How should You Plan Cancellation Policy For Hotel Booking Business


“What was the amount of refund you got when you had to cancel your hotel booking?”

“I got full refund before 1 day of booking. And you?”

“Uh! That means they have cheated me. They only provided me with 40% refund. I am not going to book with them the next time.”

This probably would sound similar to the people who had to cancel their reservations for the hotel, rentals, or similar other travel-related services.

The major problems that any travel and hospitality business suffers from are the cancellation policy.

So today we are here to helps you to plan your perfect cancellation policy for hotel booking business.

Do You Know Cancellation Vary to the Channels?


cancellation policy percentage table - TRooTech

The data from 40 of the channels and analyzed the cancellations % on room nights in the last four months of the three significant online channels:, Expedia, and the web itself.

The results shown are sure to startle you to the core:

cancellation policy percentage graph - trootech

While customer retention is of utmost importance for the booking platforms, cancellation policies often disappoint the customer who cancels the reservation made and decide to not book from the platform the next time they plan for the trip.

The major cause of such dissatisfaction is because of the psychological behavior of the customers to compare the prices of the cancellation policies with that of others.

The relation between and is 56% more than

Facing such problems is obvious as the platforms may consider various different types of cancellation policy in their system.

Umm, yes you just heard different types of cancellation policy for hotel booking business.

Talking specifically about the hotels, the customers are not aware of the different cancellation policies of the hotels and that is where the problem is.

To get a deeper glance into the problem, let us get to know about the different policies of the hotels.

Types of Cancellation Policies Encircling Around the Hotel Booking


The hotel businesses around the globe are having a tough time in employing a single consolidated platform to automate their unique workflow and leverage their core business resources.

Though dealing with the same industry, two organizations may have vast differences in the operational practices.

And this is when the automation process of the business also starts to differ.

Presenting the two most important cancellation policy for hotel booking business that you should consider.

How Cancellation Happens With The Help Of Global Distribution System


global distribution system- trootech

A Global Distribution System is a network operated by a company that enables automated transactions between travel service providers and travel agencies.

It holds no inventory, but the data can be stored by the hotel managers as and when they update their policies.

A GDS system will have real-time link to the vendor’s database where the customers can access the travel data, shop for and compare reservation options, and book for the service.

It is extensively used by the independent travel agents, online agents, and travel agencies to search for the best available travel and hospitality and rate their clients for the customers.

What happens is, all the hotels store their policies and availability of the rooms in the GDS system.

From this system, the mediators such as travel agents fetch the policies, pricing, and availability for the hotel rooms and customize their offers.

Not only is this method effective for the travel agents but also is suitable for the hotels that can merely make updates on the standardized platform, thereby eliminating the excessive usage of resources, time-consuming and manual methodology.

Why GDS is a wise decision?



The mediators can offer bundled packages that include a flight booking, rentals, accommodations, and other travel related plans. This gives better rates to the guests which in itself is a USP.


The hoteliers can gain better marketing exposure without burning a hole in the pocket. The system automatically puts forward the hotels without forcing you to shell out more money.


Using GDS, the marketers can gain access to a wider pool of audience to target from.



The information about the service can be updated in real time. This means that when the hoteliers change the prices of their accommodations, the managers can easily modify the price or make special offers. The agents will immediately see these changes and will be able to suggest new opportunities to the customers.

Reduced Manpower

The system is a trustworthy middleman that can seamlessly transmit information from one point to another. All digitized!

question mark image - trootech

How Cancellation Happens With The Help Of Customized Inventory


hotel inventory - trootech

Being a hotelier they have a huge list of items to manage on a daily basis.

In the customized inventory method, the communication occurs between the agents and the hoteliers and the party is updated with the alterations, if any, in the pricing, policy, or availability.

The custom inventory meets the needs of the most clients possible today as it has a lot many benefits than off-the-shelf inventory management system.

Most of the clients on a domestic level prefer custom inventory since it easily integrates with other software programs.

Moreover, it is developed in a way to suit your unique business processes which is not obtained in the standardized Global Distribution System. It is easy to manage as other off-goal features are not involved and so it becomes an intuitive system which makes navigation quicker for the new users.

The custom inventory is comparatively cheaper on the budget than the Global Distribution System wherein the API’s are needed to be purchased and any customized functionality cannot be added.

It improves the customer relationship since all the inventories are in sync with the hoteliers and their policy and systems. It makes the overall system more efficient, less mistakes, more control, and more visibility into your processes. It streamlines the operations and thus, the overall in-house management is cost-efficient.

Big Reasons to Adopt Custom Inventory


Automate Unique Workflow

The custom inventory can be implemented without interrupting the current workflow and system.The customized solution provides the industry specific solution which easily incorporates new functionality which eases the back-end operations.

Custom Reports

The custom-reports are a much-required tool for a wide-variety of business verticals as it provides the customers and the agents with the ease to filter out the data according to a specific criterion.

Additionally, the custom-built reports are a point-to-click tool which indicates the areas in which the inventory will target in.


24/7 Technical Ongoing Supports

The all-round support keeps the business secured and operates at high expertise, analysis, and guide on which the Hotel businesses can rely upon.

A Customized Cloud Solution

When the solution is hosted on a private cloud, a custom inventory management system offers better control, extendable bandwidth, superior and security performance in terms of speed and connectivity.

Now for the online travel businesses, it cannot be said whether Global Distribution System is suitable or Custom Inventory is the best.

Ultimately, it depends on how demographically you want to expand, what model suits for your business, how unique you want your business flow to be and the budget of course for the development of course.

Have a read at different travel agencies and their cancellation policies and you will know about how the cancellation is made across the online booking portals giants today.

Know the Flow of Bookings Cancellation in B2C


booking cancellations in B2C- trootech

When the customer cancels his booking made with the online booking portal, at the time of booking itself, he/she is well-introduced with the policies of the cancellation in both the industries.

Thus, no matter whether the online booking portal includes Global Distribution System or Custom Inventory, it is upon the hotels to decide the cancellation policies as per their own rules.

Based on whether the cancellation policy is flexible, Moderate, Strict, or Super strict, the amount of refund and The numbers of days are decided.

Here, whenever the customer cancels the booking, some hotel might provide the customers with the complete refund before 1 day.

Or in others, the customers cannot avail the refund at all in case of strict cancellation policy.

How Cancellation Happens In B2B Marketplace


booking cancellation in B2B - trootech

The order for the hotel rooms is created from an online channel. Then the inventory is managed and the offers and discounts are embedded in it for the customers to avail discounts.

Only after the hotel rooms are associated with the facility like car rental, trip management, etc. an inventory fulfillment is checked.

Here, now when the customer’s requests to cancel the order,

The refund of the cancellation depends on the hotel the room belongs to. This is because there are hotels that don’t allow refund to the customers.

Upon cancellation of a room, the availability is once again shown in the calendar for the cancelled room.

The Cancellation Possibilities and the Navigation Along


Many times when the cancellation takes place, but obvious it will reflect on both the hotelier and the customer.

In cases the customers cancel a booking, the hotels loses the dates on them and on very rare occurrences, when the hoteliers cancel a booking, the customers suffer due to sudden change in their plan.

Thus, a cancellation policy should spell out exactly what happens when the business or customer cancels a booking.

cancellation possibilities - trootech


When Customer Cancels


There are some of the critical issues encircling the hotel cancellation policy when the customer cancels a booking.

The cancellations from the customer’s end are common in the online hotel booking segmentation.

In such cases, the businesses are entitled to make a cut from the deposit and booking amount and as per their policies; they may choose to not refund the booking amount pertaining to the days gone vacant.

When Business Cancels


There are very few chances wherein the businesses cancel the booking.

The reasons may be:

  • Bushfire Circumstances
  • Customer Identity Issue
  • Unfair Means by the Customer
  • Other Unavoidable Influences

In such cases, the customers may be entitled to claim damages from the business as compensation for any kind of loss they suffer as a result of this unexpected business action.

Thus, it is of utmost significance that the outcome should be such that it satisfies both the customers and business without drawing out extra from any of their side.


The Bottom Line


While dealing with the cancellation policy for hotel booking business, the online travel portals should remember that they may be a customer in the future and the cancellation they made would be because of some genuine reason.

Thus, when the cancellation policy for hotel booking business is thrusted upon, it is expected that they come up with such cancellation policies that it suits to both the hoteliers as well as the travelers.

As for the travel agencies, it is critical to get the portal developed in a way that compliments and strictly enforces to the policies of the cancellation.

On the same lines, we came up with an interesting case study about the development of the online hotel booking platform, which you would want to read so that you can avoid any mishaps for your travel business.


Faced similar problems with your hotel cancellations policy? Tell us we will suggest you what is the best option for your business.


More About Author

Vishal Nakum

Vishal Nakum is a tech enthusiast with a passion for exploring the latest developments in the world of technology. He has a keen interest in emerging technologies such as Artificial Intelligence, Machine Learning, and Blockchain, and enjoys keeping up-to-date with the latest trends and advancements in these fields. Vishal is an avid learner and is always on the lookout for new ways to expand his knowledge and skills. He is also a creative thinker and enjoys experimenting with new ideas and concepts. In his free time, Vishal enjoys playing video games and reading books on technology and science.