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Beware: 48-hour cancellation policies!

The latest hotel trend is not a good one.  Major chains such as Marriott (who now own Starwood) and Hilton are imposing 48-hour cancellation policies on customers.

It wasn't that long ago that 6pm day of arrival cancellation policies were the norm.  Then, about 3 or 4 years ago, all the major hotel chains started imposing 24-hour cancel policies. Travellers accepted that change in stride, as it didn't seem too unreasonable.  Roughly the same time, hotels also started putting similar restrictions on cancelling nights during your stay: eg. insisting you must give them 1 day's notice of a shortened stay once you have checked in.  Again, travellers mostly accepted these changes as reasonable.  (Obviously, a hotel can't sell a room that it has blocked for you; so the later you release the reservation the harder it will be to fill it again.)

The latest fad, however, has earned Marriott, and now Hilton, some push-back.  Marriott (including its newly purchased Starwood Hotels properties) and Hilton Hotels will be expecting customers to give them at least two day's notice of cancellation, or face, typically, a one-night penalty.  (The one-night cancel fee hasn't changed.)  In a recent survey, 59% of corporate travel agents and travel managers said they'd likely look for alternative hotels.  Whether or not there will actually be an impact on these chains is still unknown.  Large corporations and most travel agencies (ours included) have excellent corporate rates negotiated with the major chains.  It is hard to say whether there's an appetite to take on these two major hotel chains on this issue, and risk losing the deals.

Whenever consolidation happens in an industry, as it just did when Marriott bought Starwood, consumer advocates always warn that there will be a inevitable impact on consumers.  Clearly, this is just that.  Between these two major chains, they control a significant world-wide market share of hotel rooms.  It is by no means a monopoly, but there's no question Marriott and Hilton have a lot of leverage.

If there is a back-lash, look to see this benefiting independents and smaller chains.  That, of course, could have negative consequences as well.  With increased demand, prices go up.

As one article points out, there is a silver lining to the new two-day cancellation policy.  With more rooms freed up earlier, look to see the last-minute sell-off booking engines have more, cheaper product to sell to consumers.  As often is the case, the those who do not carefully plan ahead may be rewarded!




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