How to better understand, prevent, and reduce cancellations

Help Guide 

Updated 9 months ago
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Tackling Cancellations Together

With all the demands of running a busy property, we know cancellations can be a headache for you. Many cancellations are genuinely unavoidable because guests’ change, but there are steps you can take to reduce cancellations and avoid “harmful” cancellations, those last-minute cancellations and no-shows that leave you with no time to react and replace lost business. This guide outlines the tools we provide to help you proactively avoid these situations and secure revenue.

Understanding your property’s cancellations

Get valuable insights from your “Cancellation characteristics” report

If you want to improve your property’s cancellation performance, first we recommend taking a closer look at your property’s specific cancellation patterns. If you’re not sure whether it’s early-booker or last-minute cancellations that are hurting your business, we have a tool that can help identify your particular challenge.

Under the Extranet’s “Analytics” tab, the Cancellation characteristics report analyzes your bookings and provides an overview of:

  • Your overall cancellation and no-show rates

  • When your cancellations occur

  • How you compare with similar properties in the area

Interpreting your “Cancellation characteristics” report

To find out how you can improve, first compare your “Overall reservations” to your competitive set and market, noting their cancellation and no-show rates. This will give you a better idea of cancellation behavior in your region. Then you can check your:

  • Reservation status: Are there certain booking windows with more cancellations than stayed reservations?

  • Cancellations before check-in: Are there specific periods before check-in when most cancellations occur?

You can use this data to address specific cancellation patterns and to decide on improvements for your property’s overall performance.

Pro tip: Check your “Cancellation characteristics” report regularly to stay in control of the situation. Focus on where your performance differs to your market and determine what level of last-minute cancellations and no-shows you’re comfortable with.

Example: In this case, the partner has used the report’s compare function to assess their property’s performance against that of their peer group.

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cancellations report - reservations

The property’s cancellation rate is 35.4%, which means just over 35 of every 100 bookings are canceled, while the average cancellation rate for the property’s peer group is 25.3%. The fact that the property has a higher cancellation rate than its peer group indicates room for improvement. Another way for the property to improve their performance would be to reduce the no-show rate of 2.5% to as close to 0% as possible.

Proactively preventing cancellations

Your “Cancellation characteristics” report helps you understand:

  • Your overall cancellation and no-show rates

  • When your cancellations occur

  • How you compare with similar properties in the area

Once you’re aware of your property’s cancellation patterns, you can take the right steps to prevent cancellations, reduce their impact, and secure revenue. You’re always in control of choosing the rates, prices, policies, and other preventative features that best suit your business. That way you can manage cancellations without being too restrictive and losing out on bookings.

Top tips for preventing cancellations:

Manage your cancellation policies

We give you the flexibility to specify whether you offer free cancellation, what time frame applies, and the charges if guests don’t show up.

Pro tip: When revising your cancellation policies, target specific booking windows or time periods that have high cancellation rates. You can find this info in your “Cancellation characteristics” report.

 


Consider offering non-refundable rates

To appeal to more guests, you could offer both non-refundable and flexible rates. Guests who make non-refundable reservations are generally more committed to their stays because they'll have to pay if they cancel, make changes, or no-show.

Non-refundable rates are very attractive to bookers and can increase your visibility on search engines. On average, we see adding a non-refundable rate plan can help reduce cancellations by at least 9% – and increase bookings by at least 5%.

Non-refundable rates are generally cheaper than rates that allow free cancellation, but you’re likely to make up the small price difference by getting more guaranteed bookings and higher overall revenue.

Pro tip: If reservations booked far ahead are getting canceled most, try displaying discounted non-refundable rates for these specific booking windows to secure early-bird bookings.

To protect yourself from guests who make non-refundable reservations with invalid credit cards, combine your non-refundable rates with prepayment or pre-authorization policies. Also consider offering guests the option to pay online when they book.

Note: Only offering non-refundable rates can result in fewer overall bookings.

 


Accept multiple payment methods

If it’s available on the Extranet, you can sign up for Online Payments and let guests use alternative payment methods like PayPal. This will help you reach more bookers, reduce cancellations, and save time on admin tasks.

Pro tip: When guests pay for their reservations using alternative payment methods, they’re 4 times less likely to cancel or no-show.

Alternative payment methods are also useful if a guest’s credit card details turn out to be invalid. Offering them another payment option gives you a chance to guarantee their booking – and secure revenue.

 


Validate guest payment in advance

Between the time of booking and arrival, you can choose to pre-authorize guests’ credit cards (i.e. hold a small amount on their cards). This lets you confirm that the details are correct and the card isn’t lost or stolen, and also helps you avoid unchargeable cancellations.

Another way to reduce the risk of no-shows is to set up a prepayment requirement and charge guests in advance, either in full or partially. Just keep in mind that only allowing pre-payment can result in fewer overall bookings, since some guests want more flexibility when it comes to payment (e.g. paying in cash on arrival).

Pro tip: Partners who pre-authorize cards typically hold an amount between 0.01% of the total cost and the cost of the first night. If the card is reported as invalid by the bank, follow the invalid credit card process to request new details from the guest.

 


Validate guest payment: Mark invalid credit cards

To save your time, we started checking a certain percentage of bookings and marking invalid credit cards on your behalf. These will be tagged as “Reported by Booking.com” on the Extranet.

For all other bookings, you can verify the card by pre-authorizing a small amount or charging a prepayment. If it’s reported as invalid, mark the credit card as invalid on the Extranet. Once you do, we’ll let the guest know their card was declined and ask them to provide a new one within 24 hours.

Pro tip: Try not to assume the worst if a card is declined. There may be a logical or innocent reason such as international transaction restrictions. Reach out to guests to find a solution.

 


Manage your restrictions

Depending on your property’s cancellation patterns, you may want to use restrictions to prevent certain kinds of bookings and lost revenue.

For example, you might want to avoid getting bookings too far in advance, since those guests’ plans are more likely to change and result in cancellations. Setting a “maximum advance reservation” restriction can help you prevent this.

Or you might want to limit how much availability a single reservation can take up. Setting a “maximum length of stay” restriction will prevent guests from booking more days than you want them to.

In general, we recommend offering as much availability as possible, since setting restrictions may affect your visibility in potential guests’ search results.

Pro tip: Restrictions can work well in combination. For example, to prevent longer stays booked far ahead, set both a “maximum length of stay” and a “maximum advance reservation” restriction. Or you could consider taking partial payments or having less flexible cancellation policies (non-refundable) for these bookings.

Note: We don’t recommend these restrictions for seasonal properties.

 


Offer compelling prices

Guests might cancel if they find a comparable room for a better price at a different property or the same room for a cheaper price on a different website.

In fact, unattractive prices can increase cancellations by up to 30% and potentially lead to decreased visibility on our site.

The Extranet’s Price Quality Score helps you keep track of how your prices are displayed across other online channels, and indicates how compelling they are.

Pro tip: Having a structured rate plan can help you fill rooms at the last minute and optimize revenue. Review your rate plans and learn more about making rate types work for you.

 


Reply quickly to guests

Our research shows that guests are less likely to cancel if they receive quick replies to their questions. You can reassure guests and reduce your own admin time by using our smart messaging tools, such as customized templates, scheduled messages, and automatic replies.

Pro tip:When guests contact you, it’s generally with good intentions. You can set up messaging preferences to give them the info they need without increasing your own workload. You can also communicate with guests while you’re on the go by downloading Pulse, our property management app.

Tools that help you reduce the impact of cancellations
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Cancellations

Discover additional solutions that can help your business

Once you identify your property’s cancellation patterns and take proactive steps, you’ll be well on your way to improving your performance.

If you want to further reduce the impact of cancellations on your business, we offer a range of optional features that may suit your property.

Check the Extranet to see which of these solutions are available to you:

Reduce manual tasks around cancellations

Did you know that a quarter of all cancellations occur within 24 hours of a booking being made? By setting a grace period and waiving cancellation fees for guests who cancel 1, 4, or 24 hours after booking, you can reduce no-shows by 20%. This will significantly reduce the manual work involved in managing cancellations and reselling rooms, and help you secure revenue as quickly as possible.

 


Prevent bookings from guests likely to cancel

 

To avoid bookings from guests with existing reservations for the same check-in/out dates at other properties, you can display less flexible cancellation policies to these guests (excluding groups).

Pro tip: This feature works best when you offer a non-refundable rate. 

Note: This option can reduce overall bookings, which may impact smaller properties in particular.

 

 


Ask for a replacement guest

When receiving a cancellation, you can save time reselling the room and instead let us find you a replacement guest.

We’ll hold on to the canceled room/unit for up to 24 hours and market it to guests searching for a place to stay on the same date(s) and/or overlapping date(s).

Check the Extranet’s Opportunity Center to see if your property is eligible.

 


Take the cancellation risk out of certain reservations

To help you offer more flexible rates without the added risk of losing revenue, we developed the Risk-Free Reservations program.

The program lets you upgrade your semi-flexible or non-refundable policies to fully flexible ones, so you can appeal to more potential guests and get more bookings.

If you receive a cancellation on the upgraded policy, we’ll try to resell the room/unit. If we can't find you a new guest, we’ll pay you the full amount you had set for the original room night(s).

Either way, you’re guaranteed a payout without having to take on any extra work

 


Tools that help you attract new guests after last-minute cancellations

If you’re receiving last-minute cancellations, don’t worry. There are always other guests looking to book closer to arrival. By optimizing your pricing, availability, visibility, and conversion, you can gradually boost your last-minute bookings over time.

Here are the tools and products you can use to attract last-minute bookers:

Appeal to last-minute mobile bookers

A majority of bookings on our platform are made on mobile devices. You can stand out to mobile bookers with a special mobile-rate discount and increase bookings from mobile devices by up to 26%.

Plus, you can make the booking process quicker and easier if you allow last-minute mobile bookers to book without a credit card or omit address details.

Pro tip: Consider offering a mobile-rate discount of 10% or more.

Note: Removing address requirements will apply to all bookings, and removing credit card requirements may increase no-shows.

 


Make sure you’re visible in searches

To improve your visibility in last-minute bookers’ search results, make sure your “minimum length of stay” restrictions aren’t too strict. You can apply restrictions to individual rooms, dates, and rate plans.

Pro-tip: Combine your restrictions with rates and policies to manage your risk and boost your appeal to last-minute bookers.

 


Welcome Genius guests

You can increase your last-minute conversion by signing up for our Genius program. On average, Genius properties get 18% more bookings, 17% extra revenue, and fewer cancellations. If eligible, your property will rank higher in search results and attract high-value Genius guests who spend more per night and book more frequently.

 


No credit card for local bookers

If allowing all guests to skip address or credit card details seems like a big step, you could start small and only apply this to domestic bookers. You can actually increase your stayed bookings by up to 5% by making it quick and easy for local guests to book while they’re logged in to their Booking.com accounts.

To avoid misuse, this option doesn’t appear for local guests if they have an upcoming reservation with Booking.com for the same check-in/out date(s).

 


Create a deal or promotion

If you offer discounted rates and secret deals, you’ll be more visible in Booking.com search results, appeal to guests booking closer to arrival, and be able to fill empty rooms faster.

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Cancelamentos
3 common cancellation scenarios and ways to handle them

 

Scenario 1: A guest didn’t show up and you can’t charge for the booking

Suggestions:

  • Verify guests’ credit card details when you initially receive bookings, and consider pre-authorizing a small amount or requesting a prepayment in advance.

  • Review your booking window for these cancellations. If a lot of these bookings are made far ahead, consider offering early bookers a non-refundable rate to increase your occupancy and secure revenue.

  • If your property is eligible, you could sign up for Risk-Free Reservations. That way you can offer more flexible rates and guarantee revenue even if guests cancel.

 

Scenario 2: You get a last-minute cancellation

Suggestions:

  • If there’s time, adjust your availability and try to resell the room/unit.

  • If your property is eligible, sign up for Risk-Free Reservations. That way you can offer more flexible rates and guarantee revenue even if guests cancel.

  • Review your restrictions (and relax them if necessary) to make sure you’re visible to as many potential guests as possible.

  • Make it easier for last-minute mobile bookers to make a reservation.

 

Scenario 3: You have a higher cancellation rate than similar properties in your area

Suggestions:

  • Try to offer a mix of rates and policies that appeal to all kinds of guests, from non-refundable rates for early bookers to flexible cancellation for those booking in medium to long booking windows.

  • Make sure your availability, rates, and restrictions are maximizing your visibility to guests for all booking windows, long and short.

  • Offer guests multiple payment options to increase your chances of bookings and securing revenue.

  • Verify guests’ credit card details when you initially receive bookings, and consider pre-authorizing a small amount or requesting a prepayment in advance.

  • Check your “Cancellation characteristics” report regularly to track the impact of specific actions you’re taking to reduce cancellations.

Disclaimer: The material included in this guide is for general information purposes and not intended to represent commercial advice. It doesn't take your specific needs, objectives, or situation into consideration. Not all products/solutions are available or applicable to all partners and markets.

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