8 Tips to Reduce Last Minute Hotel Cancellations and No Shows

Things come up. Circumstances change. Plans get disrupted. But is that the only reason why your guests might cancel their reservations or not show up - at the last moment? More often than not, the problem lies on your side of the fence: a messed up cancellation policy, radio silence post booking, or even a better deal somewhere else often lead to unexpected cancellations and no-shows! In this post, we're looking at how to reduce reservation churn by staying in constant touch with guests while staying

Note that while this article title specifically mentions last minute cancellations, all the tips below apply for all types of hotel cancellations.

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 HotelMinder 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 empathising 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.

More articles about Revenue Management

• The Paradigm Shift in Revenue Management with Future Demand Data
• How to Manage an Airport Hotel and Maximize Its Revenue?
• Getting Started with Revenue Management for Hostels
• How to Manage a City Centre Hotel and Maximize its Revenue?
• What are Inventory Hard Controls and How to Use Them?