Hilton has announced it will enforce a 48-hour room cancellation policy beginning July 31. The company’s decision has been met with criticism from some media and consumer advocates. For many professional meeting planners, however, the policy makes good business sense.
Hilton’s announcement follows Marriott’s decision on June 15 to charge a full-night’s stay if people cancel their reservations with less than 48 hours’ notice. InterContinental Hotel Group, which owns Holiday Inn, also imposes a mandatory charge for cancellations made less than 48 hours before check-in.
A recent Business Travelers Coalition poll found 59 percent of respondents believe the policies will be negatively received by business travelers. For professional meeting planners, however, the decision to require a two-day cancellation notice prior to check-in (72 hours in select locations) has upsides:
- The policy is unlikely to impact meeting planners, who typically book multiple rooms months in advance and are not prone to cancelling reservations.
- Stricter requirements mean cancellation costs are less likely to be passed on to businesses and associations that sign contracts with hotels in advance.
- The enforcement of stricter cancellation policies indicates hotels currently are prospering, which bodes well for the entire meeting-and-events industry.
Hotels rely on reservations to calculate occupancy rates. When travelers cancel reservations at the last minute, hotels are stuck trying to fill empty rooms, often at below-market prices. Cancelled reservations drive up room costs for reliable customers—including meeting planners.
In fact, meeting planners are legally bound to honor contracts with hotels after negotiating room rates. Private companies, government groups and associations that book rooms months in advance of events are effectively subsidizing leisure travelers who overbook rooms and then price-shop for lower rates, often online.
By enforcing stricter cancellation policies, Hilton and Marriott are inadvertently addressing a challenge from hotel-booking websites that encourage consumers to reserve rooms at multiple hotels, and then cancel their reservations at venues with higher rates a few hours before check-in.
A Hilton spokesperson explained to travel industry website Skift that its policy gives hotels time to rebook the rooms for committed guests. “Business travelers, leisure travelers, and hotel owners will all benefit from access to rooms that would previously have gone unused,” the spokesperson said.
Hilton’s decision comes a few months after the Global Business Travelers Association (GBTA) released a study comparing the rising popularity of home-sharing properties, such as Airbnb. Ironically, GBTA’s study found that business-travel professionals still prefer hotels by an overwhelming margin, in part because home-sharing property owners tend to enforce stricter cancellation policies.