Late cancellations must be seen as an opportunity, not a threat

It seems counterintuitive to say that making it easy for customers to cancel a booking (especially at very short notice), is smart business practice. It’s all about conversion, surely, not leaving the door open to back out? But a key aspect of the relaxation of restrictions, and an opening up of the holiday opportunity is a heightened awareness of consumers looking to balance their enthusiasm to get away with their anxiety about whether it’s safe to do so.

The public want vacations – that’s not in doubt. But with a wide variation in available holiday spend (as we’ll explore in another blog), the travel industry needs to do what it can to reassure customers that being bold and booking a break doesn’t need to come with the added danger of losing deposits if restrictions return, or anxiety heightens.

This need was demonstrated clearly in our latest research into consumer trends. When asked what would make them more or less likely to want to go on holiday this year, 57% of UK respondents cited late cancellation policies – a figure rising significantly across Europe: 70% in Germany; 68% in Spain; 67% in France; and 65% in Italy. This clearly demonstrates how a safety net that at first glance looks like a business detractor can in fact be a differentiator (indeed, one Tealium customer has shortened the notice period to just four hours, with great success).

An evident opportunity from the shortening of cancellation periods (on your terms), is that the customer has to liaise with you directly. The hotel website and 1:1 relationship with the holidaymaker underpins a flexibility to work around that customer’s expectations. This might not always be the case with an Online Travel Agent (OTA), where late cancellation policies can be farther in advance (compromising the word ‘late’) or may come with expensive cancellation fees. 

Customers want flexibility and confidence, so give it to them. The late cancellation needn’t be the end of the booking either – if anything, it should be seen as a platform to maintain a relationship with the customer. OTAs are unable to offer truly transferrable bookings or deposits – something which hotels can, provided they have the relationship with the customer direct. Again, our research indicated that the transference of bookings or deposits is a big pull; in France 57% of respondents stated they’d be more likely to book if they could use deposits for a re-booking through the same company. This dropped slightly to 53% in Germany, 50% each in Italy and the UK, and in Spain 46%.

The opportunity to retain custom from around half the holidaymaking audience is a commercial opportunity not to be missed. From a marketing perspective, this must be a big driver in targeting those you know still want to spend their hard-earned vacation pot with you – a late cancellation, but desire to rebook should be seen as a proxy to cart abandonment, with steps in place to re-engage and convert accordingly.

Without resorting to Covid-19 cliché, consumer expectations around holidays have dramatically shifted. Customer confidence has become a bigger factor than ever, not just in terms of safety and cleanliness, but in terms of not getting stung by factors outside of their control. The travel industry is uniquely placed to act as a reassuring arm around the shoulder – and, done correctly, it can turn what looks like a business threat, into a significant commercial opportunity.

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