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Hotel cancellations can cost you

Know the policy at your hotel or B&B, and think about getting travel insurance to cover any penalties.

October 25, 2009|Jane Engle

You find a great hotel rate online and hit the button to book it. But did you read the "terms and conditions" section? If you didn't, that great rate could cost you hundreds of dollars.

Like airfares, some reservations for hotels and bed-and-breakfast inns are nonrefundable or subject to penalties if you cancel your stay within a week or two of your scheduled arrival. Although online travel sellers such as Orbitz and Expedia recently removed some cancellation penalties, plenty of innkeepers still charge them. And the practice may be growing.

Through this year, claims that involved nonrefundable lodging expenses were up 17% from the same period last year at Travel Guard, a travel insurance company based in Stevens Point, Wis.

And now a reservation service for bed-and-breakfast inns is marketing optional trip insurance that includes coverage of nonrefundable deposits, with the service and the B&B earning money from the policies. That's right: The B&B sets tough cancellation rules, then profits by selling insurance against them.

"I can see where that would be taken funny," said John Banczak, chief operating officer for the Austin, Texas-based reservation service, called RezOvation, which covers about 9,000 B&Bs.

But he said the International Lodging Protector policy was extending a common practice in the travel industry, in which airlines and online sellers such as Priceline offer insurance on nonrefundable payments.

In that spirit, here's my own International Consumer Protector policy, which I offer at no extra charge beyond the cost of a Sunday paper:

Know what to expect: More than 80% of hotels charge a late-cancellation penalty, according to a survey released last year by the American Hotel & Lodging Assn. The survey didn't show the typical amount or time deadline, and data on this are hard to come by.

A deadline of 4 or 6 p.m. on the day of arrival or the day before, with one night's rate as the penalty, seems common at major chains. But that could be changing.

"The whole concept of cancellation penalties has picked up, especially in . . . accommodations that are associated with theme parks or resorts," said Dan McGinnity, spokesman for Travel Guard.

Cancellation policies tend to be stricter at small B&Bs than at big hotels, and with good reason, said Bill Carroll, senior lecturer at the School of Hotel Administration at Cornell University in Ithaca, N.Y.

Cancel your reservation at a four-room B&B at the last minute, and the innkeepers lose 25% of the night's income, compared with just one-half percent at a 200-room hotel, Carroll said.

Although policies vary widely, Sandy Soule, vice president for marketing at, a marketing service for nearly 10,000 B&Bs, said many B&Bs charge one night's rate or 50% of the total stay -- whichever is more -- if you cancel less than a week before your stay.

Do the math: Many hotel chains offer discounted rates described as "advance purchase," "fully prepaid" or "book now and save." These bookings are usually nonrefundable, so if you cancel, you may owe the full price of your stay. Is getting 10% or 15% off your room worth the risk? And is that charming B&B worth risking hundreds of dollars if you get sick before your trip?

Consider insurance: For a premium that typically runs 5% to 8% of your trip cost, you can buy a bundled travel insurance policy that, among other coverages, will refund your otherwise nonrefundable hotel deposits if you cancel your trip for a covered reason. (Read the fine print.)

Negotiate: Especially at an intimate B&B, you may be able to talk your way out of a cancellation penalty.

The 12-room Carmel Country Inn in Carmel has a seven-day cancellation deadline, with a penalty of "payment of all reserved nights or any nights we are unable to resell," according to its website, but the reality is more flexible, innkeeper Amy Johnson said.

"We take it on a case-by-case basis," she said. "We don't want to alienate customers," about 70% of whom, she said, are repeat visitors.

Now that's what I call hospitable.


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