business to a future year with the same contract terms.

Many customers have their own legal terms they are asking to include in contracts, she added, which can slow the process of closing business as new terms are vetted.

“From a business perspective, one of the tougher aspects is determining adequate space for customer events based on any new—but yet to be solidified—norms as it relates to meeting room capacities and maximum gathering sizes.

De Jong said CitizenM values long-term connections with its customers, and will never take the approach of going for “a fight with the lawbook in hand.”

Hamlisch said Wyndham is less dependent on the meetings business given most of its hotels are in the select-service economy and midscale segments. However, the company’s full-service and upscale hotels have been working closely with meeting planners over the past four months for business that has been cancelled and rescheduling into late 2020 and 2021.

He said the OTAs continue to be great partners through this COVID-19 period in working through the logistics of cancellation policies.

“They have worked very closely with us … (in) making sure that they accommodate the same flexibility that we’re affording our members,” he said.

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