Why do cancellations happen?
It’s important to differentiate between harmful cancellations and non-harmful cancellations. In general, the bulk of cancellations are within policy terms and the guest’s plans have simply changed. But for those that aren’t as straightforward, understanding of the context can help inform the solution.
We know that a fair amount of cancellations come from the customer just wanting to modify the original booking - so, they still want to go but they're trying to change an attribute of the reservation itself. For example, there are guests that are trying to change the stay-dates but end up cancelling and rescheduling - we're making investments in this area to support this on the platform itself.
Then, there are those who are trying to change the party composition - people are joining or leaving the group and the number of guests in the room or number of rooms in the reservation needs updating. There are a lot of moving parts in a big group, whether its friends or a family, and they all tend to have different needs and circumstances. We see that big parties with very long booking windows tend to cancel the most. This is very situational: you have more time between the booking-date and stay-date, and a lot of things can come up in that timeframe.
Less common but still pretty important to the customer, is the need to change personal details. While some of these can be updated online (without cancellation) others, especially the guest email address and phone number, need to go through customer service - this is to avoid scamming and phishing, protecting the partner in the process.
The second bulk of cancellations come from customers that are booking multiple options and alternatives for the same stay dates. This may be because they are not the ultimate decision maker, or they actually might not be confident in the first choice they make.
There are two main approaches for indecisive customers. The first is ensuring the potential guest is aware of the quality of the product on their first choice - having the right property content is a big factor in this. The other is to avoid what is called recency bias: the guest considers a new property and because it's the most recent choice they think this might be better than the previous one. In actuality, this is not often true. We compared those rooms in many cases and saw they were pretty similar. Supporting the customer to get to that final decision faster is the goal. For each of these customers, we're designing different treatments to support them and reduce the potential for cancellation.
Historically, there has been a lot of discussion around the idea of fake bookings being made to secure visas, but after conducting significant research in that area we found there was no discernable difference in cancellation rate in countries where this trend had been assumed. However, we do understand that this kind of activity is painful and we are trying to address the small proportion of bookings that do cause problems in this area. But the perception of the scale of this risk is bigger than the problem itself and, based on our data, we know that bad intent is minimal, so the worst shouldn't be assumed.
One of the big focuses for us is understanding customer intent. Cancellations vary globally; there are market dynamics and there are property dynamics. What might be a big problem in one region may not be a problem at all in another. If you understand what your property represents in the marketplace and which customer groups you appeal most to, there are ways you can adapt your offering that might help mitigate cancellations.
Our investments in addressing harmful cancellations are still at a relatively early stage and there is a lot to learn. The more we explore this area, the more we are able to come up with tailored approaches and solutions.
Get insights on your property’s cancellations characteristics on the Extranet. You might like to listen to the Talking Cancellations podcast on Click.
- Not all cancellations are bad; it’s important to differentiate between harmful and non-harmful activity
- Understanding the context of a cancellation is the first step in reducing the incidence
- The bulk of cancellations come from guests trying to modify their booking - whether it’s the stay-dates, contact details or party composition
- Indecisiveness is another factor, where guests may book multiple options for the same dates. Here, the goal is to support the guest to get to their final decision faster