Two days before their stay, a couple calls to cancel their weekend reservation. They have simply changed their mind. Maybe they got into a big fight. All you know is that there isn’t enough time to rebook the room. It’s the weekend and you are always full. It feels like you just lost a few hundred dollars. How do you handle the situation professionally? Even if you charge the card on file, how do you avoid a chargeback?

In this article we discuss strategies for handling and avoiding cancellations and chargebacks. Incorporating a solid cancellation system can drastically improve your chances of successfully contesting chargebacks.

Refining Your Cancellation Policies and Strategy

There is a delicate balance to cancellation strategy. You might find yourself being too hard or too soft. Be firm but understanding. For example, if a guest calls to cancel because her mother just passed away from cancer and she is heartbroken. Hopefully, you will express condolences and tell her everything is taken care of, even if a portion of her reservation is non-refundable. You will more than likely win a lifelong customer. On the other side, if you worry about offending no-shows and walk-offs, they have already cost you business and probably won’t be sending you business in the future. Don’t burn a bridge, but hold them to their commitment in a polite and professional manner.

If you have the time, one of the most effective methods to reducing no-shows and other types of cancellations is to call or email the guest a couple days before their cancellation deadline. Express how excited you are to have them stay and offer to answer any questions they may have. This friendly reminder goes a long way and earns customer loyalty.

If it has been a while, you might want to review your cancellation policies and make sure they handle any new cancellation situations you have encountered. Make a list of the more memorable cancellations you have had. Establish policies that are in your favor. Reserve the right to make exceptions.

While refining your cancellation policies, be polite and courteous. Complete sentences and paragraphs are better than bullets and phrases. The Bouldin House in High Point-Greensboro North Carolina is an excellent example of well-written, professional yet polite policies.

Write policies unique to your inn. If your rooms fill up fast, shorten the cancellation period. If your rooms are booked further out in advance, lengthen the cancellation period. Some innkeepers will refund a guest if their canceled room is rebooked. If you are extremely busy, it might be too much extra work. Avoid complicated math and rules. It is harder to enforce them. Charging a flat cancellation fee or a percentage of the reservation is common.

Practice makes perfect. If you have staff, do some practice calls and have them handle the different cancellation scenarios: death in the family, dead-beat guest, walk-off, no-show, irate guest with cause, irate guest without cause, etc. Be courteous, understanding, yet firm. Separate your frustration with the situation from your customer interaction. Blame the cancellation system instead of your inn, since it is an inanimate object. Replace “It’s our policy…” with “The cancellation policy is…” The last thing you want is to turn a guest into an enemy/protestor who tells everyone they know how they have been wronged, even if it isn’t true.