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Lingering Guest Fears Make Flexibility More Important Than Ever

This is a guest post by Matt Barnard, Director at Hosting Hobart a locally owned property management company, specializing in short and medium term accommodation management services in Hobart and surrounding areas.

COVID-19 has required short term accommodation providers to reassess how they handle guest cancellations and to adapt to an atmosphere of uncertainty amid border closures and lockdowns. While we’re optimistic that the worst is behind us, and though we have seen a significant demand for accommodations since the commencement of the vaccine rollout, we’re still sensing some lingering hesitance from guests simply because they don’t want to lose their money. 

A unique dilemma

As a short-term accommodation provider in Tasmania, an island state that relies on tourism, Hosting Hobart has seen first-hand the effects of border closures on travelers’ confidence when it comes to closing bookings without flexible cancellation policies that guarantee full refunds in the event of uncontrollable circumstances relating to the pandemic.

We have always maintained strict cancellation policies for reservations in our properties, as they are sought after locations in high demand.  Our typical policy was that guests would forego 50% of the reservation fee if they cancelled 60 days prior to arrival and 100% within 14 days. Though guests booking during the pandemic were aware of this, there seemed to be a general expectation that it would not apply to cancellations caused by border closures, as these were beyond their control.  

Adaptability is key

After considering how to be fair and reasonable in order to both accommodate our guests and maintain a good reputation, we offered guests the following options:

Option 1: Guests were given the opportunity to reschedule their reservations for any available time within 6 months of their original reservation date. Approximately 70% of our guests chose this option. 

Option 2: We offered guests 75% of their money back if they cancelled their bookings immediately, granting us sufficient time to attempt to fill the new vacancies. This option was chosen by 20% of our guests.  

The remaining 10% requested a complete refund just days prior to their reservation. These were assessed on a case-by-case basis, we agreed to several requests and the others we offered them a 20% discount on the accommodation if they made a reservation within 9 months of their reservation date.

Cancellation policies moving forward

There is certainly discussion within the industry as to whether COVID-19 will lead to a permanent change to standard cancellation policies. Each property management company needs to evaluate this for themselves, and the process should involve:

  • Reviewing average occupancy/nightly rates and the change in rates pre and post COVID.
  • Assessing inquiry and conversion rates. Is the demand there for your style of property?
  • Conducting a trial of a more flexible cancellation policy. This may only be necessary if you feel there is lower demand for your property.

Guesty’s Analytics tool has enabled us to make judgements and assessments like these  analytics, presenting data, such as lost revenue, in an easy-to-view format. This gives us an understanding of demand and we can then adapt our rate strategy using the software’s revenue management feature.

Today, fewer and fewer guests expect us to change our cancellation policy. However, we continue to offer them the options listed above in the event that the borders close and force them to cancel their reservations. 

A winning strategy

Listening to our potential guests, allowing additional flexibility and using good judgement, has enabled us to maintain good nightly rates and occupancy throughout an unprecedented period for the industry.

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