Even before COVID-19 cancellation rates on OTA bookings were high relative to other booking channels and trending up. In fact, some studies have shown OTA cancellations as high as 41% based on the channel and geography.

Rather than requiring deposits to secure a booking, these channels now emphasise the option of “free cancellation” - with ease - to potential guests. This has led to a rise in “Booking Infidelity” as travellers continue to research hotels long after their initial booking, sometimes booking multiple properties safe in the knowledge that their unwanted booking can be cancelled easily and without penalty later on.

A steady creep of the same buying behaviour is now evident on the direct channel. Avvio data shows up to 7% of direct bookers hold multiple hotel bookings for the same stay dates in 2021.

Unless hotels mitigate this by adopting new strategies to retain bookings, we predict this behaviour will grow faster in the coming years as new technologies emerge allowing a guest’s booked rate to be monitored post-booking, and automated rebooking tools become more common.

At the sharp end, we expect this trend will have a very negative effect on profitability for hotels unarmed with a Booking Retention strategy.

Booking Retention – Beyond Segmentation  

Whilst COVID-19 has contributed a lot of noise to our datasets, the insights that can be gleaned from historic cancellation data provide a solid platform for a hotel to develop an understanding of how guest segmentation relates to cancellation behaviour.

With the right tools, it is possible to go beyond segmentation and look at which individual bookings within a segment are at higher risk of cancellation. For example, to predict which international couple will be more likely to cancel than another.

Rather than looking at one dimension of data (e.g. traveller type), this fine-tuned approach leverages Artificial Intelligence to take a multidimensional view, incorporating data based on the individual guest journey, market conditions at time of booking, what has changed since the booking, and more.

Revenue forecasting that doesn’t consider the full impact of cancellations will increasingly undermine wider business goals. Hoteliers need to consider the whole timeline and detail the opportunity-costs attached to their strategies to optimize for profit. To do this, hoteliers will need to utilize a new breed of tools that leverage A.I. and big-data to obtain a competitive advantage in the marketplace. Allora.ai is designed with this in mind.

Key considerations

·       You need a booking retention strategy to take control of your cancellations.

·       Start analysing cancellation patterns – Who - When - How - and Why.

·       Ensure you have the right tools that leverage A.I. and machine learning - these technologies can dramatically reduce the burden of effort needed to tackle the problem and improve accuracy.

·       Start tracking your Net CPA in relation to digital marketing. Let this guide your targeting and post-booking messaging.

·       Look at retention strategies as an opportunity to build your brand and overall engagement with your guests.

·      Be as personal as possible and contextualise around the individual needs of the guest.