A new hotel scheme for gouging the customer
I’m interrupting my previously scheduled column to tell you about a hotel policy that really makes me mad. I don’t know how long hotels have been doing this or who thought it up, but I think it’s fairly new and probably the work of some greedy corporate vice president.
A few weeks ago, my friend Mary Ann made a reservation through the Holiday Inn Express Web site for a room at the Holiday Inn Express in her hometown. She was having some company and was afraid she might not have room for everyone at her house. After one of her visitors canceled his trip, she knew she could accommodate all the guests, so she called the hotel to cancel the reservation. Too bad, she was told. You booked a special rate online, and you can’t cancel or change your reservation. Never mind that you called well in advance of the arrival date. You’re going to be charged room and tax for all six nights of your reservation, to the tune of about $750.
After letting a few choice expletives fly, Mary Ann called me to see if anything could be done about the situation. At first, I didn’t have much sympathy for her. I knew that despite her protestations to the contrary, there were probably several warnings about the cancellation policy on the Web site. And I was right. I checked the site, and there are notices about the policy, and they’re fairly obvious, though they are full of industry jargon. Still, fail to read the fine print, and you have only yourself to blame!
I discouraged Mary Ann from disputing the charge through her credit card company, because she was clearly in the wrong. Instead, I suggested that she speak to the hotel’s manager in person, admitting her mistake and begging for mercy. Maybe he would agree to some sort of compromise, perhaps charging her for only one night. Alternatively, I suggested she go ahead and check into the room even though she wouldn’t be using it. At least that way, the hotel couldn’t resell the room and make a double profit and she’d gain some small satisfaction from “sticking it to the man.” Otherwise, I was afraid she was out of luck.
But the more I thought about it, the more I sympathized with Mary Ann. Anyone could have made her mistake and, besides, the policy is simply outrageous.
The first time I noticed a “no cancellation” policy like this was back in April, when I was booking a room online at a Doubletree hotel. I was cruising through the booking on Doubletree’s Web site when I noticed this:
FULL PAYMENT REQUIRED AT TIME OF RESERVATION. CREDIT CARD
REQUIRED AT TIME OF BOOKING AND WILL BE CHARGED IMMEDIATELY FOR THE FULL AMOUNT OF THE STAY AS RESERVED. NO REFUNDS OR CREDITS FOR EARLY DEPARTURE, CANCELLATION OR NO SHOW. NO MODIFICATION ALLOWED ONCE RESERVATION IS CONFIRMED. GUEST MUST CHECK IN ON ARRIVAL DATE OR RESERVATION WILL BE CANCELED AND FULL PAYMENT FORFEITED.
They were going to charge everything upfront - no problem, this policy has been around for a while, and I can deal with it. No refunds or credits for early departure - again, this is a pretty standard policy, though many hotel managers will waive it under certain circumstances. But no refund for a cancellation? Hold up!
In the event of a cancellation, most hotels charge only for the first night’s room plus tax — and only when the reservation is canceled on late notice. Faced with the Doubletree policy, I figured: Well, if I needed to cancel and didn’t want to lose my money, I could just change my reservation dates to another time, or let a friend check in, right? Nope, this ironclad contract did not allow me to modify the reservation in any way. I went ahead and booked the room, however, because I had to be in that town for an appointment that had been planned for ages and could not be rescheduled, and I had to be there even if I was at death’s door. And guess what? At the last minute, something almost forced a cancellation, and I almost lost my money.
When I nearly got stung by this policy, it irked me a little, but I didn’t give it much thought. When Mary Ann got burned to the tune of hundreds of dollars, I gave it some more thought. I think this policy stinks, and here’s why:
* I’ve booked hotel rooms online for ages, and I’ve only noticed this policy in the past year, so I think it’s fairly new. If a company makes major changes to the way it does business, it had better let its customers know about the change as quickly and as clearly as possible. In my opinion, hotels need to post any no-cancellation policy in huge print in a prominent position on their reservations pages. The Doubletree site does a good job of this. The Holiday Inn Express site does highlight some of its cancellation policy with red font, but many people would need a magnifying glass to read that font. Holiday Inn Express even has the nerve to begin its “Rate Description” section with the phrase “Special Savings!” It should read “Buyer Beware!” And almost all of the hotels’ rates policies that I checked use industry jargon that many people might not understand.
* The no-cancellation policy is not applied across the board. As far as I can tell, it applies only to certain bookings on the hotels’ Web sites. If Mary Ann had called the hotel directly or gone down there to book in person, she would not have been charged for her cancellation; similarly, when I called the toll-free reservations number for a hotel company that applies this policy to online bookings, the operator mentioned only the standard 48-hour cancellation policy. If hotels choose to penalize online bookers, fine. But they need to clearly state on their Web sites that booking in other ways will allow guests to cancel their reservations under certain conditions. Also, if you look closely online, you will often find rates that are only slightly higher that do allow guests to cancel. Again, this should be more clearly explained. I shouldn’t have to hunt around for a link to get an explanation of the rate structures.
* It’s not necessary. Don’t get me wrong - I think cancellation policies are valid. If a hotel is sold out one night, and it turns down guests because it’s sold out, and then people don’t call to cancel their reservations, the hotel has lost business. The hotel shouldn’t have to lose the revenue of unsold rooms just because lazy people can’t be bothered to pick up a phone and cancel a reservation. But in theory, the hotel should invoke the cancellation policy only when it can’t resell the room. If a guest cancels a reservation weeks, or even days, before the arrival date, the hotel has plenty of time to resell. Even if a guest cancels late, he should be charged only for the first night since the hotel has time to sell the room for the remaining nights of the stay. Only in rare circumstances, such as during huge events, should hotels keep all the money for a canceled reservation.
So now when you book a room through a hotel’s Web site, you’ve got to make sure that the cheap rates don’t come with restrictions that you might not be able to accept. You’ve got read the fine print every time you book, because hotels are making secretive changes that they don’t want you to know about.
Does any of this story sound familiar to you? Does it sound like booking an airline flight, by any chance? Yes, it seems that hotels have now decided to charge rates and make policies just like the airlines do. Well guess what, hotels? People hate airlines. If you want to emulate a business model, how about one that makes lots of money by providing a great service and a great product, not one that makes money by screwing people over. Next thing we know, hotel chains will make us commit to staying at their hotels exclusively for two years. If we decide to go somewhere else, they’ll charge us a $200 “early termination fee.”
But here’s the worst part, in my opinion, fellow travelers: We have let the travel industry do this to us. Every time we go searching for the absolute rock-bottom rate, we will get what we pay for. Every time we forget to cancel a reservation and then swear to our credit-card company that we did cancel it and the hotel is lying, the hotels will find even more ways to protect themselves. Just as businesses must be responsible and ethical, so must consumers.
The next time you book online, please read the fine print, even if you have to go searching for it. Question everything, and then decide whether the risk of highly restricted hotel rates is worth the reward of saving a few bucks.
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13 Responses to “A new hotel scheme for gouging the customer”
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Amy, you must be living in a hole. Hotels have had noncancellable rates for years and years. Just like the airlines have had.
My experience is they are generally deeply discounted bulk/net rates available through travel agents or wholesalers OR special internet rates. I have seen, and booked, them often and every time the hotel has been clear and definitive that the rate is fixed and noncancellable.
The problem is not the rates, it is that people are greedy: they want the lowest rates but are not willing to accept the associated terms. Thus they whine.
Sorry to disagree with you Amy, but hotels have had this practice for several years now.
To advocate that one should read the fine print when booking a room online just because of this policy…….well, people should read the fine print anytime they do anything online. If they don’t want to be bothered with it, then they should book through a travel agent, and make plain that they want a room that is changeable and cancelable. As with any purchase, cheapest is not always the best, or the best value, and you do have to do your research to find the best fit for you and your situation.
I have to agree with the other two…I have been traveling for years, and always seen these rates; most websites call them out immediately as a “special rate” which is always lower than the rest. This is not just an issue with US based hotels, it happens all over the world. These “non-refundable” rates are made pretty much for leisure travelers that have a set vacation, and not for the business travelers that needed flexibility. If your friend had any remote chance that somebody would cancel, she should have booked the fully refundable rate.
I have noticed this when I book and am willing to pay the higher rate that allows me to change, cancel, modify.
BUT has anyone had this rate, (no cancellation no modify) and been told there is not a room available? And been walked to another hotel??
This same thing happened with me with a Hilton 3 years ago. I thought I received a lower rate because I logged on using Hilton Rewards Number. However when I wanted to change the date of a arrival & departure to a day later I was told I would forfiet that particular day and would pay full price for the last day. I talked to the manager of the hotel and got no where. We were staying with relatives whose house was going to eventually become full & some of us were going to be staying at the local hotels. The city was booked up for various events. In the end I showed up at the hotel on my original scheduled day which was prepaid. Guess what…my room was sold. The manager did make it right. I would like to point out this reservation was not a “deep” discount but only 7 or 8 dollars/night & attempted date changes were made 2 months in advance. Also I have not had this problem repeated when using my Hilton Honors card.
Amy -
Such rates have been available for at least 5 years. Travel Agents can access them through their various GDS just as anyone can access them on-line. In the GDS at least they’re pretty clear as to the rules - basically, you are getting a lower rate for paying up front and accepting the rather stringent cancellation policy. This is nothing new.
What bothers me is that all of us in this industry should be, and should be reminding others, to read all disclaimers before purchasing anything on line - this is no new issue and it has been, and will always be “caveat emptor”!
Amy -
Such rates have been available for at least 5 years. Travel Agents can access them through their various GDS just as anyone can access them on-line. In the GDS at least they’re pretty clear as to the rules - basically, you are getting a lower rate for paying up front and accepting the rather stringent cancellation policy. This is nothing new.
What bothers me is that all of us in this industry should be, and should be reminding others, to read all disclaimers before purchasing anything on line - this is no new issue and it has been, and will always be “caveat emptor”!
Holiday Inn makes it very clear on their website that the cheapest online rate shown is non-refundable. Booking with Expedia and some other mass online bookers usually specifies a non-refundable fee of at least $25. I have booked the slightly higher rates directly on the hotel websites to give myself maximum flexability…sometimes can cancel right up to 6pm the day of arrival without fee. Any online booker should also become a member of the hotel “loyality” programs, and look for any discount rates including weekends, senior, government, corporate, or airline/affiliate as offered depending on employment and memberships. During busy trade show/convention periods, I have found Hilton, Doubletree, and Sheraton to be very hardline about the rules and possibly waiving any fees for changes.
I agree with most of the other posters — these rates, especially at Holiday Inns — have been around for years. I was managing a Holiday Inn in 2002 when this was first announced to us. The program allows those who wish to get the lowest rates to provide some sort of “concessions” as well. The premise, as it was explained to us back then, was that deeply discounted rates (and I’ve noticed that some are not that deeply discounted) should have more restrictions and conditions than higher rates. When we implemented the program, our non-refundable rates were suggested to be 10% to 20% lower than the best flexible rate. Then, another tier of rates was created (simply called “discounted” rates) that had a $25 cancellation/change fee. The rates weren’t as cheap, but there was more flexibility built-in.
I no longer work in the industry, but now travel quite a bit — and I ALWAYS steer clear of the “discount” rates. The savings are not worth the headache in the end.
Quite often you’ll see the prepaid, no refund of cancel - at high rates (not discounted) at properties that are in certain areas (think Vail, CO, in the winter) or a city that a convention is taking over the entire town (such as Amsterdam when IBC is there in September).
I nearly got caught up in the above situations where I was booking online & expected the normal cancel 24hrs (or 48 or 2weeks), and was stunned to read that the second I booked (again, NOT at a deeply discounted rate, but instead a highly-inflated rate) it was prepaid, non-refundable even w/ advance notice of cancellation. I don’t know too many corporations that will allow their employees to prepay, non-refund 9 monhts in advance (when I booked Ams). Luckily in my case I checked the rate rules before clicking enter & learned a lesson about not assuming the regular cancels apply. In those instances I took my business to properties who did not have such draconian policies.
I think most hotel corps do actually post non-refundable, special net rates, non-refundable & make it clear. But it does behoove the consumer to read all the fine print, even if it’s small.
I”ve seen these rates quoted on major hotel websites, and they quite clearly state that they are non refundable. I opt for the higher yet refundable price. It was pretty clear to me, as it also stated it was prepaid.
My basic rule is never book a nonrefundable rate unless you are 99% sure you will be there for the stay.
A startegy I have used often with success is to book a rate that allows cancellation up to day of arrival. A few hours before arriving at the hotel I change my reservation to a lower-priced nonrefundable and cancel the higher rate.
Tips: Never book a nonrefundable rate for a hotel that is dependent on air travel. For example, if I am taking a trip to Paris and the nonrefundable rate is $50/night less, then I book either a rate that can be cancelled for the first night. It only took a couple of missed connections and the loss of a feww hundred dollars for hotels to develop this policy.
On a 5-night trip to Paris I would book nights at a nonrefundable rate for nights 2-5. But I never book a hotel rate that will forfeit the entire stay amount.
A couple of months ago I looked at the InterContinental Goa and a 5-night stay was about $1,100 booked online and the entire rate was nonrefundable if cancelled. The irony is this same hotel could be booked for 5-nights for 25,000 Priority Club points using PointBreaks special hotel award and the room could be cancelled up to 24 hours with the loss of only 5,000 points ($50 to buy).
Read the options and know the fine print.
Loyalty Traveler
http://www.loyaltytraveler.blogspot.com
i was lucky, last year I forgot to cancel at the Hilton in Pittsburgh, 2 weeks later I called and asked for a refund, guess what?! My request was granted. I will read fine print in the future.