9 Proven Tips to Reduce Last-Minute Booking Cancellations and No-Shows

A hotelier like you continually seeks for means to increase your daily bookings and revenue. And owing to the investment you’ve done in your business over time, it’s only natural for you to put everything you know on the table.

However, even though reluctantly, but you need to face an undeniable fact that the higher the number of bookings you get, the higher will be your cancellations and no-shows. 

Regardless of whatever the reason behind those no-shows and cancellations, it hugely impacts your revenue with the loss of booking opportunities.

Major reasons behind these no-shows or cancellations can be, an obvious reason from the guest’s end; OR the guest got a better deal at any other hotel.

So either you bear this revenue loss or find some other way to retain it. But most of the time, it is tough to replace such last-minute cancellations or no-shows with another reservation.

Impact of Last-Minute Cancellations on Hotels

While many think that dealing with no-shows and cancellations aren’t a big deal for hotels, the story is completely different.

This is how it impacts hotels:

• It leaves you with unsold rooms and a loss of income. Over and above, even if you manage to sell the room again, it would probably be at a lower rate.
• It increases stress and work. You keep the room ready for your guests and when there’s a no show, it leaves you with very little room for manoeuvre. Meaning, you need to start from scratch again.

Now, this might not seem like a problem for hotels that are profitable throughout the year. But for hotels that are not in urban areas or the ones that depend on a certain type of guests, it is the worst nightmare; dealing with such situations that directly affect the hotel’s profit margins, is a major challenge.

How to Reduce Last-Minute Booking Cancellations and No-Shows

1. Develop a cancellation policy

A hotel without a robust cancellation policy is prone to various repercussions like revenue loss. It is really important that hoteliers set certain protocols for guests to call their booking off. 

However, devising a cancellation policy lies entirely up to you and the OTA you mostly deal with. While many hotels have their own policy, OTAs apply their own policies through non-refundable bookings.

Try working with a revenue management expert and come up with a doable cancellation policy.

2. Collect deposit on a confirmed booking

Well, this is a no-brainer and the most frequently used means to reduce last-minute booking cancellations by hotels these days. While your guest is making the booking with you, you can simply ask for a minimal deposit amount (mostly it’s a set percentage of the room tariff) before confirming the booking.

Since he’s already paid some amount, the guest will think twice before cancelling the booking or booking with any other hotel.

3. Offer discounts to get confirmed bookings

This is also a widely used way to get more confirmed bookings and eventually reducing your last-minute cancellations and no-shows.

You can ask your guest to give confirmation for his arrival and offer him a discount once he does that. Definitely, you may need to take part in the payment, or complete payment to confirm his booking.

Further, offer attractive discounts or deals on confirmed bookings by promoting them on your website using widgets and even on your social media pages to attract more confirmed bookings.

4. Take complete payment at the time of booking

Several OTAs these days give an option of ‘Pay at Hotel’ while the guest is making the booking. You may also be receiving booking inquiries on the phone which have you hold your inventory till confirmed.

Here, you can send an online payment link to your guest, using which they can make the payment of any amount at their convenience; thereby confirming their bookings in one shot. A similar way can be used to collect deposit amounts from the guests.

Therein, regardless of where the booking is made from, the online payment link can make your payment collection easier and subsequently reduce last-minute booking cancellations and no-shows.

5. Mandate the credit card details to go ahead with the booking

Many a time, companies ask for credit card details to confirm the authenticity and genuineness of the purchase. BUT, when it comes to payments, people tend to avoid giving out important information like credit card details. 

In this case, many of your guests will fill in invalid credit card details just to go ahead with the booking. The only thing you can do here is, wait for the guest to arrive and collect the payment.

But, that guest might turn into a no-show or cancel his booking at the last minute, as a result, you’ll lose a booking opportunity and even revenue. Instead, you can carry out a proper verification of the credit card details, in order to justify the authenticity of the guest and hence the booking.

6. Incorporate length of stay restrictions

Another thing you as a concerned hotelier can do is restrict your guests’ stay length to reduce last-minute booking cancellations and no-shows.

Why?

Because people who book longer stays are less likely to cancel.

Further, before you incorporate this restriction, make sure you do an in-depth compset analysis around it. Try to determine what are your competitors’ policies and are they working fine. 

Note: You can always seek help from revenue management experts to help you curate such strategies and boost your revenue.

7. Send reminders about bookings

One of the best things you can do to mitigate the chances of no-shows is by sending timely reminders to your guests. 

Moreover, do not just keep it about a reminder,  also educate them on cancellation policy and deadlines.

This process of communicating can be automated with the help of a hotel property management system (PMS). Every time you receive a booking you capture guest details and the PMS can use that information to send the right messages at the right time. 

Over and above, this approach of communication also works in building guest experience and boosting your overall revenue. 

8. Implement Overbooking Strategy

Overbooking is often a necessary evil. It can make or break a hotel, depending on the strategy.

The idea behind this is to take more reservations than the available number of rooms. So that if a guest fails to show up, you can still offer the room to someone.

However, despite being an effective strategy, it has severe repercussions. Therefore, you must ensure that this strategy is only carried out by revenue management experts to minimise the risk of miscalculations.

9. Use guest data to learn and adapt your process

Now, one more important thing that many hotels overlook is utilising data when it comes to mitigating last-minute hotel cancellations.

What I mean by this is that hotels must look at their past data and try to understand the reasons guests have cancelled their bookings.

Further, if you have guests’ data that doesn’t have the complete information, you can reach out to them and identify the reason behind the last-minute cancellation and no-shows.

The often you practice this and the better insights you get, the better you can curate your strategies.

Word to The Wise: Don’t Lose Guest Centricity

Apart from all the tips that I have mentioned above, there’s one more thing I would like to shed light on. That is:

Don’t fret when there’s a cancellation or a no show. Before you jump to a conclusion, make sure you reach out to the guest and ask them what’s the matter.

Why am I saying this? Because there are times when guests might face unforeseen events. In that time, you have to be empathetic if you want your guests to trust you and book with you again.

Let me tell you about an incident that my colleague shared with me.

In her own words:

My family was supposed to go on a vacation to Delhi, Nainital, Dehradun, Corbet, and Mussoorie. All our hotel bookings were done.

But unfortunately, every one of us got infected with COVID-19 and we had to call off our vacation.

So, we requested our travel agent to cancel our reservations and get as much refund as possible. However, he said he cannot guarantee how much we will get.

But soon we got a call from our agent and he said the hotels of all the 5 destinations have given us a full refund (only a tiny amount was deducted).

Trust me, it was a huge relief for us. The hotels won our hearts. Even amid these tough times, when the industry is at a loss, they are still sensitive towards their guests.

In future whenever we go to these places, we will surely book the same hotels.

When she told me about this incident, even I felt really good. I asked her the names of the hotels because even I am going to pick them over other hotels.

And I think this is what a brand means — Customer/Guest always comes first!

How can technology help?

Now that you have learned about all the tactics, let me help you understand how can technology be your side-kick in this whole shebang.

Hotels MUST invest in a comprehensive property management system (PMS). When I say a Hotel PMS, I mean the ones based on cloud and streamlines all your operations.

Moreover, before you go ahead and get a PMS for your hotel, make sure the system is equipped with the following:

• It should come with an ‘ePayments’ feature that helps in collecting payments from guests conveniently. With such a feature, you can send online payment links to your guests from the system.
• The system should have a credit card verification feature to verify the credit card details (mostly on the same day of booking).
• The system should be PCI DSS Certified. Meaning, there’s a surety that the credit card details of the guests are secure in the system with no chances of a data leak.

Furthermore, if you want to know how to choose the right software for your hotel, we have a detailed resource.

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