What is the best booking and cancellation policy for my Inn?
This is a question we are often asked by aspiring innkeepers attending The B&B Team’s ‘Better Way to Learn Innkeeping’ Seminars. This is a topic that is often debated among veteran innkeepers as well. Let’s take a look at two scenarios, both real occurrences.
Small 5 room inn had a 2 room, 2 night last minute cancellation over a popular summer holiday weekend. They do not take advance deposits and in this case did not have a credit card on file. Innkeepers were not able to re-book the rooms on short notice. This inn does not have online booking and they generally do take a CC when reservation is made over the phone, but sometimes forget to get one! Result: They lost a big ‘chunk of change.’
Popular holiday weekend. 9 room inn located in a popular coastal destination location. The inn is generally fully booked a year to 6 months in advance for this annual holiday weekend event. Upon the reservation a deposit of half the amount is required and the cancellation dates are 30 days prior to the stay, instead of the usual 14 day policy. Result: Guest has guaranteed room nights and innkeeper is guaranteed a secured full house.
Odysys ,a digital marketing company for hospitality professionals, conducted a survey in 2017 entitled ‘Reservation Payment and Cancellation Policies for Hotels and B&Bs.’ The results are still very relevant today.
I think most innkeepers would agree that…“This is one of the trickiest topics for innkeepers & hoteliers, so we hope these answers shed some light on the things you are doing right and the places where you can improve.” Ben Lloyd, Odysys
As you can see, almost 50% require a deposit when reservation is made. Then the balance is collected on check-in or check-out.
The full amount due at check-in/check-out with no advanced deposit (but with a CC on file) is a policy mostly used in larger brands and chains.
You as a business owner do not want to give your guests the ‘option to bail’ at any time. When they book, your booking and cancellation policy should be communicated clearly, on your website’s policy page, on your online booking page, in your email confirmation, and verbally if they are booking by phone. With online bookings, the cancellation policy needs to be read and checked before the booking is confirmed. (I know sometimes they don’t read before they check, but you have no control over that).
Let’s look at what the Odysys survey discovered about cancellation policies.
As you can see 75% will refund the full deposit within a defined window of days. Some charge a cancellation fee, and some do not. The window is up to 10 days; we see 14 days quite often.
With your cancellation policy it is wise to be firm and stick with it. Seasoned innkeepers will tell you about all the crazy stories they get when they receive cancellations. Rick often tells our seminar attendees that when we had our Inn we found out that, “Uncle Harry died many times!”
But you must be flexible in some instances.
“You should be clear and firm in your cancellation policies, but you should leave a little wiggle room for when specific situations arise. Emergencies or accidents happen and being open to these unforeseen scenarios will build guest trust and boost future bookings.” Ben Lloyd, Odysys
In cases like this you must go with your gut. After a while your gut feelings get better refined. Can you make a mistake, sure? But sometimes you must take that chance. Many innkeepers will offer a gift certificate for a future stay when they feel the cancellation reason given is legitimate.
The Odysys blog includes some great quotes from innkeepers from some of the 117 participating inns. Worth reading for further insight on this topic.
The small lodging industry can provide you with a wonderful lifestyle and business. Loosy goosy policies that give guests ‘easy outs’ can and will affect your business. A strong, clear and fair cancellation policy is good for business. Here is what one innkeeper communicates to his guests.
“We are a small business and all cancellations impact us greatly. When I reserve a cabin for you, I turn away all other inquiries for those nights as we have agreed to hold them just for you. I’m sure you can understand, it’s purely an economic choice, we just ask that you be sure about your timing”
Another wise offering is trip insurance. From an innkeeper client’s Policy Page.
Travel Insurance – We understand that cancellations are often beyond your control and for this reason we recommend purchasing travel insurance for peace of mind. We will be happy to supply your travel insurance company with any needed documentation regarding our policy and your reservation. For insurance information please visit InsureMyTrip.com.
Thanks to Odysys for taking the time to research this important topic and the innkeepers who participated in the survey.
Thanks for Listening,
Tags: Better Way to Learn Innkeeping, cancellation policy, Odysys, online booking, The B&B Team
Thank you. Cancellations, are one of the top two or three “draining and stressful” issues for us as innkeepers (I won’t get in to the other ones). Thank goodness they are not too often at least for us. That dreaded cancellation phone call or attempt to cancel via email “assuming” there are no repercussions. The ensuing pleading, the often rudeness, the unwillingness to read the policies before accepting them when booking. Unless it is a repeat guest we strongly stick to our policy ($25/night 8 or more days from arrival and full cost within 7 days of arrival – unless we are able to rebook the room). However, based upon a judgement call, we often offer the guest the option to re-book on a Sunday through Thursday within 60 days based upon availability and apply the cancellation fee toward the new stay. This often softens the tone.
Jason, thanks for your comments. Have you investigated offering ‘Travel Guard’ insurance to your guests when they book?
We do offer TravelGuard. “Ad and link” right on our confirmation. In fact I used it myself for our last big trio. NO ONE has ever mentioned purchasing it. We have this in our confirmations: “TRAVEL INSURANCE: There are many reasons that a traveler might need to cancel a reservation at the last minute, including illness, family emergencies, or extreme weather. As you are responsible for the cost of your reservation including any cancellation fees, there are many options with regard to travel insurance to help you cover the financial risk associated with any cancellation. Below is just one example:” – We follow that with the icon and link to Travelguard (from AIHP).
Thanks for the feedback Jason. Good that you offer the travel insurance. As someone wise once said; ‘You can lead your horse to water but you can’t make them drink it’
We tightened up the policy of prior 21 year owners, who took credit card but no deposit. At time of booking we now take payment in full for one night and 50% for 2 or more nights.
And then cancellation policy – >10 days, get everything back except $30 processing per room, 2-10 days get it back if I re-rent, fully responsible inside 2 days… And the 10 days gets extended for special events – 30 days for Navy Football, 3 months for induction day, parents weekend and 6 months for graduation…
What I realized is you need to protect your revenue stream. When I explain we are small and not the Marriott with thousands of rooms of inventory people get it… in some cases I offer to rebook
Thanks Marty, appreciate the feedback and you policies mirror what we did too………….just couldn’t afford ‘option bookings’!