Did you know 6 in 10 travellers globally had a planned trip cancelled due to COVID-19*.
To say that the current climate of lockdowns and border closures poses challenges for everyone in the hospitality industry is an understatement. The constant uncertainty has resulted in a desire for flexible booking arrangements and an assurance that cancellations will not incur unnecessary costs.
A recent study by the Expedia Group saw the flexibility factor had the most dramatic rise in importance from 2020 to 2021. Nearly two-thirds (60%)* of travellers say they are unlikely to book a non-refundable room in exchange for a reduced rate. This is a near-complete shift from 2020 when two thirds (66%)* of travellers said they were likely to book a non-refundable room.
Before COVID-19, most operators required some form of payment, either total or partial payment in advance to confirm a booking. When COVID-19 struck, governments around the world restricted travel and imposed lockdowns, making it impossible for guests to stay at the properties they had booked. This resulted in requests for all refundable and non-refundable payments to be reimbursed. Some operators chose to stick to their non-refundable clause and subsequently, customers became disgruntled with many of them losing money. News outlets from around the world slammed online agents and hotel operators, customers grew wary and hence a shift in consumer behaviour started to occur.
Many of the larger global hotel companies have taken this on board and are offering fully flexible booking terms, along with the major OTA’s now prioritise properties that offer flexible booking conditions over ones that don’t. For properties to be able to compete for their fair share of bookings they will need to adapt to the current climate and take a more flexible approach.
How Has Consumer Behaviour Changed?
Over the last 12 months, consumer behaviour has changed considerably when it comes to booking travel. People now tend to travel locally and with a short lead-in time. Many consumers are leaving it much later to book accommodation and value ‘booking flexibility’ over the lowest price available. There is also a shift with guests more likely to book directly with the property.
What can we do now to help build consumer confidence?
Winning the trust of the potential guest is key. Make sure you are upfront and honest about your booking conditions. Advise guests through offline and online advertising that the property offers flexible cancellation policies that don’t require any prepayments. If guests cannot stay, and they advise the property with due notice because of restricted travel and imposed lockdowns, no payment or penalty should apply outside of 24 hours.
How can properties test if worry-free reservations will work for them?
Create additional rate plans that:
- Allow guests to make reservations without prepayment.
- Accept free cancellation up to the night prior to the arrival date.
What impact will worry-free reservations have on properties?
The days of full non-refundable advance payments are probably on hold for a while. Properties that continue to ask for them may have fewer reservations unless they are in a high demand area. Those that ask for refundable advance payments with time-bound cancellation clauses, will also have reduced reservations. Time-bound cancellations are usually imposed to avoid having empty rooms during periods of full occupancy. However, when occupancy is low, offering flexible booking with free cancellations could make the difference between winning the reservation or losing it altogether. This has become such an important point that even Google has introduced a filter to show the listing of only those hotels that offer free cancellation.
The accommodation industry is very different today than it was 12 months ago and until the world of travel changes once more, accommodation providers need to adapt their business model accordingly to ensure their ongoing profitability.
*Expedia Group Media Solutions – Traveller Sentiment & Influences 2020/2021