Hyatt Tightens Cancellation Policies While Giving Loyalty Members Flexibility

First there was Marriott, then InterContinental Hotels Group, and Hilton. And now there’s Hyatt.

The Chicago-based hotel company announced it too has revised its cancellation terms, implementing a 48-hour cancellation policy, effective for reservations made or changed on or after January 1.

Now, guests must cancel at least 48 hours in advance to avoid a cancellation fee. The company also noted that each Hyatt property may also have “its own cancellation policy based on local market dynamics and expectations,” so the window to make changes to a reservation will vary from hotel to hotel.

This is something Hyatt CEO Mark Hoplamazian has noted before. In August, he stressed that Hyatt wants to leave the “decision-making” on cancellation policies up to its hotels. However, this new policy makes it clear that the company also wants the minimum cancellation window to be 48 hours for its more than 700 hotels worldwide.

“First and foremost, I just want to make it clear that, we as a company have an operating philosophy, where decision-making is delegated in large measure to our hotel teams,” Hoplamazian said. “We do that, because, we think it allows us to be more nimble, more responsive real-time and appropriately localized to the local market requirements and so forth.”

He said in August that “about 40 percent of our total full-service hotels in the Americas have already moved their cancellation policies to be at 48 hours or more. There is a significant portion of those hotels, over 60 of them, that have cancellation policies in excess of 48 hours.”

Hyatt made it clear that in establishing this new policy that its loyalty program members will benefit from more flexibility in their reservations. Beginning January 1, World of Hyatt Explorist, Globalist or Lifetime Globalist members can cancel their reservations up to 24 hours before arrival, even when the hotel’s cancellation policy is 48 hours. This applies to all hotels, except Hyatt Residence Club resorts, Miraval resorts, and M life resort destinations. The flexible policy excludes pre-paid reservations and non-refundable rates. If a hotel’s cancellation policy exceeds 48 hours, however, that 24-hour cancellation period does not apply. Giving loyalty members more flexibility with these cancellation windows is something that the other major hotel companies have not done.

In August, Hoplamazian said that, “With respect to whether we look to establishing a change in corporate policy, it’s something that we will evaluate over time, but please note that we’ve been already active in the marketplace.”

It does look like Hyatt had time to evaluate this change in corporate policy. It is likely additional hotel companies will follow in Hyatt, Hilton, IHG, and Marriott’s footsteps as they tighten up their revenue management practices.

Requiring cancellations at least 48 hours in advance, hotel CEOs have argued, isn’t meant to penalize guests who cancel at the last minute, but to make sure that rooms are available for guests who need them.The emergence of technologies that allow people to cancel and rebook their hotel stays at a higher rate at the last minute has also made it even tougher for hotels to manage their operations.

Hilton CEO Chris Nassetta outlined the reasoning behind his company’s new policy earlier this year, saying, “If we can’t manage inventory, there is ultimately a cost to that, that at some point gets borne by the consumer. And so, the idea is we got to be able to understand what people want to do a little bit earlier, a little bit closer in. We have – we can’t have it be within 24 hours, just because we can’t manage that last-minute inventory. It’s just not – it’s very difficult to do. And so that’s why we’re doing it. We’ve had generally talked to a lot of our corporate customers and otherwise, and I think, people understand it. The reception has been perfectly fine.”

Still, some consumers, and especially corporate travel management companies, aren’t convinced by that argument.

Regardless, these types of policies are becoming an industry standard, and consumers can expect to see more of them, as well as more flexible types of rates appearing in the near future.