Vacation Rental Booking Cancellations: How to anticipate, prevent and manage them

As a host, your first priority is usually to increase the bookings of your vacation rental and maximize your occupancy – especially during peak season. However, in the midst of a pandemic, this can be a challenging thing to achieve. From lockdown restrictions to a new fear of traveling, most industries have been directly affected by the coronavirus outbreak.

In the vacation rental industry, the importance of correctly managing your cancellations has never been as obvious as it is now, for both owners and guests. In this article, we’ll discuss the reasons why booking cancellations are impacting your vacation rental business and how you can anticipate and manage them in the future.

Why are booking cancellations so damaging?

Loss of profit

The equation is simple: low occupancy equals reduced revenue because, for a vacation rental, every vacant room implicates a shortfall.

Even if you immediately relaunch your listing after you’ve received a cancellation, you cannot get the time and money back that you’ve already invested in a booking which ended up falling through.

Drop in ranking position

On top of the lost time and profit, booking cancellations and no-shows from future guests can also negatively affect your search result rankings – be it on the Google search engine or on listing sites you’re using to advertise.

This can have a knock-on effect on reputation. That’s because a high booking rate also garners more guest reviews on your own website or on listing sites which in turn increases your search result rankings and the visibility of your vacation rental

Added stress due to a higher workload

When guests cancel their reservations, it adds pressure and extra work. Not only do you have to handle the paperwork of the last-minute cancellation, but you also have to update your availability calendar as soon as possible so you don’t miss out on converting new potential guests. On top of this, you now have to worry about the profitability of your vacation rental if you cannot manage to find any other guests on short notice.

Why are you getting booking cancellations?

Be mindful of the current situation

The reasons why guests might need to cancel during these times can vary from statewide restrictions to family emergencies. Whatever the cause may be, it’s crucial to be understanding and kind when a cancellation does happen. 

Contact the guest who decided to cancel

Try to get in touch with the guest who ended up being a no-show immediately to find out why they decided to cancel their reservation. If you are aware of this you can proactively take the necessary precautions to anticipate and prevent the same kind of situation from repeating itself.

Take a look at your competitors

Maybe some travelers cancel their reservation with you to book the accommodation of one of your competitors instead. But what are the reasons for that sudden change of heart?

Is your competition offering outdoor activities and tours? Or perhaps their cancellation policy is more flexible than yours. In order to find out, you have to closely inspect what the competition offers and compare it to your own offering. This will give you an idea of what the determining factors are that end up swaying your guests’ decisions. They could range from price and amenities to services, special offers, and all sorts of other reasons. 

By observing the key elements of your competitors’ success – as well as their strengths and weaknesses – you can match and even surpass them. Simply use that knowledge to improve your own offer. Not only will this boost your bookings but you can also ensure that no more future guests will decide to skip out on their reservation last minute. 

Rethink who you’re targeting

It could also be helpful to review your targeting strategy. Maybe you’re actually targeting the wrong type of guest for your vacation rental?

In order to check if this is the case, you can analyze anyone who has canceled their reservation in the past. Was it a family, an older couple, a business traveler, or young backpackers? What were their specific needs, tastes, requests? What type of rental did they cancel and during which time period (summer or winter season, a special holiday or event, etc)?

If your property is located in a bustling, dynamic city, surrounded by bars and restaurants, with regular festivities in the area you may want to be targeting younger guests – such as millennials – in particular. Especially if your rental is on the lower end of the pricing scale! Being fully booked by travelers on a budget will prove to be much more profitable for you than setting higher prices and collecting cancellations from families and elderly guests.

In the case of the latter, you need to revisit your targeting strategy and be realistic about what type of guest is actually suitable for your property. In the case of a family with children, they will probably prefer a larger, kid-friendly home, in a safe and quiet neighborhood. If they find a last-minute offer that matches those standards more than your accommodation, it’s not unlikely that you’ll end up with a booking cancellation on your hands.

During the coronavirus crisis, rethinking your target audience could be your saving grace. Analyze new guest types that have resulted from the pandemic, such as domestic travelers or workationers. Make the necessary changes in your vacation rental website and property so that you can attract these audiences and keep your business afloat. 

Managing cancellations for your vacation rental

Ways to anticipate and prevent booking cancellations

Clarify your vacation rental cancellation policy

It’s important that your vacation rental cancellation policy is clearly visible in your reservation system so travelers can read and understand it before they click on the “Book” button. Make sure that your guests are completely aware of their own responsibility in case of a no-show or cancellation.

Also, be sure to include a cancellation deadline and the details about the cancellation fees and refund. It must be unambiguously stated that your guests are required to pay the cancellation fee if they exceed the indicated deadline.

In addition, putting a percentage on the refundable amount after the deadline will also protect your business from suffering drastic revenue losses in case of last-minute cancellations. Guests can still always cancel in advance within the deadline – which leaves you with plenty of time to update your availability calendar and find another guest for the newly vacant room. You could even use last-minute offers to attract potential guests looking for a short notice deal.

However, in a time as rocky and ever-changing as this, we recommend you to be flexible. Even if your potential guests have every intention of going on their trip, a lack of flexibility in your cancellation policy might be the factor that turns them away. By soothing the nerves of your potential guests, you will also receive more bookings.

Take a non-refundable down payment at the time of booking

You can also reduce cancellations by charging your guests for their stay during the checkout process. Some hosts opt to charge the full amount at the time of booking, while others will ask for a percentage as a non-refundable down payment. As a result, travelers feel more committed to going through with the booking, as they risk losing this amount should they cancel further down the line.

Be sure to make it clear in your cancellation policy that any advance down payments are strictly non-refundable to avoid disputes with credit card companies.

Offer a promotion for confirmed bookings

It can be a smart strategy to offer a small promotion to your guests and reward them for confirming their bookings right away. It’s an incentive for them to confirm more quickly and not change their minds again.

You could, for example, encourage a partial or full payment at the time of booking with an offer or discount for the next reservation they make with you. Not only does this reduce the chances of cancellation and positively impact your booking conversions, but it also encourages travelers to return and become repeat guests!

Check on your guests

Even after they’ve already booked, you should show your interest and stay in touch with your guests in advance of their stay. By maintaining contact and paying attention to your guests, you already start to form a more personal connection with them. This will make your guests more reluctant to cancel and less likely to bail on their booking with you.

Ideally, you should personalize all of your messages and make sure to use a friendly welcoming tone, in order to score brownie points with your guests. However, if you’re already short on time you can also automate messages that will send out reminders to them as an alternative.

If you feel like this is too generic you can also choose the middle ground and schedule personal emails or SMS in advance. This way your guests will still receive individual alerts and notifications about their upcoming stay or special promotions you’d like to offer to them.

Remember to always follow up with guests after their booking has been confirmed and make use of the opportunity to politely remind them about their check-in time right before their stay. This strategy will effectively minimize your risk of no-show instances!

Prove your own availability

As a vacation rental host, your responses to guest inquiries must be quick and accurate. Make sure to meet the expectations of travelers and avoid already losing their goodwill before they even set foot on your property. Otherwise, you’re at risk of an increase in cancellations and a decrease in bookings.

Someone who already proves themselves to be an unreliable host won’t inspire confidence in guests about what else awaits them during their actual stay. Thus, they won’t hesitate to cancel on you if another, more attractive offer comes along.

That’s why it’s important to always answer your guests’ questions as fast and as clear as possible! Even if they’re asking long in advance of their booked vacation. Don’t worry, you don’t need to be plastered to your screen all day every day in order to enhance guest experience. The use of automation tools will make this 24/7 communication possible. The impression you initially make will have an impact on the quality of the review your guests leave on your website or listing site afterward. As is commonly known, the opinions and testimonials of other travelers have a direct impact on the success and credibility of your vacation rental business. Reading something negative could even sway some people to cancel or become a no-show.

So make sure to react quickly and also respond to negative reviews and criticism in a smart way to soften the blow. Continuously monitor the comments across all of your channels (website, listing sites, social media, etc.) and stay engaged with your guests. This will prevent frustration or the altogether cancellation of bookings.

How to manage vacation rental cancellations

How to Cancel a Guest Reservation

When you have no choice but to cancel a booking, there are a few things you can do to avoid a negative review and keep the guest happy at the same time.

1. Do it as soon as possible

The sooner you cancel, the less of a negative impact it will have on the guest and your business. No one wants to have their plans canceled at the last minute and find themselves without accommodation the day before the trip, it’s not fair after all. Make sure you are quick so that the guest has time to look for a new alternative. 

2. Tell the truth

Always tell your guest the truth. You may be experiencing problems (personal or in the rental itself) or have an emergency. Tell them the real reason behind the cancellation. If you simply cancel their booking without showing them your “human” touch, they can be left frustrated and angry. 

3. Apologize

As well as stating why you need to cancel the booking, it’s also best to apologize to the guests. Tell your guests that you are truly sorry for canceling their reservation and apologize for the inconvenience. 

4. Offer a discount for other dates

If you offer a discount to those guests whose reservations you canceled, they can return another time. A 20% discount is a reasonable amount and still profitable for you. It will prevent a negative review and you’ll be able to fill your calendar for other dates.

5. Be aware of penalties

Depending on the OTA’s that you use, you might face certain penalties upon canceling a guest’s reservation. For example, on Airbnb, canceling 3 or more reservations in a year can result in your account getting suspended. On Vrbo, if your reason for canceling doesn’t qualify for a cancellation waiver, it will negatively affect your ranking metrics. Keep this in mind when canceling on a guest and know how it will impact your business.

Guest Cancellation Template

Considering the points mentioned above, here is an example you can use to send to the guests whose booking you’re canceling. 

Dear [first name],

I regret to inform you that your reservation at [rental name] for [dates] is no longer available. This is due to [state reasons why here]. 

We value our guests and for this reason, I would like you to offer you a 20% discount to stay at [rental name]. Once again, I would like to apologize for the cancellation and I hope to see you in the future. 

I apologize in advance for any inconvenience this may cause you. 

Thank you for your understanding. 


Best regards,

[Your name]

How to Avoid Cancellations

Canceling a guest’s reservation frequently isn’t a good practice. As a vacation rental owner, you must cancel as little as possible, especially if the reservation is confirmed. However, there are some things you can do and put in place in order to prevent cancellations.

1. Be clear about house rules

If you don’t accept pets, make it clear from the beginning. The same goes for large groups, parties, and smoking. Many hosts tend to minimize their house rules outlined in the listing in order to attract more guests. But doing this can be a fatal mistake, as it can lead to troubled guests. Put all your rules in place to avoid canceling repeatedly.

2. Make sure guests know the minimum nights stay

Having to cancel a reservation because the guest did not fully understand that they could not book only two nights’ stay is usually the main reason why owners end up withdrawing the booking. Make sure your minimum stay nights stay are clear, precise, and visible in your listing or website.

3. Have a channel manager

If your calendar is constantly updated, you won’t run the risk of two guests booking the same days. You can always do this manually, but due to different time zones or if you’re unavailable, you may not always be able to keep it up to date.

Therefore, it is better to have specialized software for vacation rentals that provides you a channel manager. A channel manager synchronizes all your external vacation rental listings on your calendar. This way, you’ll have everything on one calendar and never have to worry about double bookings, and then never have to cancel! Problem solved. 

4. Have a clear description

So that the guest knows what to expect, you have to be honest. If your property is not safe for children or is not suitable for guests with reduced mobility, make it clear on your description. 

5. Highlight your safety and cleaning protocols

Most people canceling their holidays at the moment are doing it out of fear. By going above and beyond with sanitation, you will provide security for both you and your guests. Make sure that you clearly state all the cleaning procedures that have taken place on your listing or website so that potential clients are fully aware of the measures that have been taken. Some tourism boards and governments are even releasing COVID-Free Badges for properties that meet the cleanliness standards. 

Cancellation policies for vacation rentals

Why it’s Best to Avoid Guest Cancellations

Canceling a reservation gives off a bad image of your business and can result in a negative review. When a guest is organizing their vacation, they want the process of finding accommodation to be easy and hassle-free. That’s why a cancellation can ruin their vacation.

In addition, if you cancel more than one booking, your property will not appear reliable and other guests may avoid booking it too, in fear that you will cancel too. In the long term, it will can you a poor reputation.

If you’re listing on OTAs, canceling a reservation will cause your position in their search engines of these pages to drop significantly, which makes it increasingly difficult for a guest to see your property on the platform.

As previously mentioned, OTAs may even charge you for canceling. In any case, canceling a reservation in your listing reflects poorly on your business and also affects your visibility. What’s more, if your cancellations are repeated, you may end up being excluded from the site. 

What to Take Away

Regardless of the situation, being ready to adapt your strategy will always be beneficial to your business.  

Of course, cancellations happen, and at times you can’t help it. If despite all your efforts the guest still ends up unhappy, most likely they will give you a negative review and post it on your ad, website, or social network. 

If you know how to face a negative review, it won’t tremendously affect your business. 

It’s not a question of counterattacking, but of answering positively. You must make sure that the guest understands that you value their opinion and that you will implement it to improve your business.  Explain the reason for their complaint (repeat it if you already stated it in your cancellation message), apologize, and be thankful that they were interested in your accommodation rental. 

Don’t ever let negative reviews get you down emotionally. Rather, stay calm and deal with them in a professional way. The key is to always stay positive!

Now that you know how to deal with this somewhat tricky situation, there’s no stopping the success of your vacation rental business! But remember, it’s easier to avoid canceling a reservation than to recover from one.

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