Whether you are an experienced innkeeper of 20+ years or brand new, when a guest calls to cancel or doesn’t show up (known as the dreaded “no show”),  handling cancellations is challenging, costly and stressful.

Common reasons for cancelling/not showing up:

- Schedule conflict: Something came up and they can no longer keep their commitment.

- Change of mind or plan: They found a “better” place to stay or no longer are visiting your area.

- Relationship trouble: The couple is fighting or has separated.

- Didn’t feel like coming (or telling you): Maybe too embarrassed (or lazy) to call and they hope you won’t charge them.

- They got lost: Terrible directions, the inn is way out there, in a dead cell area and the GPS isn’t working. Been there, done that. Shouted with joy when we finally arrived!

Sincere reasons for cancelling:

- Death in the family: Handle sincerely and professionally.

- Accident: They were in an accident recently or even on the way to your inn.

- Major health issue: When you don’t have your health, very few things are as important as getting it back.

- Lost their job: The jobless rate is 8%+ but in reality it’s much higher.

Are they faking? It’s on their conscious not yours.

In the end it’s about getting guests in beds, and cancellation coupons generate those opportunities.

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Cancellation Strategies

There are A LOT of cancellation strategies. Some are very basic. Some are highly customized. Many methods work. Some better than others.  Here are a few of the most common:

Strategy: Timid [Less Effective]

Many innkeepers have cancellation policies on their website and as part of their online booking engine but they shy away from holding guests accountable.

The thought is that by not stirring the pot the guest may refer someone, may come back in the future and at the least, they won’t write some fake bad review about your inn. The conflict and stress isn’t worth it. This works but isn’t very effective.

Strategy: Only charge a cancellation fee if the room doesn’t fill [Less Effective]

There are innkeepers who talk with the guest and indicate that if another guest comes along and fills the rooms they had reserved, they won’t have to pay the cancellation fee.  This is too much work. Your time is better spent elsewhere.

Strategy: Strict Accountability [Effective]

Some inns are very strictly with their cancellation policies regardless of the reason for cancelling. They explain very clearly and kindly to the guest the reason for a cancellation fee. As long as your policies are fair and clear, most guests understand accountability. If the guest does a chargeback, the inns fight it.

The challenge with this strategy of remaining ultra strict even when there is a legitimate reason for cancelling is that it leads to, “I will never stay or refer anyone to that inn!”

Strategy: Inside/Outside [Effective]

Example: If a guest cancels outside of 10 days of their stay there is a $25 cancellation fee. If they cancel inside of the 10 days, there is a cancellation fee of $100.

This method is effective because you are letting the guest know that they will always experience a cancellation fee any time they cancel or don’t show up. This method keeps them locked in. It doesn’t really scare away them since you are being fair about the amount.

On phone reservations make sure to mention this policy since it locks them in. “Just so you know, there is a $25 cancellation fee to cover our time booking the room if you cancel outside of 10 days. Inside of 10 days of your stay, it is $100 so please let us know soon if you need to reschedule your stay. If you reschedule your stay before the 10 days, there is no fee.” The response: “That seems very fair.”

Strategy: Cancellation Coupon [Very Effective]

A creative solution to cancellations is to issue some form of cancellation coupon which acts like a gift certificate. Most reservation systems that have a gift certificate engine will easily support cancellation coupons.

With this option, you have a sincere conversation with the guest indicating that you understand their dilemma but that their cancellation affects your business. They can either 1) re-book for another date, 2) have the full amount of their stay transferred to a cancellation coupon that is valid X months or 3) pay the cancellation fee.

I love this strategy because it’s such a win-win for both parties. The guests who truly can’t make their stay will still enjoy coming at another time down the road. If they go the coupon route and never use it, you captured even more profit. If they go with the cancellation fee, you know they didn’t want to stay with you. Probably not the best of guests, right?

In the end its about getting guests in beds and cancellation coupons generate those opportunities.

A nice touch to this approach if the reason they have to cancel is a negative life changing event (death in the family, etc.) is to give them an extra amount on an extra gift certificate so they can stay in an even nicer room or for extra days. You not only get a warm feeling but chances are you will early a new “lifer” return guest.

Some inns make these cancellation coupons non-transferrable. It is also a good plan to have an expiration date on the actual cancellation coupon.

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Mix and Match

A lot of inns will do a combination of cancellation strategies. My favorite and the one I recommend is Inside/Outside mixed with Cancellation Coupons. Lisa, a seasoned veteran innkeeper at Cayucos Sunset Inn, has done that combination for 10 years with great success.

Take a Deposit

Before we can close this discussion we need to mention deposits. It is IMPORTANT to take a deposit either by manually charging the guest’s card on file or through your reservation system using the built in seamless credit card processing.

Most inns charge 50% of the reservation total or the amount of the first night or the amount of the cancellation fee.  Some guests management systems have an auto collect feature where when a reservation is made online or by phone the deposit is automatically collected. This is a huge time saver.

Why are deposits important? Most guests stay several months in the future. If they don’t show up and then try to do a chargeback of a deposit that was not only collected months ago but showed up on their credit card statement months ago, that is the definition of an “uphill battle”.

Hope you have enjoyed this topic! Join in!

Please pipe in on this topic by posting a comment especially if you have a “secret sauce” solution for handling cancellations and no shows.