[SOURCE: D-Edge Hospitality Solutions Study – Hotelmarketing.com April 23, 2019]

Fact: Hotel Cancellation Rates Are at 40%

With staggering 40% cancellation rates wreaking havoc on the lodging industry—in order to survive—each lodging property must implement and enforce a cancellation policy based on:

• average time needed to replace cancelled reservations with new bookings,
• number of guest rooms,
• overbooking policy.

Although hotel/motel cancellation policies continue to get tighter (visit Forbes – How to Avoid Hotel Cancellation Fees) bed and breakfast cancellation policies may be more restrictive. Here’s why:

Lead Time
Hotels/Motels: The majority of hotel/motel bookings are made within a few days of arrival and often on the day or arrival.

Bed & Breakfasts: Most reservations for bed & breakfasts and other destination properties are made several weeks to several months in advance of arrival. That makes filling cancelled rooms within a limited time frame rare to impossible.

Location
Hotels/Motels: Most hotels/motels are located in high traffic, commercial areas, often along busy highways or major streets. As a result, they are better able to replace cancellations with last minute walk-ins.

Bed & Breakfasts: Most bed and breakfasts are located away from the hustle and bustle and often in secluded residential neighborhoods. As a result, they have virtually no chance of filling cancelled rooms with last minute walk-ins.

Size Matters
Hotels/Motels: Large hotels/motel chains have up to 1 million or more rooms worldwide. That means a canceled reservation is negligible—only 0.0001% of their room inventory.

Bed & Breakfasts: Most bed & breakfasts are intimate (5 guest rooms or less with many 3 rooms or less). That means a canceled reservation may represent 20% to 33.3% or more of their total room inventory—a financially impossible percentage for any lodging property to absorb.

They Don’t Know How to Hold the Reservation
Hotels/Motels: Most major hotel/motel chains over book to offset projected cancellation percentages and no shows.

Most consumers are naive to the fact that even though a credit card may be required to “guarantee a room“—hotels/motels are not required to “hold the room“.

What is the hotel’s responsibility when they over book and don’t have a room for you when you arrive? Not much.

As Ed Perkins of Tribune Media Services, Inc. stated:

“I have been unable to find any legal requirements at any level of government beyond contract law, even when a reservation is fully prepaid. The normal industry practice is to try to fix the problem on the spot . . .

If a hotel has no rooms at all, standard practice is to “walk” you to another hotel of “equal or better” quality, picking up the cost of your first night there and your cab fare to get there, re-accommodating you the next day.

Despite what you might have read, however, “walking” is not an enforceable legal requirement. Instead, it’s just industry practice, not codified anywhere, and honored sometimes but not always. Whenever I’ve faced an oversold hotel, the hotel has “walked” me, per the practice, to a nearby hotel, but the substitute hotels were always “unequal or worse,” not “equal or better” than the original. And I’ve seen reports of travelers being walked from an oversold city center hotel to a motel in the suburbs.”—Smarter Travel: Your Guide to Dealing with Overbooked Hotels and Rental Cars

Remember the Seinfeld episode at the rental car counter? . . .

Jerry Seinfeld: I don’t understand. Do you have my reservation?

Rental Car Agent: We have your reservation, we just ran out of cars.

Jerry Seinfeld: But the reservation keeps the car here. That’s why you have the reservation.

Jerry Seinfeld: I think I know why we have reservations.

Jerry Seinfeld: I don’t think you do. You see, you know how to take the reservation, you just don’t know how to hold the reservation. And that’s really the most important part of the reservation: the holding. Anybody can just take them.

Bed and breakfasts know how to hold the reservation. Most never over book. Never. They hold the reservation in good faith—no matter what—in exchange for guests honoring the property’s cancelation policy.

Like Jerry said:

“And that’s really the most important part of the reservation: the holding. Anybody can just take them.”

Question
How can you enjoy the personalized service, local experience, character, privacy, safety, and long list of other advantages only available at a destination, boutique, bed and breakfast inn—without the risk of financial loss if you have to cancel because of a last minute emergency?

Answer
Simple! Take the advice of the travel experts at Frommer’s:

 

“It’s wise to always consider a travel protection plan to cover your trip costs from the unexpected.”—Frommer’s