If you rent out your property on Booking.com and other listing websites, you should understand that cancellations are an investable part of hosting. Most vacation rental guests plan their trips, book their stays in advance, and look toward them. Unfortunately, their plans may change due to unforeseen events, and they may need to cancel their bookings.
When guests do it, they must understand what to expect after they cancel their reservation. That’s why you should clearly state the terms of your Booking.com cancellation policy, which will leave no room for confusion. It can also help safeguard your business interests and protect you from a potential loss of income.
Read on to find out how cancellations work on Booking.com and how to handle them as a host. You’ll also find tips on reducing cancellation and no-show rates.
If you’re new to this platform, you may also want to check out our article about Booking.com host fees to better understand how much you should expect to pay for each reservation.
Why Is Your Booking.com Cancellation Policy Important?
The Booking.com cancellation policy you set for your listing outlines the terms and conditions that apply when a guest cancels their reservation. It includes specific details about refund procedures, penalties, and fees associated with cancellations.
By setting up cancellation policies, you can let travelers know what will happen if they cancel or change their bookings. It can make a huge difference to your success as a host, and it’s especially important if you have just started your vacation rental business.
A strict cancellation policy could ensure a steady income stream but discourage potential guests from booking your vacation rental. Travel plans can change, so everyone likes to have the flexibility to cancel their bookings without incurring any charges.
On the other hand, more flexible cancellation policies will make your listing more attractive to guests, so they’re more likely to choose it to book a stay, knowing that they won’t lose money if they cancel. But that also means that you’ll have unpleasant gaps in your calendar and may lose money, especially if the guests cancel their reservations at the last minute.
That’s why Booking.com recommends creating a set of cancellation policies and connecting them to different rate plans. You can also set deposit and prepayment policies that best suit your business. This way, you’ll be able to offer travelers the freedom to choose and attract different types of guests.
Offering a wide range of options for guests will positively impact your occupancy rate and can help make your STR business more profitable. And if you automate your routine operations using vacation rental software like Hospitable, you can make your business more efficient and scale faster. For example, with the help of Hospitable, Home Havens founders Lauren and Aaron Havens have scaled their business from 16 to 160 rental properties in just three years.
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Booking.com Cancellation Policy: Options for Hosts
Booking.com allows hosts to set their preferred cancellation terms and conditions and configure prepayment and deposit policies.
Fully flexible terms—guests can cancel their reservation anytime without penalty.
Customized terms and conditions—you can set the number of days before check-in so guests can cancel their booking without being charged. You can choose the timeframe that works best for you, and it can help minimize last-minute cancellations.
You can charge a deposit during the booking process, which your guests will get back if they cancel within the free (flexible) cancellation period. But they won’t get it back if they cancel later.
You can require prepayment for the first night during the booking process. Guests won’t get that amount back if they cancel their reservation.
Your cancellation policies can be specific to each vacation rental property that you list on Booking.com. You can also use a set of policies and connect them to your rate plans so your guests can choose the option that suits them most.
If your guest requests the cancellation of a booking, you can inform the company via the Booking.com Extranet or the Pulse app. Then, you will avoid paying a commission for the canceled booking.
Remember that Booking.com doesn’t allow hosts to cancel reservations without a valid reason. If, for example, a problem occurs, such as an emergency or overbooking, you will have to relocate guests to another date or refund their money. If your guests don’t agree to change their reservation and choose another date to book a stay at your property, you’ll need to find them a new place to stay.
Dealing with overbooking is costly and time-consuming, so you should always keep your calendar updated. It’s rather challenging if you have listings on multiple platforms, but there’s a solution to this problem—using vacation rental management software like Hospitable.
As a vacation rental channel manager, Hospitable will allow you to efficiently manage all your listings on different websites, including Airbnb, Vrbo, and Booking.com, from a single platform. This way, you can prevent double bookings and won’t have to worry about juggling calendars, messaging, and cleaners across all your channels.
All you need from a channel manager is here
How to Handle Cancellations: Best Practices
If canceled reservations become a regular occurrence, they can become a problem for the profitability of your short-term rental business. The good news is that you can take measures to minimize these cancellations. This process begins with a review of your property’s “cancellation characteristics” report within the Booking.com Extranet.
The report allows you to compare your listing’s performance against the competition in your market. If you notice more cancellations than similar properties in your area, consider making some targeted changes.
Diversify your rate plans. If you offer your guests only non-refundable rates, you may simply end up with fewer total bookings. That’s why you should create various rate plans with a mix of early-booker, non-refundable, and flexible options. If you offer more choices to potential guests, you can make your listing appealing to a wider audience, get more bookings, and reduce cancellations.
Experiment with pricing. For example, you can consider offering a meaningful price difference between non-refundable and flexible rates. Then, your guests can perform a cost-benefit analysis and decide whether to pay for a free cancellation. Guests can also cancel if they have found a cheaper vacation rental. That’s why a good idea is to use a smart pricing tool to implement a dynamic pricing strategy and ensure that your prices are competitive.
Offer more payment methods. This way, you can attract more guests, especially international and young travelers accustomed to using online payment services like PayPal or WeChat Pay. According to the data provided on the Booking.com website, guests who pay online are four times less likely to cancel or not show up.
Be a responsive host and reply to their messages as quickly as possible. Remember that guests who have questions after booking and don’t receive a timely response may cancel and book a stay elsewhere. It’s important to be proactive and do your best to provide your guests with the necessary information at the right time.
You may want to check out our blog article about Booking.com messages functionality to learn more about tools that hosts can use to communicate with guests and discover how you can automate guest messaging using Hospitable.
Bottom Line
Your Booking.com cancellation policy significantly impacts the success of your vacation rental business, so choosing the right mix of policies for your listing is important. This way, you’ll be able to attract different types of guests, manage guest expectations to prevent surprises and be covered when guests cancel.
