The latest rage in the Hotel business is to offer PrePaid, non-cancelable and non-changeable reservations. Though it requires a hotel or motel to reduce rates even lower than their previous lowest "Best" rate, many hoteliers are more than glad to make this deal. Here is why.
Hotels usually have an internet price or a 'Best Rate' which is somewhere around 10% off the regular posted rate. With a public that has refused to book any advance reservations in this economic downturn unless they see a 'great' deal, hotels started offering multi night purchases at usually 15% off. Now, they even offer a 20% off advance rate (usually 14 days in advance required) but with the caution that this reservation is neither changeable nor cancelable. I can tell you that people are lapping it up - instead of getting a couple per week, we are getting several a DAY sometimes. Seems like a fair deal for all - with an added 5% discount, the hotel gets to charge your credit card immediately and not only use your money for whatever duration until arrival but it lessens the odds of people not showing up or canceling.
But that is not what is happening. Even though it is clearly stated that this is a non changeable reservation, people seem to think if weather makes it impossible to travel, hotels will relent and allow them to cancel, even on the night of arrival. Or they call up to change the dates 2 months in advance. They are furious when told they can't change the date even by one day. I know - I've gotten a couple of those calls.
Here is what people need to realize. In an ordinary hotel with a rack (published) rate of say $85, you can almost always book a room at $76.50 and change the date or cancel it within the allowed cancel period. If you are staying 2 or more nights on the 15% off,14 day advance booking rate, the room rate would be $72.25 per night. With the 20% non cancelable rate, it comes down to $68.00.
Many see the $68 rate and ASSUME nothing will change their plans, so they plow ahead and book at the lowest rate they can find. Some aren't reading the disclaimers and are not even aware the reservation is non cancelable. Shock turns to anger when they call up the day before and say they aren't coming and they find out they can't cancel ANY of the nights.
I'm guessing most people are about to say "that is unfair", that the hotel may not be able to cxl the first night, but why keep all the money for subsequent nights? And the hotels respond, what is unclear about NO CANCEL-NO CHANGES ALLOWED? What is the point of having a no cancel policy if the hotel was then going to allow cancelations? The whole basis for granting a $17 discount is that the hotel will pretty much be assured this reservation will show up AND they got paid at time of booking instead of time of check out.
People need to think clearly about the risks involved. Is it worth risking $136 or more to save $8.50? Do you really want to 'assume' nothing will prevent you from traveling on ANY future date? Is it sensible to buy non-refundable tickets when flying in winter?
Since our hotel started offering these types of reservations, I have seen more no-shows than ever before and I have been at my hotel for 6 years now. Where we used to get no more than 1 no show per week, here is the count for the first week in March - 5 no shows in the first 6 nights. In February, we had 9 and in January we had 11. While not all were pre-paids, some were. The moral here is not that hotels need to stop offering non cancelable reservations but for people to be completely aware of what they are booking and live (or die) with the results.
Hotels (and clerks) are happy when guests arrive and enjoy their stay. They do not WANT people to be no-shows and keep their money, that is not good press for them. But the public has to be ready to step up and take responsibility when life happens and not blame the airlines or hotels for no show charges when they are late to arrive at airports or never arrive at a hotel. It is common sense.
You describe prepaid, non-cancelable and non-changeable reservations as "the latest rage" and you are right in more ways than one. As you say, hotel chains love having the money up front and seem happy to divorce the idea of taking their customers' money from having to actually providing anything in return.
Customers can experience a much different type of rage when they find they cannot get a refund days or weeks in advance and will be paying for a room they will not be using.
This happened to me this month when I was still not aware of this latest money-making scheme on the part of hotels. Because hotels have always allowed reservations to be changed or canceled, I am in the habit of scheduling my lodging early to make sure it is available. I did not see the small print and made one of these "reservations" and then, weeks before the date, had to deal with the frustration of being told I paid for a room I would never use. This is with one of the largest hotel chains in the USA (let's call them Band of Thieves Inc.) and the experience was so unpleasant I will never stay in any of their lodging again.
Your advice "Let the Buyer Beware" is important. It is clear from the statistics you give on increasing numbers of No Shows this year that the online booking system needs to change. If No Shows are increasing as prepaid, non-cancelable and non-changeable reservations are the latest rage, there may be a causal link that ends up alienating customers. The difference between giving a hotel a credit car number to hold a reservation and having your credit card billed immediately should be made clear with a warning screen that asks if you REALLY want to do it, but hotel chains and reservation services think that the small print will suffice on prepaid, non-cancelable and non-changeable reservations.
Hotels are falling for the same fast-buck short-term thinking that got Wall Street and banks where they are today. They are seeing their business in terms of transactions and money instead of satisfied customers. I, a once-loyal customer, am so enraged that I will never do business with "Band of Thieves Inc." again. They took my money and provided nothing but grief in return.
Posted by: Frank Pozo | April 11, 2009 at 03:51 AM