Hyatt Hotels Corporation has joined Marriott International, Hilton and InterContinental Hotels Group by introducing a 48-hour minimum cancellation period across its hotels.
The company has made an exemption for its loyalty programme members, who are offered a 24 hour cancellation window, regardless of individual hotel policy.
The policy applied to all bookings made or changed from 1 January.
The company said: “Hyatt will implement a revised minimum cancellation policy that allows hotels to manage guestroom availability more effectively, including offering rooms and upgrades to rooms that would have otherwise gone unoccupied. This new default cancellation policy requires guests to cancel their reservations at least 48 hours in advance to avoid a cancellation fee.
“Because each Hyatt hotel may continue to set its own cancellation policy based on local market dynamics and expectations, we always encourage guests to check the cancellation policy at the time of booking.
“It will continue to be transparently communicated at the time of booking and in guest emails.”
Last year saw Hilton, IHG and Marriott International introduce a cancellation fee for hotel rooms.
Hilton told us: “At Hilton, our goal is to provide exceptional experiences – every hotel, every guest, every time. The proposed update to our cancellation policy guidance will allow us to maximise the number of available rooms for guests seeking accommodation. Corporate travel or group bookings will remain subject to cancellation policies stipulated in their contracts.”
CEO Chris Nassetta said that the decision was “not just because of new technologies, but just because customers have been trained to do multiple bookings and do things that have created a scenario where cancellations have, in some markets, skyrocketed. They’ve got, they’ve gone way up.
“And it’s not good for anybody. It makes it very hard for us to manage inventory, particularly close-in inventory in a way that makes sense. We can’t have it be within 24 hours, because we can’t manage that last minute inventory.”
Nassetta said that the company was also considering expanding from the “48 hour, 72-hour mark out to seven days, creating fully flexible pricing structures and semi-flexible pricing structures that would require potentially even cancel seven days, within seven days”.
He added: “A large majority of our customers know within those time frames whether they need to cancel or not. It’s just they haven’t had to do anything about it. So they haven’t. But if you can create the right incentive system where you give them an incentive to let you know earlier, it’s good for them because they ultimately probably can get a better deal.”
At IHG the group said that the new cancellation policy would create “greater consistency” across its properties, adding: “IHG’s previous cancellation policy varied by both region and brand, and this new change will mean that the majority of the IHG estate will now operate under similar terms.”
The pair follow Marriott International, which is implementing a 48-hour cancellation policy at hotels in the Americas including the US, Canada, Caribbean and Latin America, across all brands with the exception of MVW and Design Hotels.
The company said that: “In an effort to better serve guests seeking last-minute accommodations, guests will now be required to cancel their room reservation 48-hours prior to arrival in order to avoid a fee.” The decision to charge for cancelled rooms was not a new one for the operators. In 2014 Hilton and Marriott International announced that 2015 would be heralded with the introduction of charges for customers who failed to cancel their bookings by midnight the night before arrival.
Marriott International told us at the time that hotels whose policy was to allow guests to cancel their room reservations on the day of arrival without incurring a fee were “faced with a significant number of unsold rooms due to last-minute cancellations. The new policy will allow hotels sufficient time to offer these unsold rooms to guests seeking last-minute accommodations”.
Hilton also trialled a flat cancellation fee of USD50 for any booking at any time. Nassetta told analysts that the issue of what he described as “robo techno approaches to cancel and rebook” which have seen customers cancelling and rebooking at lower rates remained an issue. He said that the prior two to three years had seen a “significant increase” because of customer behaviour, but also technologies and apps, that had accelerated the behaviour.
Nassetta commented: “We’re one of the very few businesses I can think of that ties up basically all of its inventory with no downside risk, and particularly in today’s world with new technologies and these kinds of behaviours, that has a cost to it. Now that cost ultimately is going to be borne at some point by the consumer.”
HA Perspective [by Katherine Doggrell]: So great is the enthusiasm of hotels to push their loyalty programmes that one suspects any innovation or change of policy of accompanied by a klaxon going off and an employee in a special hat shouting: “MAKE IT PART OF THE LOYALTY PROGRAMME”.
Here it makes more sense than access to the pillow menu, although it is not clear how a point of differentiation it will be to the consumer. The fear is that it will be hard to retrain the guest, which is used – largely thanks to the OTAs – to cancelling whenever they feel like it, and no offence taken.
For hotels, who are in dire need of being a little more sophisticated in their revenue management, this reeducation has great potential for driving guests deeper into the arms of the OTAs. Hyatt’s offer of 24 hours grace for members is unlikely to make any real difference to behaviour. The real change in activity will come with the first fine. And the response is still likely to be anger rather than gratitude for a lesson learned.