Hilton and Marriott to You: Be Sure You're Coming

D38ABG Couple walking in hotel lobby. Image shot 2013. Exact date unknown.
By Robert McGarvey

Mark your calendar: Jan. 1. That is when both Hilton (HLT) and Marriott (MAR) stop permitting same-day hotel reservation cancellations. That may mean you will be paying for rooms you never set foot in. This is why you now need to know your other, better options that will save you money and still let you travel in comfort.

What has long been true about reservations has been, for decades, that they could be cancelled up to -- usually -- 6 p.m. the day of arrival without penalty. That has been good news for executives who do lots of last minute schedule changes. It's been great news for travelers whose flights are cancelled and who are stuck many miles away.

Resorts sometimes had more restrictive policies, requiring long-in-advance cancellations, but city hotels frequented by business travelers typically have allowed last-minute, no-penalty cancellation. Not anymore, at least not across the Hilton and Marriott brands. They both require notification the day before scheduled arrival for the traveler to avoid paying for a night.

The Numbers Behind the Change

Bob Gilbert, CEO of the Hospitality Sales and Marketing Association International, a hotel industry group, said of the Hilton and Marriott moves: "It's not surprising. The hotel business is one of the last places where you can hold inventory with no commitment." He also pointed out that in many key domestic markets -- such as Manhattan, Washington, D.C., and Boston -- daily occupancy rates are averaging around 75 percent. On several days each week, many hotels in prime markets are selling out, said Gilbert. That's not likely to change soon, said Gilbert, who indicated that new hotel construction lagged in the recession. That's created a supply-demand imbalance that puts the whip in the hand of the hotel operator. So by forcing travelers to cancel reservations sooner, hoteliers are hoping to get more control over their room inventory and maximize returns.

They also are hoping to stifle use of apps like Yapta that track hotel prices and, whenever a rate dips, apparently a growing number of travelers rebook at a lower rate and cancel the costlier reservation, literally right up until check-in time. Industry experts said that -- anecdotally, if not quantitatively -- there seems to be a lot more use of such tools by penny-pinching travelers. Effectively, Marriott and Hilton are seeking to stick a stake in the heart of this.

The big question: can Marriott and Hilton make this policy change hold? "I think it will come back to haunt these guys," said travel expert Joe Brancatelli, who blogs at JoeSentMe. Brancatelli's belief is that Marriott and Hilton are shoving cautious travelers into the beds of chains with "less onerous rules."

Like who? Try Starwood (HOT) -- Sheraton, Westin, Four Points and many more. Also Intercontinental (IHG) -- Crowne Plaza, Hotel Indigo, Holiday Inn and others. Remember that other, huge hotel groups continue to have traveler friendly cancellation rules.

A Workaround or Two

But there's yet another way around the Marriott/Hilton policies. Tim Leffel, editor of Hotel Scoop, said what Hilton and Marriott are doing has forced him to rethink the wisdom of making a reservation at all.

"If I'm going to book a hotel that doesn't allow me to cancel when my plane gets delayed or there are weather problems preventing me from getting there ... that cancels out any advantage to booking ahead if I'm going to get charged for a room I didn't use," he said. "This would positively keep me from booking a hotel at one of those two chains. If other companies follow that lead, then I will exclusively use last-day booking services like HotelTonight or just negotiate a day-of-arrival discount directly when I actually land."

Chew on that. Just maybe what Marriott and Hilton have done is force savvy consumers into playing chicken with them. Just don't book in advance, use last minute booking tools, and in the bargain you probably will be rewarded with a lower price.

What if there's no room? For the risk averse, the better strategy is to go with the competitors that have more flexible cancellation policies. Reserve at a Sheraton, and you'll still get that 6 p.m. day-of-arrival cancellation option (but do check at the time of booking, as not all hotels under a particular flag follow the chain's policies on cancellations).

But whichever route you take, know this: you don't have to get stuck paying for unused rooms at Marriott or Hilton. And you shouldn't.
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