Go Moderate! How Hotels' Cancellation Policies Affect their Financial Performance
Keywords
Cancellation; penalty; performance; revenue management; RevPAR
Abstract
Hotel cancellation policies have shifted considerably in recent years. This is mainly in response to growing rates of last-minute cancellations and no shows and the resulting negative impact on the hotel's performance. This study explores how two key policy elements, the penalty and the cancellation window, are likely to benefit the hotel. That is, how the severity of the policies is likely to positively impact the hotel's financial performance. We developed a mathematical model and used cancellation and performance information data from a random sample of over 500 U.S. hotels to examine the effectiveness of a range of cancellation policies. The empirical findings support the mathematical model's prediction that moderate cancellation policies are likely to generate better financial performance levels, compared to more lenient or more stringent policies.
Publication Date
12-1-2023
Original Citation
Altin, M., Chen, C.-C., Riasi, A., & Schwartz, Z. (2023). Go moderate! How hotels’ cancellation policies affect their financial performance. Tourism Economics, 29(8), 2165–2182. https://doi.org/10.1177/13548166221128450.
Document Type
Paper
Language
English
Source Title
Tourism Economics
Volume
29
Issue
8
Copyright Status
Unknown
College
Rosen College of Hospitality Management
Location
Rosen College of Hospitality Management
STARS Citation
Altin, Mehmet; Chen, Chih-Chien; Riasi, Arash; and Schwartz, Zvi, "Go Moderate! How Hotels' Cancellation Policies Affect their Financial Performance" (2023). Faculty Scholarship and Creative Works. 1259.
https://stars.library.ucf.edu/ucfscholar/1259