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Hotel Cancellation Policy Changes - Our View

Recent changes to cancellation policies by some major global hotel players has created anxiety in the marketplace. Understanding the reasoning and business logic behind these changes is more important than ever to ensure your hotel program is competitive, rational and addresses your true needs. Marriott announced changes to their cancellation policy first, Hilton followed and IHG has now implemented their version - IHG has moved to a 24-hour cancellation policy while Hilton and Marriott have gone to 48 hours (in select cases it is 72 hours). Understanding why and how this has come about is key. In the past few years hotels have implemented much more advanced pricing and revenue management strategies. This has allowed them to maximize their revenue and utilization of their assets based upon historical data and behavior patterns. In some ways, this has been driven by airline revenue management type of practices (remember when non-refundable tickets and change fees were first implemented?) cross pollinating to the hotel industry. There are many viewpoints on potential impact (and whether others will join suit) on corporations and their travel programs. At Zulu Solutions, we believe the impact can be minimal and mainly for the following reasons:

• The hotel industry remains highly fragmented and competitive

• Hotel chains value relationships that deliver and can be measured

• Negotiations are open moving forward as to what is a valued component of your program – if the cancellation policy is important, add it to your list of key items When taking a longer term view this policy can be seen as actually reinforcing preferred relationships and creating additional value for companies who have the following key components in their hotel programs:

• A strong policy that reinforces utilization of Preferred Partners

• A program that delivers as promised and can be measured

• Dynamic pricing and discounts that reflect on commitments and delivery As a business decision, this is a sound call for the hotel industry and is logical. From a corporate, managed travel view, it is now more imperative than ever that you know and understand your hotel usage. Having a strong payment process and booking your hotels with/through a partner TMC are two key components to ensuring a successful hotel program and capturing the necessary data. This will help you leverage your hotel relationships to the fullest extent. As hotels move to more sophisticated and mature programs it’s becoming an implicit understanding that the same level of insight, knowledge and support for a hotel program be in place on the Corporate side. Zulu Solutions can help ensure you have the right solution at the right time – contact us now for more information on how we can help you with a competitive and manageable hotel program.

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