Hilton Worldwide and Marriott International have confirmed plans to charge fees for late room cancellations.
The operators said that the move was intended to increase availability for last-minute booking, a market which is currently being targeted by the online travel agents and a number of specialist apps.
From the beginning of January, customers of both companies must cancel their bookings by midnight the night before arrival to avoid being charged.
Marriott International told Hotel Analyst: “Marriott is revising the cancellation policy for its hotels in the US, Canada, Caribbean, Central and South America. The intent for the change is to make rooms available that would have otherwise gone unoccupied due to a guest’s last minute cancellation.
“While cancellation policies vary by hotel, those hotels whose policy is to allow guests to cancel their room reservations on the day of arrival without incurring a fee are faced with a significant number of unsold rooms due to last-minute cancellations. The new policy for these hotels will require a guest to cancel their room reservation by midnight the day before they arrive in order to avoid a fee. The new policy will allow hotels sufficient time to offer these unsold rooms to guests seeking last-minute accommodations.”
The revised policy is scheduled to be implemented by 1 December for arrivals starting on or after 1 January.
Similarly, Hilton Worldwide said: “Reservations made after January 1, 2015, must be cancelled by 11:59 p.m. local hotel time the day prior to arrival, to avoid being charged for one night’s stay. Cancellation policies may vary depending on the property and date of reservation, so we encourage guests to refer to their individual confirmations to verify the hotel’s policy.
“Along with providing guests greater consistency in the booking process, we anticipate these changes will make more rooms available for travellers needing last minute accommodations.”
This year has seen a surge in the last-minute booking market, with the OTAs investing heavily, with mobile a priority. In February last-minute specialist HotelTonight saw Barry Sternlicht, CEO of Starwood Capital, invest an undisclosed amount in the group. The news was quickly followed by announcements of agreements with 10 hotel brands, illustrating that the same-day mobile booking market was coming of age.
Since Sternlicht joined the company, the group has made a number of new hires with a view to global expansion and has also extended its booking window to a week, encroaching on the territory of the traditional OTAs. So far it has been successful in pushing its message, boasting more than 11 million downloads and 15,000 hotel partners.
The more established OTAs are also pursuing the market. At the group’s most-recent earnings call, at the end of October, Expedia CEO Dara said that the company was seeing “very significant, last-minute activity” in the mobile market, adding “The pattern of use from mobile bookers on our apps, et cetera, is very, very strong”.
One market where this was particularly true, for general booking in addition to last-minute, was China, the current focus for global operators’ development teams. Khosrowshahi said the country was “seeing a higher percentage of mobile adoption than, I’d say, elsewhere in the world. And a very high percentage of that mobile activity is on apps versus mobile web.”
The operators are trying not to be too late to the party. As previously reported in Hotel Analyst sister title, Hotel Analyst Distribution & Technology, Accor has identified the last-minute market in its recent digital strategy overhaul. CEO Sébastien Bazin said that mobile was “totally changing the way we operate in terms of last-minute booking”.
When Sternlicht invested in HotelTonight he commented: “There’s something more that attracted me – it’s that HotelTonight is proving booking by booking that both hotels and distributors can win. HotelTonight is a refreshing alternative that should become a major participant in the future of hotel distribution.”.
Whether hotel operators believe that they can win by partnering with the likes of HotelTonight remains to be seen. This latest decision by Hilton Worldwide and Marriott International, which is likely to be followed across the sector, suggests that they are eager to get involved and keep as much control as possible. Control that, historically, panicked revenue managers have given away.
HA Perspective [by Chris Bown]: For a good number of consumers, the flexibility to cancel at the last minute has long been lost; or has attracted a significant administration fee. Budget hotels have copied the low cost airlines, taking payment with the booking and promising low prices with no flexibility. At Premier Inn, Whitbread has gone further, offering the option of a no-cancel and a flexible price. However, for those paying premium prices at the upper end of the market, the opportunity for no-fault no-shows has remained, until now.
Just as airlines overbook, so do hotels, in the expectation of no-shows. However, unlike air passengers, who can be encouraged to delay their flight, hotel guests typically still want to sleep that night, leading to an unseemly scrabble as the front desk books a room with a local rival, and orders the bumped guest a cab. It’s an expensive, messy business – and bad for the brand, too. No wonder hotels want to stop it. And with the rise of same day booking, they can be surer they will resell any rooms that are released by flexible bookers.
Will guests who currently rely on no-show booking flexibility be upset? They might be, but then all they need to do is download the right app, and they can book same day.
Last minute apps are where it is heading, whether that’s HotelTonight, or Choice and its deal that is seeing Ford cars delivered with an onboard booking app. And just as with online bookings, the brands are in danger of letting third party providers do the selling for them, for a fee. Will they agree with Sternlicht that it’s a win-win? Probably not – they’ll be preferring to take late bookings themselves, via their own booking apps. But a quick look at the apps the brands currently have on offer, and booking a last minute room is hardly simple.
Where HotelTonight does currently win is in its curation of offers, its real time availability, geolocation and its simplicity of booking. The brands are going to have to work hard to get anywhere near its ease of use – and they certainly won’t be able to match its cross-brand variety.