Beating the Big Hotel Chains’ Cancellation Policies

By Robert McGarvey

There’s good news and bad when it comes to how business travelers can best cope with the new 48 hour required cancellation imposed by Marriott and Hilton.  Cancel later and you will be stuck with a one night stay penalty fee.  Ouch.

That adds up.  Hotel booking service HRS has estimated that the 48 hour policies will cost business travelers 2% in increased hotel costs this year. But there are smart ways to get this down to zero,

Understand, too, that Bjorn Hanson at NYU is forecasting a bonanza year for hotelier fee revenues.  According to Hanson, “total fees and surcharges collected by US hotels are forecast to increase to another record level of $2.7 billion in 2017. Fees and surcharges were higher than forecast for 2016; although occupied room nights were lower than anticipated, fees and surcharges were higher, with the largest increase in cancellation fees.”

Yep – cancellation fees are lining the pockets of hoteliers.

Hanson noted: “The industry also has become stricter about cancellation of reservations with fees for cancelling within two days of arrival as most common, but three days for an increasing number of hotels.”

He did not break out the exact contribution to profits of cancellation fees.

Hanson did wryly note: “Fees and surcharges are highly profitable; many have incremental profitability of 80 to 90 percent or more of the amounts collected.”

You bet.  Whacking a traveller for a room night just because he/she cancelled 47 hours before arrival is a pure profit play.

And when US hotel occupancy is about 60% who’s kidding whom that hotels need an advance notice of a cancellation in order to manage their supply of rooms.

Hotels did fine managing rooms up until a couple years ago even though the cancellation deadline was typically 4 pm of the day of arrival.

All that has changed is that the big hotel chains – enviously eyeing the fee income of airlines – want their share and they think they have us over the proverbial barrel.

They don’t.

Enter independent hotels.  According to a recent story in Hotel News Now, “Indies look for flexibility in cancellation policies,” said the headline.

The subhead got more specific:  “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.”

Richard Millard, CEO of Trust Hospitality, a boutique hotel management company, told HNN when asked if he planned to impose cancellation policies in line with airlines: “I don’t think we have the clout to do that,” he said. “It’s a different business model.”

Many independent hotels are sticking with a 24 hour cancellation policy or, in some cases, the classic 4 pm cancellation.

The odds – room availability – are on our side.  Don’t forget that when tempted to look at a Marriott or Hilton. If a meeting or event is there and you want to be in the thick of it, sure, go for it.  I’d probably do likewise.

But when the whole city is before me I will duck Marriott and Hilton and others with long cancellation windows and book elsewhere. I am sure I won’t sleep on a park bench.

At 3:45 pm PT on a Tuesday in late September I checked availability in San Francisco for that night. The Marker, a Joie de Vivre hotel, wanted $221 on Hotel Tonight.  The Hotel Zoe was mine at $209.  The Argonaut wanted $292.  Many more hotels wanted my business in Hotel Tonight.

Alternatively, per the HNN article, look for independents where you travel.  Many will be much more flexible than are the big chains that seem delusional in their sense of marketplace power.  When 4 in 10 hotel rooms are empty every night, it hardly seems hoteliers have the whip hand.

Incidentally, multiple San Francisco Marriotts had room available that very night, for booking at 3:45 pm PT. Which means you could do it on the BART from SFO into the city and that way you know you won’t be hit with a cancellation fee.

There’s essentially no excuse for getting hit with a Marriott or Hilton late cancellation fee. If you want to stay in those properties just don’t book until you land in the destination city.  Simple. Cost effective. And there will be plenty of rooms just about everywhere.