Marriott, Hilton Revise Policies To Add Penalty Fee For Last-Minute Reservation Cancellations

Consumers used to having the ability to make hotel cancellations the day of arrival for free had better get their wallets out next time they try to do so at Hilton or Marriott hotels. The two chains are apparently taking a lesson from the airline industry and implementing a fee for last-minute reservation cancellations.

The New York Times reports that starting January 1 both hotel chains will charge guests a penalty of one night’s room rate if they fail to cancel their reservation by the day before their scheduled arrival.

Officials with Hilton say the change was made so the hotel could provide consumers with a more consistent booking process and to make rooms available for when guests are in need of last-minute travel accommodations.

The new fee charge and last-minute cancellation policy will not affect some of the brands’ smaller chains. Current cancellation policies won’t change for hotels that already require a two-day, four-day or longer advanced notice, the Times reports.

“Some hotels have more restrictive policies in place, so please refer to your individual conformations to verify their policy,” officials with Hilton say in a statement.

Bjorn Hanson, an official with the New York University Tisch Center for Hospitality and Tourism, says hotels’ once standard policy of having until 6 p.m. on the day of arrival to cancel are long gone.

Instead, he says, hotels’ tighter cancelation policies are a response to an increasing trend in which business travelers cancel accommodations more than they used to.

The Times reports that the policy change for Hilton and Marriott could also be a sign that the hotel industry is taking a page from the airline industry which charges additional fees for any number of things including canceling and rebooking flights.

According to estimates from IdeaWorksCompany.com, the airline industry earned $2.81 billion in cancellation penalty fees in 2013, up from $1.67 billion just five years ago.

For years, hotels have earned ancillary revenue through fees for Wi-Fi and so-called resort charges. With the addition of tighter cancellation policies and penalties, those fees are sure to account for a large chunk of the industry’s earnings.

In fact, Hanson projects that hotels will accrue a record $2.25 billion in fees and surcharges this year.

Still, the industry has a long way to go to catch up with airlines, which raised about $14.3 billion in total ancillary revenue last year, the Times reports.

Inspired by Airlines, Hotels Increase Fees [The New York Times]