Hotels cancel their old cancellation policies

by Christopher Elliott on April 16, 2013

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When heavy rain grounded Amy Li’s recent flight from San Francisco to Cancun, Mexico, she hoped that her resort would allow her to cancel her prepaid room. But it didn’t.

Instead, she received an apologetic e-mail from the Excellence Playa Mujeres, saying that while the hotel was “truly very sorry” about her canceled flight, it would be keeping her money. “They were unwilling to refund a penny,” says Li, who works for the city of San Francisco. “Not even in hotel credits.”

She and her husband lost $1,656, the entire cost of the hotel.

Li is one of many hotel guests who are discovering how restrictive hotel cancellation policies have become. She could have received a refund if she’d notified the Excellence Playa Mujeres a week in advance, according to the resort’s rules. After that, the all-inclusive property begins to charge her even if she doesn’t show up — an average two nights’ stay from the booked period if she canceled within five or six days prior to arrival, and the full amount if she canceled within four days.

“Hotel cancellation policies have been getting more strict than they used to be,” says Bjorn Hanson, a professor of hospitality and tourism management at New York University. The changes vary by market and hotel. At some properties, you can still cancel your room by 6 p.m. on the date of your arrival without getting charged, but in some parts of the country, the cancellation window is being pushed back to within 48 or 72 hours of your arrival, Hanson says.

And often, hotel companies bury their cancellation terms in the fine print. That’s what Dan Firth alleges happened when he recently reserved a room at a Super 8 property in Pittston, Pa., through its Web site. “My travel plans changed, and two days later, I called the hotel to cancel the reservation,” he says. Not possible, a Super 8 representative told him. His online reservation was nonrefundable, as disclosed on its site.

But Firth, who works for a jewelry company in Fairlawn, Ohio, says that he was “distinctly under the impression that I was making a reservation, not buying something.”

Hotels have assumed a hard line when enforcing their new policies. Taking a page from the airline industry’s post-9/11 “no waivers, no favors” playbook, some refuse to bend a rule even when a guest can’t make it for reasons beyond his control.

Joe Farrell, an attorney based in Los Angeles, recently planned a stay at the Villas of Grand Cypress, an Orlando golf resort, but was unable to get there because of a storm so severe that parts of central Florida were under a state of emergency. “I was not all that hot to trot for a refund,” he said. “A night at some point in the future would be fine — we’d be there.”

But the hotel denied his request, claiming that the storm was just a “bad rainstorm.” It kept his money.

You don’t have to be a lodging industry insider to know why cancellation policies exist. A hotel room, like an airline seat, is considered a “perishable” commodity, which means that if you don’t check in when you’re supposed to, the hotel doesn’t make money.

But historically, hotels have balanced their need to protect their revenue with guests’ circumstances, allowing them to cancel or postpone their stays when needed. The latest policies, which are being applied more uniformly, make some travelers wonder whether these hotels still think they’re in the hospitality business.

Owen Compher, an assistant admissions director for a college in Charleston, S.C., was shocked to discover the cancellation policy for the Autograph Collection hotel in the British Virgin Islands. Under the terms of his reservation, he’d lose everything if he canceled anytime within 30 days of check-in. Compher was surprised, because Marriott owns the upscale Autograph Collection as well as many budget brands that have neither resort fees nor onerous cancellation policies.

“Marriott’s lower-end brands usually let you cancel by 6 p.m. on the day of your arrival,” he says.

Marriott spokesman John Wolf said that franchise properties typically set their own cancellation fee policies, while hotels managed by Marriott allow guests to cancel before 6 p.m. the day of arrival. “Our resorts typically require more notice because of leisure booking patterns,” he says. In other words, at resort hotels, most reservations are made farther in advance, and a canceled room may not be resold.

As of now, no one’s actively tracking hotel cancellation policies or estimating how much the rule changes potentially cost guests. Rather, hotels are silently deleting their old policies from their Web sites and reloading new ones both online and into their reservations systems. And until guests challenge these rules, there’s no way to tell how strictly they’ll be enforced.

Guests do have options, ranging from the obvious to the ethically questionable. Elite-level membership in a hotel’s loyalty program can get the policy waived, although once you’ve factored in the cost of reaching elite status, it may not be worthwhile. A reliable travel insurance policy may protect you, too. You can also ask politely for a refund of your hotel charge, even when you’re not entitled to one. That’s been known to work.

There are two other ways around a cancellation fee. You can dispute the charge on your credit card, as long as you present adequate evidence that the policy wasn’t properly disclosed. Or you can try to reschedule your visit, moving it forward in time by a few days until you’re outside the cancellation window, and later calling to cancel. But to me, that’s as bad as pocketing a guest’s money even when another customer reserves the previously canceled room and the hotel loses no revenue. It’s morally problematic.

Unfortunately, a consumer advocate like me can’t successfully mediate a case such as Li’s or Farrell’s because, technically, the hotel is right. The rules are clear. In hindsight, there’s only one certain way to prevent losing your money: Read the restrictive cancellation policy before making the reservation, and then book somewhere else.

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  • Julie

    Why didn’t Amy Li catch the next flight out and only miss part of her vacation instead of all of it? Guessing if she lost all of the hotel they didn’t travel. Can’t imagine heavy rain would have grounded flights that long?

  • Michael

    I just did a quick check on the hotel’s site, and a stay from 4-26-13 to 4-28-13 for 2 people in 1 room runs from $1016 to $1348 (without getting into their “Excellence Club” category – that can take the same stay up to almost $2000). So, $1700 could be only a 2- or 3-night stay. Also, as I was picking the type of room, right under the total is a link for “Cancellation & Modification Policy” – it clearly stated by what dates I could cancel or change with no penalty, partial penalty, etc.

    On such a short stay, they might not have been able to be quickly rebooked in time to make the trip. If the Friday flight was cancelled and Saturday was sold out, then a 2-Night stay would have meant flying to Cancun on Sunday, the day you check out of the resort and fly back home.

    Sounds like a case when travel insurance might have been warranted.

  • bodega3

    What is missing from this article, but Chris mentioned on his website, is this was at Xmas time and the flights were so full they couldn’t get there for days.

  • DCTA

    I feel sad for Amy Li and her husband, but mostly I feel sad that they didn’t purchase (apparently didn’t) insurance for this vacation. When her flight was cancelled, she could have called the insurance and they would have done everything they could to get her out on a later flight – they don’t want to pay her for having to cancel (she would have got all her money back). AND if they couldn’t get her out, they would have payed out on the policy. What a shame – it’s such a small amount to protect a big amount!

  • vortix

    I booked a pre-paid reservation at a luxury all-inclusive resort in Punta Cana for my honeymoon. We left after 4 nights into our 8 night stay due to a major problem with roaches, lizards, and other critters that would frequently enter our room at night – the last straw was when a cockroach flew at my wife while we were laying in bed watching TV at night.

    The problem was the rooms at this hotel were built with no screens on doors/windows, and they had thatch roofs. They were not properly insulated to keep the creatures out at night. All rooms at the resort were designed the same way, and there was no way the hotel could provide us with alternative accommodations to avoid the problem, so we left early.

    I met with the on-site manager of the resort before we took off. Their procedure is to charge a 2-night penalty for early departure. When I got home, I went back and forth with them, and finally got them to agree to providing me with a refund for the 4 nights that we didn’t stay at the hotel. It wasn’t a fun/easy process, but they did finally come through.

    I personally will never risk a pre-paid reservation like this again in the future. And after reading this article, I certainly will never book a pre-paid reservation at an all-inclusive resort in the latin america/caribbean area.

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