Pandemic notwithstanding, quarantine-fatigued Americans looking to hit the road with a minimal chance of getting stuck with hotel cancellation fees can party like it’s 2016, for now.
Hotel companies such as IHG Hotels & Resorts, Hilton and Hyatt Hotels Corp. — which all relaxed cancellation policies for most of their branded properties last year amid the COVID-19 outbreak after tightening them in 2017 and 2018 — are maintaining flexibility for guests in order to encourage reservations.
Marriott International this week extended its relaxed policies by another two months.
Marriott announced that for reservations made after July 5, 2020, for stays starting May 31, 2021, guests can cancel their reservations up to 24 hours prior to arrival date without being charged a fee. For stays starting June 2021, the cancellation policy will be dictated by the individual hotels. Marriott previously allowed its hotels to dictate their own cancellation policies for stays starting in April, but the company extended its 24-hour-advance, no-fee cancellation policy by another two months.
Marriott’s updated cancellation policy, which applies to reservations booked directly with the company, doesn’t apply to some luxury hotels, resorts, or for some group bookings.
“We made the initial changes to our cancellation policy to give guests increased flexibility and confidence when they booked stays given the uncertainty caused by COVID,” said Drew Pinto, Marriott’s global officer of distribution, revenue strategy, engagement centers and global sales. “Anecdotally, we heard appreciation for the change among our customers.”
IHG allows for full refunds 24 hours prior to stay on all prepaid, directly booked reservations and permits a no-deposit reservation for as few as three days prior to the stay for direct bookings. Hilton also allows for no-fee cancellations on directly booked stays up until 24 hours prior to future stays. Hyatt allows the same, though only for stays with arrival dates through July 31.
“Providing guests with flexible booking options and giving them the confidence they need has been our primary focus throughout the pandemic," said George Turner, IHG’s chief commercial and technology officer.
"In an effort to provide guests with greater travel flexibility moving forward, Hilton is ensuring bookings are flexible and cancellable with a few exceptions," added Hilton senior director of corporate affairs Megan Ryan.
The looser cancellation policies are part of U.S. hoteliers’ efforts to lure back travelers following a year with the worst occupancy levels on record for most hotels.
In 2020, U.S. revenue per available room plunged 47% from 2019 as occupancy fell 22 percentage points to 44%, and average room rates dropped 21% to $103 a night, according to STR. The drop in the largest 25 U.S. markets was even more pronounced last year, when RevPAR dropped 58% from a year earlier.
Still, February’s numbers showed a slight improvement, as U.S. RevPAR was down 45% from pre-pandemic year-over-year levels, and with COVID-19 numbers falling and vaccination numbers rising, hoteliers are counting on at least somewhat of a rebound during the spring and summer months.
“Leisure is the core of the travel industry for hotels,” said Bjorn Hanson, adjunct professor in the Jonathan M. Tisch Center of Hospitality at New York University. “More guests will be attentive to this than at any time since 2016, when cancellation policies started to become so much more rigorous.”
Hotel companies began tightening cancellation policies about five years ago as occupancy ramped up from the depths of the Great Recession and peer-to-peer lodging providers like Airbnb were increasing their share of the travel market. With U.S. hotel occupancy rates advancing from 61% in 2012 to 66% in 2017, Marriott that year became the first major hotelier to tighten its policies by requiring guests to give at least 48 hours notice instead of 24 hours at most hotels in order to avoid cancellation fees. Hilton and IHG followed suit shortly thereafter, while Hyatt did the same in early 2018.
With the pandemic spurring a rash in travel cancellations, however, hotels had little choice but to allow guests more leeway in order to fill largely empty hotels.
As a result of such precipitous demand drops, IHG last March waived all cancellation fees for reservations made through last April, then subsequently extended that waiver for stays through September 2020.
Hilton, which had initially relaxed its policy to allow for a 24-hour no-fee cancellation through last September, extended that policy indefinitely last October.
Meanwhile, Hyatt last June put its current policy allowing 24-hour no-fee cancellations through this July in place.
Neither IHG, Hilton nor Hyatt have indicated they will change their cancellation policies soon.
Hanson said these relaxed cancellation policies will likely be temporary.
“It’s not a permanent reset, in my expectation,” he said, adding that prior to the tightening of policies in 2017, New York City-area hotels had been grappling with cancellation and no-show rates of as much as 30%. “It became so critical to manage inventory. When occupancy starts to recover, there may be even higher levels of attrition, so the reason to have cancellation policies will return.”