In the hospitality industry, a guest who arrives much later than planned, or who fails to arrive at all, is called a “no-show.” The charge the guest faces for not showing up is an incidental indicator, and it may affect payment processing. Understandably, having a no-show is frustrating for hoteliers, as it prevents other guests from staying at the hotel, and it may even cost the establishment money. Furthermore, hotel staff is put in the position of asking the individual why he or she did not show up, which can create an unpleasant situation for everyone.
While a no-show prevents another guest from using a room, it doesn’t always mean that the lodging facility loses money. Most payments are collected via websites or by phone, which gives hotel staff the opportunity to collect as much data as necessary to complete credit card processing even if the customer doesn’t show up or refuses to pay later on. Before charging a customer for merchant services, it’s a good idea to have a cancellation policy in place. That way, staff can explain policies to guests before they arrive and let them know what portion of the booked stay they’ll be responsible for paying in case they don’t make it. This policy is a win-win scenario for all, as it makes guests aware that they’ll be responsible for paying for having the room held, even if they don’t arrive as scheduled. It also authorizes hoteliers to carry out payment processing for up to 100% of the first night’s stay to avoid losing money from the hold. In addition to collecting 100% of the first night’s fee from a no-show, some establishments have other clauses in their cancellation policies that charge various amounts based on when the customer cancels. For instance, some establishments charge the guest a portion of the room fee for receiving notice within a certain period of time, which is normally up to 24 hours before the cancellation. Having a written policy in place allows lodging establishments to make their cancellation policies clear to customers. It also provides transparency into the entity’s merchant services. Having a concrete policy also makes it easier for lodging facilities to take the customer to small claims court if he or she breaches the contract and fails to provide payment as requested.
In addition to preventing financial loss in case of a no-show, a cancellation policy can help lodging establishments in other ways. By requesting advance notice of cancellation, they put pressure on guests to commit to staying at the establishment or provide plenty of time for the lodging facility to re-market the room to other guests. In doing so, the facility may be able to give a wait-listed guest a room or provide a current guest with a free upgrade.