As we move past winter, the “dreaded spring” will be a blessing and a curse for many hoteliers, with uncertain weather thrusting us into a season of cancellations.
Though customers have grown accustomed to cancellation policies, some will still contest charges. Refundable, non-refundable, free cancellations, and no-shows will be the buzzwords in the coming months as unpredictable weather tests the patience of both front desk staff and guests.
Add to this the last-minute changes in individual plans and the impact of weather forecasts on our bookings. While city hotels catering to business travelers have the advantage of short 24-48 hour cancellation policies, aligning with average stays of about one night, the leisure segment faces a much more complex situation.
For longer stays, such as a week, a 48-hour cancellation policy is highly unfavorable to the hotel. If a cancellation occurs, only one night may be charged while the remaining six have to be resold. This makes cancellation policies a crucial element to “track” for proper sales settings.
At MyForecast RMS, we’ve introduced a system that monitors weather conditions and retains historical weather data from previous years.
But is this enough? Not entirely. While weather forecasts add valuable insight during rate reviews, they don’t shield properties from last-minute cancellations. Ideally, we should track last-minute cancellations by channel, offering better cancellation terms only to channels with acceptable cancellation levels.
Many customers, incentivized by flexible cancellation policies, may reserve multiple rooms or dates, only to cancel last minute, distorting the on-the-book data. Tracking this allows us to implement controlled overbooking strategies, turning cancellation rates into a sales advantage.
In the past, hotels had waiting lists. By overbooking slightly on dates with historically high cancellation rates, hotels can create a higher inventory to automatically fill cancellations and last-minute changes.
Overbooking always looms as a potential risk, often avoided or poorly managed. But preparing in advance on specific dates, where overbooking can bring revenue benefits, may indeed be the better approach.
Tina Ingaldi, Sales Manager MyForecast RMS