Feb 21, 2020
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5 min read
How to Reduce No-Shows and Cancellations in Your Hotel
Without question, one of the most frustrating things in running a hotel is the tendency of guests to reserve a room but then cancel at the last minute. Or just fail to turn up altogether. It’s not just the annoyance factor, though; last-minute cancellations or no-shows have a real impact on the profitability of your hotel. How do you manage to reduce no-shows and cancellations in your hotel?
Independent hotels may suffer from this inconvenience more than most, due to a tendency (whether real or perceived) to have more lenient policies than multi-site corporations. While there is no solution that could promise to reduce these incidents to zero (we’re dealing with humans, after all!). There are a few simple methods you can use to greatly reduce both the likelihood and the impact of cancellations you suffer from this year. Ready to find out more? Let’s dive in!
Method #1: Have a Fair, but Clear Cancellation Policy
As we touched on in the introduction, the key reason that independent hotels may suffer from an above-average number of no-shows or cancellations is the relative lack of a clear policy. Even more patchy enforcement of the policy.
Review your policy now. See how it compares to those of your competitors. You can usually find these quite easily by browsing to the “terms and conditions” section of their website. Your cancellation policy needs to strike a balance of fairness for both you and the guest. All kinds of things can happen to disrupt the plans of a traveller, after all, so it’s only fair to them to allow them to cancel.
The more notice they give, the less the impact on your hotel. So make sure your policy reflects this crucial fact. Many hotels allow free-of-charge cancellations provided there is at least 48 hours notice. Giving you some time to make the reservation available to another customer.
It may also be wise to consider a more stringent policy for particularly over-subscribed times of the year. For example over Christmas, or when a large event regularly takes place in your area. Again, make sure that this policy is easy to understand. All your staff have to know exactly what the special policy is and what dates it applies to. Finally that it compares favourably to the cancellation policies by your competitors for the same timeframe.
Method #2: Make Sure your Cancellation Policy is Published and Enforced!
This may seem obvious, but it’s amazing how many hotels have their cancellation policy buried away where customers will only have their attention drawn to it once it’s already too late.
Anyone that makes a reservation, whether online, via phone, or any other method, needs to be provided with a copy of your cancellation policy so they can’t claim ignorance of it later! Ideally, they should confirm their acceptance of the policy when they make the booking. At the very least their booking confirmation should include a clear reference to it. Even if it’s just a short summary with a link to the full policy on your website.
Make sure all staff are trained to refer to the policy and enforce it, politely explaining the costs involved if doing so causes push-back from the customer. If you decide to allow discretion in the enforcement of the policy, you should make it very clear who is allowed to exercise this discretion. Give examples of circumstances that might allow them to do so – for example, extreme weather conditions.
Finally, any promotions that you run, whether via email marketing or other advertising, should also include a clear reference to your cancellation policy. Best to cover all the bases!
Method #3: Encourage Guests to Communicate Changes to You
You should allow customers plenty of options to communicate any changes of their plans to you. Providing them with the option to submit a cancellation or re-schedule of their stay via email or live chat on your website will result in a reduction of no-show occurrences.
Some customers are just too embarrassed or shy to pick up the phone and have to explain to someone exactly why their plans have had to change! Give them as many options as possible to get in touch. Emphasise that you’re keen to hear from them and that you understand plans sometimes have to change at the last minute.
For example, if your policy states that cancellations with less than 24 hours notice have to be paid at the full rate. You could send a reminder email or text 36 hours before the reservation starts. Telling them that you are looking forward to seeing them and including all the ways they can let you know if their plans have had to change for any reason. Many hotel reservation systems can be configured to send such reminders automatically. Though provided all the necessary information is captured when the reservation is made initially.
Further reading: DIRECT BOOKING
Clear and consistent communication removes the worry of the unknown!
Method #4: Re-market Rooms that Become Available due to Cancellations
As we’ve covered, cancellations are a fact of life – you’ll never be able to avoid them altogether. Where many independent hotels are missing a trick is in taking advantage of the opportunity created by a cancellation. Use it to make an extra special offer available on the now vacant room.
A room cancellation, especially for one of your premium suites or stay options, give you a valid justification for letting someone else upgrade to. Even more book that room for a lower-than-usual cost. You will reap the rewards of a delighted guest (who will be more likely to tell others and share pictures of the room on their social media). In addition, you’ll recoup some of the monetary loss that the cancellation has caused.
You can advertise the cancelled room in various places. Your reception/bar, on the boards outside your property and of course on social media. Don’t forget your own database of customers, too. Email and text (SMS) marketing are a powerful way to drive more traffic to your website and ultimately secure more bookings.
Further reading: https://stampede.ai/blog/effective-email-marketing-tips-for-hotels/
In Conclusion
We hope these methods for managing this frustrating aspect of running a hotel have given you plenty to think about and implement in your establishment.
Do you want to find out more about how our solution could help you stay in touch with your guests? Get in touch!