First of all we need to dispel the myth of the non-refundable bargain, and replace it with the idea that making a booking which is changeable is a premium product to be charged for accordingly…
Think of the airline industry…
Non-refundable bookings are great, they provide guaranteed income, they reduce losses due to cancellations (in fact when non-refundables are cancelled they give the opportunity for resale and maximised income!) They negate the need for overbooking to compensate for cancellations, and they also prevent guests cancelling and rebooking if you decide to run some alternative promotion to increase uptake.
By having the refundable / changeable booking at a premium rate, the non-refundable will look like a bargain – and the bigger the difference the better the bargain / incentive to book.
If you don’t use the refundable option year round, aim to offer it well in advance for high season, decreasing the level of saving the closer to high season dates. Here you are using the non-refundable option to avoid having rooms cancelled and left empty at times when they achieve maximum rates.
So if you haven’t done so already, make your current rates non-refundable, and add in a premium refundable option to get the best of both worlds!
The level of cancellation experienced from OTAs can reach as much as 50%, so drive that number down significantly with non-refundable rates!
What do you think?