A percentage of no shows and cancellations are physiological in the daily operation of a hotel and must be taken into consideration in the planning phase by the manager of the accommodation facility.
However, care should be taken in the event that these indices begin to assume high or generally anomalous values, precisely because they can jeopardize significant slices of proceeds from the structure.
What is the no show and how to manage it in the hotel
No show conditions occur when a customer has booked a stay in a specific structure, but does not show up at the time of check-in, without having warned or modified his reservation.
In this case, the hotelier, based on the booking terms and conditions stipulated with the customer, can apply a penalty by credit card (the application and the manner of the penalty are obviously at the discretion of the hotel).
The cancellation rate varies by sales channel and rate
The cancellation percentage cannot be seen as a single number, but must be measured for each distribution channel used by the facility.
Some online portals push towards “more aggressive” sales strategies, for example through the sale of rooms with fully refundable rates, this strategy brings with it a significant increase in the cancellation rate.
This is not necessarily a problem, however, if the hotelier plans his work starting from the awareness of this data.
Knowing that a particular portal or agency has an X cancellation rate allows you to initiate compensation strategies, first of all controlled overbooking.
However in medium or small structures it is almost always difficult to compensate for cancellations on a given date and it is risky to work with constant overbooking.
So the first analysis that must be carried out is that which consists in measuring the cancellation percentages for each portal and for each tariff.
Based on these numbers, we can think of acting in different ways:
- sell fewer rooms (some rooms only) with a refundable rate;
- only sell rooms with refundable rates at certain times of the year; or
- never sell rooms without cancellation penalties.
No show and type of customers
Another aspect that significantly influences the cancellation business strategy is the type of clientele of the structure.
A hotel that mainly has customers who are families will hardly decide to offer refundable rates; for family hotels, a significant share of revenue comes from cancellation penalties.
The strategies described above can be carried out in a simple way only if the structure is equipped with a channel manager software evolved enough to allow you to distribute rooms and rates on each channel according to a set of rules that can be set and defined during the planning phase.
Managing the opening and closing operations manually would be too expensive in terms of cost and too risky from the point of view of any human errors.
How to reduce and limit “economic damage” for no shows
Compared to a cancellation, the no show is much more problematic because the non-arrival of the customer entails both economic damages that affect profit margins and unpleasant situations with the guest.
Some tips to reduce the no show can be:
- Define in a clear and evident way in the pages of the site and in your booking engine terms and conditions of reservations. Highly highlighting the cancellation policies with the possible application of penalties, the hotelier takes shelter from any complaints. For example, it is necessary to define how far in advance a customer can cancel the stay without applying penalties.
- To be provided and verify data and validity of the credit card as guarantee;
- Ask the customer for a deposit for the reservation made;
- Send the reminder emails to the guest a few days before check-in, through the management software, so as to remind them of the stay and offer them the purchase of additional services (cross-sell).
- Avoid selling rooms without cancellation penalties.
- In the high season, prefer the non-refundable rate. but most of all
- Use a channel manager who is able to distribute rooms and rates gradually on each channel.
