Your guest keeps checking the price after she books. She cancels while it's still free.
Four in ten travelers keep watching the price of a room they've already booked. Two million real bookings show what they do when a hotel nearby gets cheaper, and why the cancellation costs you more than it costs the OTA.
by Markus Busch
The confirmation email goes out. The room is blocked. For a lot of guests, the shopping carries on.
A survey of 1,015 US travelers, published this month by Skift Research and McKinsey, found that 41% keep checking the price of a booking they've already made. Marriott's chief information officer, Naveen Manga, told the researchers why. Guests can cancel up to a certain date, so they keep looking. "As an industry, we allowed that," he said.
That's what travelers say they do. What they actually do shows up somewhere else.
What happens when the price drops. Four researchers, publishing in Tourism Management in June, took more than two million real bookings from 327 hotels on Mallorca, stays from 2021 to 2024, pulled from a channel manager. Across the data, 22% of bookings were cancelled.
Then they checked what a guest would pay to rebook the same kind of hotel, in the same area, for the same nights. When that price fell, cancellations rose. Ten euros cheaper down the street made a cancellation 4.7% more likely. Some guests book a flexible rate, keep an eye on the market, and cancel when something similar gets cheaper.
The window is the door. The more days a booking can be cancelled for free, the more likely it is to be cancelled. Non-refundable bookings were 82% less likely to cancel than fully refundable ones.
The surprise sits in between. Partially refundable rates, the ones with a small penalty, were cancelled 3.7 times as often as fully refundable ones. The authors read the small fee as cheap insurance. Some guests book on speculation and pay the penalty when a better deal turns up.
Who pays for the switch. Compared with bookings from bedbanks, OTA bookings were 72% more likely to be cancelled. Direct bookings were 42% less likely.
The authors spell out what that means for each side. The cancellation hits the hotel directly. The channel can "simply shift a booking from one hotel to another," they write. If the guest rebooks through the same OTA, the OTA keeps her. You keep the empty room, with less time left to sell it.
The study covers one island and mostly three- and four-star leisure hotels. A city hotel full of business travelers may see different numbers. The pattern is still the one to look for in your own data.
The Monday check. Pull your cancellation rate by channel and by rate plan. Check how many days each OTA rate plan lets a guest cancel for free, and when you last changed that number. Then look hard at any partially refundable rate. In the study, it was the policy that cancelled most.
Read also: The real cost of an OTA booking isn't the commission — it's the guest
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