Discover invaluable strategies to optimize your revenue management with these 8 tips tailored to reduce last-minute hotel cancellations and no-shows. It’s important to note that while the focus is on last-minute cancellations, these tips are applicable across the spectrum of hotel reservation changes.
1. Make Sure You have a Solid Cancellation Policy in Place
- Safeguarding your guests’ interests is a great approach. But not when it’s hurting your revenue. The cancellation policy is supposed to safeguard your interests.
- Before your guests hit the ‘Book Now’ button, you need to make it clear for them to understand everything. This may include information about refunds, cancellation fee, amount blocked on card etc.
- A stricter cancellation policy can have a great impact. Moreover, it also reduces fraudulent bookings.
- Ideally, your cancellation policy should be the same across channels. If you offer better terms on OTAs, it might lower your chances of getting direct bookings.
2. Require Credit / Debit Card Deposits
- Near the high season or bank holidays, it’s better to ask for card deposits to secure payment.
- You could even mandate credit card details to block an amount for the booking.
- A partial or complete payment at the time of booking may come with offers and discounts. This not only reduces the chances of cancellation, but even has a positive impact on conversion.
- Depending on policy, you could even allow pre-authorization of cards.
3. Set Discounted or Advance Purchase Rates
- A partially prepaid rate with a slight discount works wonders. Many of our clients witness pretty good results with a 30% prepaid rate.
- A fully non-refundable booking doesn’t always sound bad, especially when it comes with a deal or a discount.
- For early bookings, offer upgrades or discounts. It makes you seem more credible and guarantees a cheaper rate for guests.
- OTAs offer special package deals, such as Hotel + Flight offers. Usually, these deals have a low cancellation rate, since it’s not possible to cancel flights with sufficient refunds. You can enroll for such a packaged deal with an OTA. However, take into consideration the commission charges and the impact on revenue.
4. Use Length of Stay Restrictions
- Checkout your competitors’ policies on length of stay restrictions. Some hotels do not allow one night bookings on busy days, or when an event is happening nearby. Longer bookings mean less booking count, which reduces the number of cancellations.
- Here’s a complete guide on how to use Length of Stay Restrictions. These restrictions also align with your Revenue Management strategy, and provide you with additional revenue.
5. Sweeten the Deal for Direct Bookings (Offer discounts)
- As per a study from Mirai, cancellations from a hotel’s website amount to only 19% as compared to 39% on Booking.com and 25% on Expedia over a 4-month period.
- Guests are less likely to cancel their reservation if they book directly with the hotel. For direct bookings, cancellation lead time is often longer, giving you more time to resell.
- Since it’s better and easier to control direct bookers vs OTA guests, it’s good to offer a special deal on the website. It also aligns with our recommended pricing strategy.
6. Send Your Guests Email Reminders About their Booking
- Post booking interactions show your guests the level of attention and care they’d receive at the property. Stay in touch with guests once they’ve booked.
- Warm your guests about imminent deadlines too.
- When you keep the communication going, it gives a personalized experience to guests. You can inform them about local events, nearby places, cancellation policy and no-show fee.
- If your PMS allows, create a template and automate emailers – and if you need help setting those up – don’t hesitate to book a consultation with an OTALyst Expert.
7. Adopt A Cautious Overbooking Strategy
- Don’t be afraid to oversell. Now of course we aren’t recommending this for a small-sized property. But if you’re part of a pretty big hotel network, take a chance. It will definitely mitigate the consequences of last minute cancellations and no-shows.
- Timing of such a decision is crucial. It’s better to adopt this strategy at the time of local events or during peak season.
- Also, you should have a backup plan, just in case. Shifting a guest to a similar property at the time of check-in could be one way to handle the situation.
8. Be Responsive and Proactive
- Keep a track of cancellations. Your front desk needs to be proactive and responsive.
- When guests don’t turn up, get in touch as soon as possible. Information is power and gives you the chance to resell the room.
- While empathizing with the guest is necessary, you need to be firm. For instance, the no-show fee could be allowed as a voucher for future use, if you’re able to resell the room.
Tools like PMS (Property Management System) and CM (Channel Manager) only assist lodging establishments in operating more simply, saving time, and being more efficient compared to not using them. However, that is not the root of growth or the challenges faced in the accommodation business. If you want to effectively manage OTA channels and create stable growth, you should have a clear understanding of how OTA platforms operate, such as their nature, operational models, and how they display, calculate displayed prices, and collect prices (after deducting commissions). Of course, larger hotels that want to approach it systematically will do it synchronously from the beginning, but smaller lodging establishments wanting to reduce operational costs should overlook it and focus on optimizing display and providing outstanding customer care.
Synthesized by: OTA Lyst
