It’s become something of a ritual for me before each business and leisure trip. I make my initial hotel booking, while making sure to keep a close eye on rates at nearby hotels. If any move down into my target rate range, I cancel my initial booking and rebook at the lower rated property.
And why wouldn’t I, and countless other guests, engage in this practice? It’s not like there are any ramifications, right? Right?
Anyone?
Well, turns out more hoteliers, finally, are getting wise to this old trick. The New York Times reported that hoteliers are more aggressively pushing nonrefundable rates in attempt to thwart comparison shoppers like me and countless others. As many as 20% of hotel reservations see a decline in price after the guest books but before the guest arrives, Chris Anderson, a professor at Cornell University’s School of Hotel Administration, is quoted as saying.
While nonrefundable rates have been a part of the industry for a long time, they are being more heavily promoted. Hotel companies such as Kimpton Hotel & Restaurant Group LLC and Preferred Hotel Group are marketing discounted rates to consumers that cannot be canceled.
“We do offer some extraordinary discounts and in return, we ask our guests to make a commitment,” Kathleen Reidenbach, senior VP of marketing at Kimpton, was quoted as saying.
I’m surprised all hotels aren’t offering similar programs, especially as metasearch sites continue to gain popularity with consumers. It seems to me offering nonrefundable rates would take the guess work out of trying to determine what your occupancy might be on a given night, how many rooms are left to sell and what they need to be sold for to hit your target while having the added benefit of a stabilized, predictable rate.
I suppose one argument against nonrefundable rates that need to be paid upfront is it might scare some consumers away. In fact, Hotel News Now covered that very idea. In a 2012 survey, the American Hotel & Lodging Association found the number of hotels charging for late cancellation declined by 9 percentage points to 68%.
“I think that has more to do with customer satisfaction and retention than anything else,” Mike Marshall, president and CEO of Marshall Hotels & Resorts, was quoted as saying.
I understand the need to keep the guest happy so he or she keeps coming back, but look at the airline industry. While I wait and wait and wait to book my stay at hotels, I book my flight weeks and months in advance. There’s a lot less flexibility in making changes to my flight, but it still gets me to book sooner knowing that I can’t immediately hop onto the next best offer that comes along.
Bottom line, it’s about the bottom line. You’re in this industry to make money. Don’t make it so easy for guests to procrastinate when forking over their cash.
Tweet of the Week
If ppl used earned vacation days, it would create $100B in additional spending, increase demand for hotels by 30% http://t.co/uVf8aNPEKd — U.S. Travel (@USTravel) October 7, 2013
And if the hare hadn’t taken a break during the race, he would’ve beaten the tortoise. Still, this stat shows just how much room there is to run. Keep that in mind as the sector continues plowing through the recovery.
Email Shawn A. Turner or find him on Twitter.
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