How to respond to last-minute cancellations

by Ed Watkins, Contributing Editor | June 28, 2016

The worst call a revenue strategist can get comes from a GM or director of sales: “That large group we booked for next weekend has cancelled. You need to fill 250 room nights—now.”

While that scenario might seem rare or extreme, from time to time DORMs need to face the reality of expected business evaporating and the mandate to fill the void, hopefully with business that comes at a low cost of acquisition. Depending on the size of your hotel, it could be a 100-person corporate group that cancels at the last minute, or a 25-room-night kids soccer team that didn’t make the tournament after all. It’s not the size of the loss that matters, it’s how it affects your property’s ability to reach occupancy, RevPAR and profitability goals.

While expletives might fly following such a call, it’s no time to panic. Smart DORMs take a deep breath and apply the same principles of channel management and rate strategies they would use to fill any hole in their occupancy forecasts. It’s time to rely on internal and external data, analyze all aspects of the situation and then create a rational, non-panicked plan.

Of course, the urgency of the situation demands DORMs move swiftly to restore equilibrium. Here, with the help of Duetto professionals Vince Cusma and Chris Knothe, are some thoughts on how to approach the dreaded last-minute-cancellation scenario:

Hotel Cancellation Tips

  • Work close with your sales teams to brainstorm possible replacement business. If the cancellation comes 36 hours before expected arrivals, there is little the sales machine can do. If it’s a week in advance, however, sometimes you can make up the business, especially if it’s during a period of compressed occupancy in the market.
  • Like most industries, the hotel business is relationship driven, and the power of solid relationships is never more important than in a crisis situation. If you’ve been fair and responsive to those people and companies that drive business to your hotel on a daily basis, they will be glad to do what they can to produce for you. Not so much if you haven’t forged those solid relationships.
  • Online travel agencies can be your friends in this time of need, but they must be leveraged efficiently and wisely. Simply dumping all your available room nights into OTA inventories is lazy. Call your market managers, and if you have had fair dealings with them in the past (see above) they will be able to quickly and efficiently put together and market package programs aimed at potential pools of business. Their reach often can extend across the globe and within a variety of consumer cohorts. The cost to acquire this business might be higher than normal, but it can be worth it.
  • You can leverage through your own channels whatever deals you create for the OTAs. Strong relationships with your loyal customers can pay off for you and them in this kind of situation. A potential problem can be offering deals to customers who would be coming to your hotel anyway, but in times of stress, it might be a chance worth taking.
  • Don’t be shy to work with last-minute booking sites as needed. These customers tend to be one-timers, so offering cut-rate prices through opaque or nearly opaque sites shouldn’t hurt you in the long run.
  • Think old school: Turn to wholesalers and traditional travel agents to push special rates and packages. Here is another area in which solid relationships will help you gain traction.

[bctt tweet="A good #hotel #RevenueStrategy includes boosting business after a last-minute cancellation"]

Funnel Your Business to a Friend

While some cancellations come out of the blue and only affect your hotel, other business downturns can affect whole markets. Sometimes the forces are political and cultural. In the 1990s, the Arizona hotel market suffered from a boycott by many groups and organizations who were protesting the state’s reluctance to adopt Martin Luther King Day as a holiday.

Today, the same kinds of boycotts are in effect in North Carolina, Mississippi and several other states. This time the issue is LGBT rights.

In these cases, sales teams and DORMs can perhaps funnel business they might lose to other properties in other states under the same ownership or brand banner.

It’s possible you will go into the office tomorrow and receive the dreaded cancellation phone call. While it might be a shock, it’s not necessarily the end of the world, if you’re able to nimbly reassess your strategies and rely on long-nurtured relationships.


Ed Watkins, Contributing Editor

Ed has been covering the hotel industry for more than 40 years. He was editor-in-chief of Lodging Hospitality from 1980 to 2012. He then joined Hotel News Now as an Editor at Large, until his retirement at the end of 2014. Ed still contributes to several publications and is a member of the advisory boards for the hotels schools at Michigan State and Penn State.

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