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, if you frequently experience booking cancellations, it can actually significantly slow down your booking rates instead.
Ask yourself: what ultimately caused those booking cancellation cases? Is there a way to better anticipate and prevent them from accumulating again in the future? Of course, dealing with an issue that directly affects revenue is always a major challenge.
In this article, we’ll discuss the reasons why booking cancellations are impacting your vacation rental business. Once you’ve understood the root of the problem, we’ll offer you tips and techniques that you can apply to anticipate and minimize booking cancellations 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.
Investigate why you receive booking cancellations
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. Of course, every individual case is different, but there might actually be a common reason that keeps persisting. 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?
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 or other 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)?
For instance, 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 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.
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, to prevent cop-outs and enjoy full occupancy, you should define your vacation rental cancellation policy according to precise parameters!
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 you should make sure 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. 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.
To recap you should firstly remind yourself why booking cancellations are so damaging to your business, analyze the reasons behind your past cancellations and then adapt your strategy to anticipate and prevent any future repetitions!