Hotel Cancellation Fees

Hilton Cans Cancellation Fee After Pilot - Business Travel News

Excerpt from Business Travel News

Hilton Worldwide has decided against enacting a $50 cancellation fee at its hotels, for now.

Hilton launched a pilot in November at a handful of its hotels, charging guests a $50 penalty if a reservation was canceled anytime after booking. CEO Christopher Nassetta said the company implemented the program in "a really blunt-force way" to gauge customer reactions. "Customers hated it, but that's not really surprising," he said during the company's fourth-quarter earnings call. "We knew they would, but we did get some nuanced intelligence out of the experience."

Cancellation penalties have become the new frontier for hoteliers looking to recoup costs from last minute-cancellations and to change how the industry does business. "For almost every other product out there, when you've purchased it, you've committed to buy it," said Patrick Bosworth, co-founder and CEO of revenue management company Duetto, "whereas hotels have historically had an incredibly flexible cancellation policy. In many cases, even if you just no-show without telling the hotel, they wouldn't charge you."

Nassetta said hotel players are willing to tie up inventory for potential customers at no cost, "which sounds illogical and is illogical." In 2014, both Hilton and Marriott International enacted a stricter, 24-hour policy, charging one-night's room cost for guests who fail to cancel before 11:59 p.m. the day before arrival, and the industry followed suit. But hoteliers are considering even tougher terms.

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