This post is also available in: Français
Dear hotel owners and managers,
The title says it all! Today we’ll be discussing the cancellation policies for direct bookings versus Booking.com. With the current situation, this subject is taking on even more importance since, every day, many travelers are forced to cancel their bookings due to the global health crisis.
To provide a complementary and expert perspective, I called upon the knowledge and experience of Julie Palisse to co-write this article. A specialist in the hospitality industry since 1998, and founder of JPS Hotel Solution, Julie has collaborated with more than 150 hotels and brings us her relevant operational expertise.
The choice of this subject is particularly close to my heart and stems from the observations I’ve made in my own business. The pandemic has led to a collective belt-tightening and attracting new customers has become very difficult. This harsh reality begs the question, “If we can’t acquire new customers, how can we retain existing ones?”
What is the cancellation policy for Booking.com?
Currently, if you want to make a hotel reservation on Booking.com, the cancellation details presented on their site seem quite clear:
“For bookings made on or after April 6, 2020, we advise you to consider the risk of Coronavirus (COVID-19) and associated government measures. If you do not book a flexible rate, you may not be entitled to a refund. Your cancellation request will be handled by the property based on your selected policy and consumer law, where applicable. During these times of uncertainty, we recommend booking an option with free cancellation. If your travel plans change, you can cancel free of charge until the free cancellation expires.“
In other words, if the hotel does not offer a flexible cancellation policy, Booking.com will not be able to offer a flexible cancellation policy, and a cancellation fee will be charged. Therefore, to benefit from some flexible, you must book a hotel with a free cancellation option.
However, the rules applied between March and December 2020 were not clear-cut and gave rise to many issues.
Can Booking.com impose its own cancellation policy on hotels?
Julie, who works with many hotels, explains that, from the beginning of the first lockdown in March 2020, Booking.com and other OTAs, such as Expedia and Agoda, decided to modify the general conditions of sale, without consulting hoteliers. Reservations, including “non-cancellable” and “non-refundable” reservations, could now be refunded, without charge, upon the customer’s’ request.
However, on March 26, 2020, the French government published Order No. 2020-315 on the terms and conditions for canceling tourist bookings in cases of force majeure. This entitled tourism professionals to offer a credit note in lieu of an immediate refund for any cancellation requested between March 1 and September 15, 2020. But Booking.com does not give hotels the choice of offering a credit note and guarantees all its customers a free refund.
As you can imagine, this has created quite a number of problems in terms of management, communication, and especially repayment terms.
Today, faced with the dissatisfaction of hotels, Booking.com has changed its approach. There is, however, a real problem of trust. One of the 12 commitments made in 2016 by the reservation platform guaranteed “endeavoring to find an amicable solution in collaboration with the hotel in the event of a customer complaint.”
Reimbursement: why should intermediaries be avoided?
For any financial transaction, intermediaries can create a host of problems. If they don’t reach an agreement, the money may be in transit for some time before it is returned, if it ever is.
And since a real-life example is worth more than a long explanation, here’s a little anecdote that Julie experienced with one of her clients:
“Last April, a Parisian hotel found a refund line on its Booking.com commission statement following the cancellation of a prepaid reservation. After checking his records, the hotel owner realized that the reservation in question was non-cancellable / non-refundable. He had never agreed to reimburse the client and was not even aware of the situation. Apparently, Booking.com had already accepted and confirmed the refund, and was now demanding the amount owing without having consulted the hotel previously. Our hotel owner, outraged by this way of conducting business, did not give in and refused to pay Booking.com… which then decided to remove his hotel from the platform.”
Unfortunately, this story is not an isolated incident.
This is a good reason for investing in direct marketing, which will allow you to encourage internet users to book directly on your website instead of through Booking.com.
How do we encourage online customers to book directly?
The current situation is complex and short- and medium-term visibility is limited. According to Julie, it is of utmost importance for customers to know, even before booking, that they will benefit from flexible cancellation terms and exclusive advantages by booking directly with you.
What message should I convey to the customer?
In marketing, we know that conveying two different messages simultaneously divides the impact by three. So, is it better to talk about the new health and safety measures implemented in your hotel or the ultra-flexible cancellation policy you offer? You will certainly answer,and justifiably so, that the customer needs to be assured of a safe, worry-free stay, especially during a global health crisis. Therefore, does this mean that it is important to stress health measures?
When I asked Julie, she pointed out that today, people are generally well-versed in the “new” rules of hygiene. Everyone wears a mask, coughs into their elbows, disinfects their hands regularly…. On the other hand, the customer is not necessarily aware of the terms and conditions for canceling a reservation and the advantages that you offer. We need to also reassure them concerning the financial aspect of their trip, which is very important.
People want to travel, that’s a fact. But they are also afraid of losing money. So reassure them in this regard! Help them take the proper steps to plan their future trip and book their future hotel room!
Highlighting the benefits of booking online
Before, during, and after the reservation, every possible effort must be made to reassure your customers and show them how much they are valued. For example, Julie offers flexible rates in her hotels, and for non-refundable reservations, she recommends letting customers know that they can reschedule their booking.
Be careful, however. If the customer books and pays [NR rate] in 2020, but doesn’t come until 2021, it will not generate revenue for 2021, but will contribute to the hotel’s occupancy rate. According to Julie, it is sometimes better to allow a cancellation and reimbursement for an NR, rather than ending up in 2021 with a full hotel that is not generating revenue.
In her view, practical benefits such as an upgrade or late check-out (available only through direct booking, of course) should also be offered.
The implementation of new rates such as semi-flexible early booking (that an be cancelled 7 days before arrival) can also be a creative way to offer more competitive prices.
How do we get the message across?
It is essential to stay in touch with your loyal customers. For example, Julie regularly sends positive e-mails to her customers:
“Despite travel restrictions and travel pans, we haven’t forgotten our guests. This is why we offer special cancellation options and exclusive advantages for all direct online reservations.”
She also recommends advertising these benefits prominently on the home page of your website and/or relaying the message through social media.
How do we encourage customers not to cancel their reservation?
If you think you don’t have any control over this kind of decision, let me give you some tips on how to keep cancellations to a minimum.
While it is important to offer flexible rates given the current situation, the disappearance of the non-refundable rate may also encourage customers to book in multiple hotels and then cancel at the last minute without fear of not being refunded. Your goal will then be to have them cancel their bookings at other hotels, rather than yours.
I can only advise you to focus on pre-stay communications: a booking confirmation by e-mail, a pre-stay survey, an SMS or even a phone call will make your customers feel valued and increase their satisfaction. With a good pre-stay communication strategy, the figures speak for themselves: the cancellation rate drops to 47%!
Confirmation by e-mail is particularly important. While most hotels let an OTA or their booking engine handle it, there is a much better customer experience when the e-mail comes from the hotel itself. Through this small gesture, you show your customer that you are already taking care of them. Beyond the wow effect, we take the opportunity to “incept” the client, to slip in the underlying message that we do what others don’t.
Personalization then comes into play with pre-stay mail. Between 2 hotels that have both sent a confirmation email and a proposal for an additional service in pre-stay, the customer will most certainly choose the one that best adapts its services to their needs.
For example: Is the customer coming with his wife? Offer rose petals on the bed, satin sheets, champagne, chocolates, a rainbow in the room on arrival, etc. ! I’m exaggerating a little, but you understand the principle.
To personalize your pre-stay e-mails, rely on the data collected during the customer’s previous stays, the information provided at the time of booking, or just ask them! By e-mail, SMS or—even better—by phone. According to Julie, if it can be done, the “wow” effect is guaranteed.
Therefore, your mission over the next few months will be to retain the few clients you already have. In order to achieve this, every effort should be made to prevent cancellations and encourage customers to book directly through you.
And to encourage travelers to book directly on your site rather than on Booking,com, there is nothing more effective than direct marketing.
Let people know that you offer flexible cancellation terms; provide your customers with convenient, exclusive, and immediate benefits; and personalize your communication to make a difference. Anything goes, as long as the customer comes to you!
According to Julie—and I think she’s right—you can’t expect a flood of bookings on day one of your reopening. This will happen gradually and will depend greatly on the communication strategy you have applied thus far. So you need to prepare now, and then be among the best.
Thanks for reading!