Business travelers still not adjusting to hotel cancellation policies

A year after international hotel chains implemented more restrictive cancellation policies, the number of cancellations continues to rise, according to a study by HRS. This is costing client companies an additional 4%, so many are negotiating more flexible cancellation fees.

A year after certain international hotel chains introduced new, more restrictive cancellation policies, the hotel booking behavior of corporate travelers continues to remain unchanged. According to a study by HRS, the number of last-minute cancellations by this profile of travelers has increased by 0.9%. 

Also, the additional expenses associated with companies remain considerable: stringent conditions have led to companies absorbing higher accommodation costs, accounting for an average of 3.8% of the total hotel outlay. 

As a result, corporations already negotiating their 2019 deals are prioritizing cancellation flexibility, as business travelers consider it one of the most important elements in any such booking. 

For their part, corporations are looking to minimize their exposure to cancellation and other fees that lead to higher hotel expenses.

To conduct this analysis, HRS analyzed the booking behavior of its largest corporate clients globally. In September 2017, the hotel solutions provider reviewedó cancellations from that same grouping of corporations and forecast additional costs in the millions for corporations, due to large chains extending the “cancellation penaltyón” period from 24 to 48 hours prior to arrival.

In an HRS survey of 100 travel managers, one-third showed an interest in negotiating the right special terms to avoid these additional costs.

Companies that outsource hotel rate negotiations can get ahead of this trend and minimize the economic impact of these additional costs. According to Marco D’Ilario, vice president of Sourcing Solutions at HRS, “in the current hotel rate negotiation season, we find that avoiding these types of fees and negotiating flexible cancellation policies are a necessity for travel managers and travel buyers. Stricter cancellation policies cost hotel programs nearly 4% more, making flexible terms even more relevant.

“Last year, HRS maintained the same-day cancellation option on 95% of the deals we agreed with corporations. By leveraging volume and involving the entire market, including global chains, regional groups and individual hotel properties, we help companies reduce the incidence of these rates,”, added D’Ilario.