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Hilton Tests New Cancellation Penalty

A $50 penalty to cancel your hotel reservation? That’s exactly what Hilton is now testing at a handful of its hotels.

Is there a limit to the number of ways the travel industry can nickel-and-dime consumers? If there is, it’s nowhere in sight.

The latest is from Hilton, which is testing a new cancellation fee in around 20 properties across several of its hotel brands. According to Skift, the policy, if adopted systemwide, would subject Hilton customers to a $50 charge for reservations canceled up until midnight the night prior to check-in. Same-day cancellations would remain subject to the current policy (itself new this year): a charge of one night’s stay. Notably, members of Hilton’s HHonors program would be exempt from the $50 cancellation fee.

The fee’s effect would be two-pronged. First, it would generate incremental revenue for the company, from customers who are unlucky or oblivious enough to have to cancel their bookings. And second, by exempting HHonors members from the fee, it would drive increased membership in Hilton’s loyalty program. Which in the long term would lead to more bookings, and increased revenue. Either way, it’s all about the money. More of it. For Hilton.

Not so, according to a Hilton source quoted in the article: “With record occupancies, many rooms are being held, then not used, meaning other customers who want those rooms cannot book them. This is problematic for our customers because they do not always get access to rooms they want, because they are being held but are ultimately canceled.”

Hilton, then, would have us believe that the new fee is in the best interests of the majority of its customers, who will no longer be prevented from booking rooms by a few system-gamers who are holding reservations only until a better rate becomes available elsewhere.

Even with the lodging industry’s current high occupancy rates, I’m not aware of any widespread (or narrowspread) complaints from travelers unable to book rooms at full-to-capacity hotels. On the other hand, it’s a near certainty that there will be complaints about a $50 cancellation fee. At least, that is, until it becomes an industry standard. Which is probably Hilton’s HHope.

Reader Reality Check

Is the cancellation policy under consideration a consumer benefit, as Hilton claims, or a consumer gouge?

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This article originally appeared on FrequentFlier.com.

By Tim Winship

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.