Just Say No To Hotel Cancellation Fees – Talking At You, Hilton
by Robert McGarvey
Hilton acknowledges the obvious: we “hate” cancellation fees, said CEO Chris Nassetta in the company’s fourth quarter earnings call. He quickly added: too bad. The chain intends to keep charging such fees.
Said Nassetta: “I think what you will see us do…is different ways of pricing our products both short, long, lead and more and less flexibility. And to some extent not unlike what the airlines and other industries have done. What we want to do is make sure that on behalf of ourselves and our owners that we’re not tying up inventory unnecessarily without customers having to take any risk or have any cost.”
That means buckle up for more – and harsher – cancellation fees.
Expect the other big hotel companies to follow suit.
In the old, glory days of travel basically just about any hotel reservation could be cancelled, with no penalty, up to shortly before arrival (often 6 p.m. the night of arrival).
Hilton for instance has imposed a hard cutoff of midnight before arrival – cancel later and you are on the hook for a day’s room rate.
The chain also has experimented with a $50 fee for any cancellation after booking – no matter how long in advance.
Some properties impose still longer cancellation lead times.
Marriott does likewise. Some of its properties impose a 72 hour cancellation notification to avoid penalty. Many have the midnight the night before deadline.
So does Starwood.
Intercontinental, meantime, as been slapped with a class action suit triggered by its cancellation policies.
There is no logic behind such charges. Hoteliers see airlines doing similar and their envy and greed kick in and they want their cut of the easy money. That’s the totality of the “logic.”
For a business traveler in particular, these fees are toxic. How often have I had trips cancelled the day before? Let me count the times. Even, sometimes, the same day.
But hotels want the cancellation monies.
They will get them if we don’t fight back.
I am looking at a resort in Northern Arizona and its cancellation policy is even more obnoxious: “Cancellations are accepted until 7 days prior to arrival. Cancels within 7 days will forfeit deposit,” which equates to one night’s fee, pushing $600 when tax and the resort fee are added in and, yep, you probably will be whacked for the resort fee even if you won’t set foot on the property.
Crazy? You bet. But so profitable.
I have a foolproof way around ever paying a cancellation fee – and note: I never have.
Stop making reservations in advance.
The last time I went to New York – during the UN General Assembly hubbub, when just about every room in Manhattan is booked – I did not book until the morning I flew out. I used HotelTonight, got a lovely room at the Bryant Park Hotel, and I knew there was no doubt I would use it.
What if the hotel you want is full? Bet that it won’t be. Few hotels sell out, ever. The odds are strongly in your favor.
Of course also have backup options. In the case of the UN General Assembly, I had a hotel in mind in Jersey City I had been meaning to try, also one in the Bronx, so I knew I would not sleep on a plastic bench at Port Authority.
In the case of the Arizona property there are two or three similar hotels – and, understand, the vast majority of hotel rooms are what economists call fungible, that is, there are essentially identical alternatives. Don’t get hung up on a specific hotel and you can – safely – laugh at the cancellation fees.
Think about this. You are driving cross-country. You will stay in probably five or six motels along the way. How many room nights do you reserve? Probably exactly none. You drive until you are tiring, you see a sign you trust – Holiday Inn Express or maybe La Quinta or whatever – you pull in. And you get a room. How rare is it to see a sign saying there is no availability?
Right. It doesn’t happen often enough to worry about.
Will we do grievous damage to hotel revenue management programs if we all suddenly stop making reservations? Probably. Their pricing will revert to to haphazard guesswork and they will complain.
But they have only themselves to blame.
They gave us no choice but to resolve to stop reserving rooms, except early the day of arrival.
Why don’t we do likewise with airlines? Two reasons. (1) Prices for last minute bookings are exorbitant; and (2) flights – increasingly – do sell out. If we play chicken with the airlines, many times we will be the losers.
Not so hoteliers. Most hotels rarely – never – sell out. When they do there are similar rooms nearby. And if anything room prices go down – never up – at the last minute. Hoteliers have incentivized us to not reserve because they punish us when we do. And they charge us less for last minute bookings.
That’s the smart way to travel in 2016.