Do Cancellation Policies Hurt Bed and Breakfasts?
I posed the question on Twitter yesterday as to whether Innkeepers think that their Cancellation Policies help or hurt their businesses. I received some really interesting answers; not a scientific survey, but the reactions of some very smart people in our Bed and Breakfast Industry. It turned into a sort of on-line discussion, and Twitter served as a perfect forum for Innkeepers to share their thoughts. Here is what I learned.
Most of the Innkeepers who responded said that while they really did not have a lot of examples of guests canceling at the last moment or even within the limits of their cancellation policy, they liked their policies because it gave them the option of protecting themselves. Hilary Jones, from Admiral Peary House B & B in Fryeburg, ME said that it was “. . . very rare to get cancels, and even rarer last minute ones.” Scott Thomas, from Brewster House Bed and Breakfast, Freeport, Maine, said that “they are very lenient on it and find that guests are appreciative and rebook at a later date.” Colleen and John Rinaldi, from Sabal Pines Bed and Breakfast in Lake Worth, FL, reported that “(we) explain to the guest that we don’t want to charge for a cancellation, we want them here so that they can tell all of their friends about us.” Likewise, Donna and Ken Arold, from Main Street Manor in Flemington, NJ, said: “They rarely get last minute cancellations, and most always allow the guests to come again by honoring the deposit. We want them to have the EXPERIENCE.”
Karen Melanie from Ammonoosuc Inn and Restaurant, in the White Mountains of New Hampshire, said that “ . . . many Inns are too wordy or have policies so stringent, I would never have considered booking there, beautiful or not.” This is an interesting comment which turned out to be another theme in this on-line discussion. Karen Thorne, from Hopton House Bed and Breakfast in Shropshire UK said that her cancellation policy was “. . . fairly simple and only had two no shows.” However, she went on to say that she “. . . didn’t know how many people never got to book because of it.” Eric Goldreyer, from BedandBreakfast.com commented that “B & B’s drive off business with too strict cancellation policies. Some Innkeepers are so worried to lose a reservation that they never get it in the first place.”
Based on all of these responses, I would pose the question this way. If the business risk of a late or last minute cancellation is not great, why have a really strict cancellation policy in the first place? The penalty seems to far exceed the potential loss to the Innkeeper in the real world. Now others would, of course, say that without the policy in the first place, the guests would feel like they had a right to cancel at any time (like with a hotel policy), and would run rough shod over the Innkeepers who would stand to really lose money if they couldn’t rebook the rooms. All of this is true, but having a policy and enforcing it are really two different things. Perhaps a “soft” policy works better. In other words, set up the policy, but only enforce it in the very worst of situations.
The soft policy depends, however, on whether the Innkeeper believes that the guest is telling the truth about the situation that caused the cancellation. We certainly have experienced the last minute calls about sudden funerals or sicknesses in the family. How can you ever know if these are real or not? The simple answer is that it really doesn’t matter. If last minute cancellations only happen infrequently, then it is not a serious problem with most Inn businesses. The same is true about early check-outs. Most of the time, despite the excuse given, I always felt that the guest was really leaving because my Inn was for some reason not a good match for them. This is really a learning experience for Innkeepers. If you penalize the guest at that point, you are just losing a potentially good customer, and not learning the real reason why they are leaving. Thus, you have missed an opportunity to improve.
Then again, several Tweets seemed to feel that a strict policy on its own may drive business from the Inn. In other words, guests who really wanted to make a reservation, might hold off from doing so if they were a little uncertain as to whether they could really make it to the Inn. In today’s world of economic worry, stress and high pressure jobs, with people working longer hours and not taking their full vacation time, it is clearly understandable why strict cancellation policies might be actually stopping people from making reservations in the first place. After 9/11 we all saw a new phenomenon in the Innkeeping business; namely that advanced bookings never seemed to reach the levels seen in prior years. Perhaps that is a change in the travel customs brought on by the ability to do on-line reservations or just a reaction to the stress of life, but it is a real issue which strict cancellation policies seems to make worse.
One final thought. In this new age of Reputation Management, are Innkeepers really going to strictly enforce a cancellation policy and run the risk of terribly adverse reviews on TripAdvisor, BedandBreakfast.com and the other review sites? Perhaps it is time to re-look at cancellation policies and, in fact, all of the other terms and conditions that Innkeepers put on their websites. I have asked TripAdvisor whether there have been any adverse reviews based on cancellation policies, and will write about their response when I get it. They are very active on Twitter and, surprise, very responsive to inquiries. All of this is clearly food for thought. Give me your comments, and we will continue this discussion.
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Great points Howard.
First off to clarify, BedandBreakfast.com only allows reviews from folks that have stayed at a B&B. If someone tried to post that they were upset with a B&B/innkeeper because they had to cancel and the innkeeper enforced their stated cancellation policy – while I think most consumers would side with the innkeeper and realize it was the poster that was out of line in this instance – we would not allow it on the site.
Regarding the cancellation issue, I completely agree that cax policies serve a purpose. That purpose it to prevent innkeepers from losing revenue – period! I think the important question as it relates to cax policies is what causes innkeepers to lose more revenue? Cancellations from folks that had booked a room and then cancel last minute and the innkeeper is not able to resell/rebook the room? Or a strong cancellation policy that prevents consumers from booking int he first place because the cax policy is so burdensome.
My concern is that having seen a fair amount of innkeeper cax policies over the years, I am certain that there are some properties that are losing more revenue because they have a very heavy cax policy and if they would lighten it up a little, they would undoubtedly get more reservations.
A good question for innkeepers is how many cancellations have they had in the last 12 months. Would you have gotten more reservatiosn than you had cancellations if you had a softer cax policy? Yes, with a softer cax policy you may have more cancellations, but you will also most likely have a direct correlation to the additional number of reservations…
The beauty in this discussion is that this is very easy to test! Just play with your cax policy. It is not printed in guidebooks anymore. Virtually 100% of new business for B&Bs comes from the internet! Change it on your website and your top 2-3 directories that drive the bulk of your business. Change it in your Webervations calendar, etc. It’s quick and easy, and you will see if it works or if it doesn’t.
Need R&R? Go B&B!
Eric
Hi Howard –
Thanks for inviting TripAdvisor into the conversation. We don’t have hard data around cancellation policies resulting in adverse reviews, but we’ve gotten feedback on this from the bed and breakfast and inn communities.
A traveler might write a negative review for a property even without completing a stay because of a cancellation policy problem. Travelers often expect policies to be similar to those of major hotel chains, and are unpleasantly surprised when they’re more restrictive. Our advice to owners is simple – be painfully clear about your policy, whatever it is. The reservations process is a significant part of the guest experience and a bad experience, even without a stay at your property, may result in a review.
All reviews impact a property’s popularity ranking on TripAdvisor, but they are also an opportunity for future guests to learn about your policy and avoid surprises. And if you feel the traveler didn’t accurately describe the situation, we encourage you to write a management response and set the record straight. How you respond is often times more important to potential guests than the negative review itself. For details on the management response tools, please see http://www.tripadvisor.com/help/instructions_for_writing_your_management_response.
Thanks. Feel free to follow up with me on Twitter if you’ve got questions.
April
http://www.twitter.com/TripAdvisor
Hi Howard,
Thank you for including our comments from the Sabal PALM House Bed and Breakfast
.
Below is the cancellation policy we have on our web site:
“We are a small inn and consequently cancellations affect us significantly. Cancellations made in the two weeks prior to your arrival will result in a charge of one night’s cost or 50% of your stay, whichever is greater. Should it be necessary for you to depart earlier than your confirmed date, you will be responsible for the full amount of the intended stay, unless we are able to book all nights.”
As noted above, we are small–only 7 rooms. We hate it when we have to turn people away from our Inn because we are fully booked and then have someone cancel last minute and all those potential guests have now booked somewhere else. We explain our policy to our guests when they are reserving a room and do mentinion verbally that we will not charge a cancellation fee if we can book all of the nights they are coming. We have been more vigilent in explaining our policy during high season and holiday weekends when a last minute cancellation can really hurt.
Thanks again, Colleen
http://www.twitter.com/sabalpalmbnb
I also have a 14 day cancellation policy, but am somewhat flexible in the execution of the policy. If I can rebook the room, there is no charge. If I am not full and therefore am only losing that one room, I usually will not charge and will write a nice email telling them that fact. Often times, the person will rebook for another time. I also offer what I call “peace of mind”. The guest can purchase “peace of mind” for 8% at the time of the booking and with that program, they are able to cancel up until noon of the day of check-in. So far, I am ahead of the game. Jack
Hi Howard,
Came across your discussion the following morning after we had a family decide not to stay the full three nights that they had agreed on. As mentioned by some of the other comments, this is very rare. We are also very small in as much we only have two rooms, in fact one double as both rooms are inter connecting.
Our property is 400 years old and we cannot have en suite as the building is listed.
This time though the comment we were given was that the road was too narrow and dangerous , we live about one thousand feet up in the hills of Wales.
We do not have a full diary this year and we spend on food when we get a booking and with this particular case we have lost three nights for three people £225. We did keep the 10% deposit though.
Would like to know about other bed and breakfast owners experience on this matter.
Cheers Barrie.
Howard
Thanks for posting in your blog and Twitter about cancellation policies. My immediate reaction was that my cancellation policy was not putting anyone off – however I don’t know how many people read the website and decide never to book.
I’ve since reviewed our policies and now refund the deposit minus a £5 fee if people cancel more than 14 days out. I was charging a £25 fee. I need to charge something because with high bank charges I would be out of pocket.
I also now say I will refund the deposit for cancellations made within 14 days if I am able to re-let the room.
I’m sticking with my check in times – if it’s a day when I’m doing all the cleaning myself and it’s a 3 room changeover it does take me till 4.00 to finish!
Thanks for opening the discussion. It can become too easy to get stuck in your ways and forget to review what and why you are doing things.
Karen
Hi!
Good question. And one which we really can’t know the answer to! A guest who doesn’t like the policy won’t book. They won’t call and say, ‘I would have booked but I don’t like your policy.’
My feelings on having a good cancellation policy on the website, in the email confirmation and on the phone is that a guest who is waffling won’t book. Good. If they don’t hold the room up until the last minute before they decide to cancel then a guest who really wants to stay has the opportunity to do so.
Quite frankly, if a guest went on a review site and said they didn’t like my cancellation policy, one they agreed to in writing, I’d thank them for pointing out to other possible guests that we are serious about this.
Our policy is not harsh. We ask for a one week notice of cancellation. Unlike some of the other comments here, cancellations are quite common, up to and including guests walking in the door saying they don’t need all 4 rooms they booked and they don’t expect to be charged. In season, the last minute cancellations are rebooked almost immediately so we’ve rarely had to charge anyone.
What I’ve found with being lenient on the cancellation policy is this: The guests either never rebook or they rebook and cancel multiple times.
Monica
We have a well written cancellation policy on our website, reservation confirmation, any paperwork… and I always had a good feedback from guests who think this is a fair one.
We have the 14 day cancellation policy, and we take $25 cancellation fee on all cancellations (our time is paid!).
If the guest cancels less than 2 weeks, but more than 4 days before arrival, we give them a credit voucher valid for 4 months if the room remains unrented. They can come back and they do not loose their entire deposit. If they cancel within 4 days before arrival, we do not refund anything and do not give any credit voucher, unless the room is rented again.
Guests usually understand very well this cancellation policy. Of course, when they call to cancel, sometimes we might be even nicer and not charge them the cancellation fee, and if they are repeat customers, we usually refund entirely the deposit without any problem!
I also found that our cancellation policy is well accepted overseas, where Europeans usually like to have a complete written cancellation policy when they book a room.
Frederique Procyk
http://www.twitter.com/cranmoremtlodge
Thanks for all of the comments on Cancellation Policies. Clearly this is a hot topic, so let’s keep the discussion going. For those of you on Twitter or FB, how about making a reference to this Posting so that we can have a broader discussion of best practices in our Innkeeping Industry?
HighFields is both a day and destination retreat. We advertise a 10 day cancellation policy for overnight guests and a 48 hour cancellation policy for day guests. We don’t take a deposit. We ask for credit card information when taking a booking, advising that we need this information in order to secure the booking. This way there is a commitment on the part of the client. However we don’t process credit cards until the guests arrive. I really feel there is no point in processing a deposit because if the guest doesn’t show or the guest cancels, the guest could dispute any charges with the credit card companies and if we don’t have a signed copy of a credit card charge, the credit card companies reverse the charges. There is also Credit Pre-Authorization which simply holds the funds for 30 days. We’ve really never experienced any problems that we couldn’t live with.
The longer I am in this business, the more important it is to have a firm cancellation policy! Our cancellation policy is stated in the Reservation Confirmation email upon booking:
$25 cancellation fee for any reason.
Two-week notice of cancellation – only $25
If less than two weeks notice – Full charge unless we can rebook – then only the cancellation fee. (My time entering all their info. and phone time.)
We are a military/university town and thrive on those bookings. Cancellations show up on Availability Calendar immediately.
BUT: Have had 2:00 a.m. call to cancel because they were “having too much fun at Wedding Reception”. Had already charged the person’s card who had given them the Gift Certificate. They then called a year later and wanted to redeem the expired Gift Certificate. Told them I would honor it week-nights only if they paid $25 for re-entering all their info. Never called back to make reservation. (I did not tell the person who gave them the Gift Certificate that they had cancelled in the first place.)
I look at the cancellation fee as my insurance policy: They invest in my integrity to reserve the suite for them, I invest in them to honor their reservation and show up by agreed upon check in time.(Wedding night couples by midnight, all others – 4:30-8:00 p.m.)
With only 3 rooms, last minute cancellations means loss of income and expenses in preparing for our special guests.
I’m also a much nicer person the next morning so that our faithful guests can enjoy my sparkling personality during breakfast if I’ve had more than 4 hours of sleep!