The Logic Behind Inn Policies – Part One

When we bought our first inn, I remember thinking that a lot of the policies we inherited from the previous innkeepers seemed kind of, well, rigid. I mean, I had stayed at countless Marriotts and Hiltons where I was able to cancel my reservation the day I was due to check in and there was never any mention of minimum stay requirements or deposits being taken. So what was up with the strict and lengthy page of policies citing rules involving “14 days notice,” “reservation handling fees,” and “three night minimums?” It took a few months before I thoroughly understood why a small inn’s policies couldn’t mirror those of a Marriott. Which leads me to speculate that aspiring innkeepers or, worse, potential guests, must read the policies of smaller lodging establishments such as ours and wonder where we get off charging guests for reservations they don’t use or demanding a three or four night stay. So, my next few posts will attempt to explain ourselves as well as answer any questions from a business perspective.

Policy Explanation #1: What’s up with a 14 day cancellation policy?

Our cancellation policy states (and I’d like to defensively add that it is a lot more lenient than many other inns in which I’ve stayed):

A deposit of one nights stay is required to guarantee all bookings of four nights or less and two nights stay for more than four nights. We are able to refund the deposit, minus a $30 handling fee, if we are given 14 days notice for a cancellation. Otherwise, the deposit is refundable only to the extent we are able to re-rent the room.

So why do we require 14 days notice when Marriott hardly requires any notice at all? For starters, a Marriott has several thousand hotel rooms across the world. We have just 16 rooms which means not only do we have fewer to sell and therefore retaining a room for a guest means holding over 6% of our potential revenue for the night, but we also have a smaller marketing budget so it takes longer to sell 16 of our rooms versus 16 Marriott rooms. The bottom line is, a small business like ours can’t absorb the lost revenue like a Marriott can. But, you may wonder, why should the guest have to forfeit a deposit just because we don’t have the corporate cushion to recoup our loss? Think of it like this: a guest reserves a four night stay which we have been holding with a one night deposit for, say, three months. The day before they are due to arrive, they cancel due to illness. Fair enough – I probably wouldn’t want to travel when I’m sick either. Now, it seems somewhat insensitive for us to keep the one night deposit given the circumstances; however, we had been holding the room for three months and we’re still out three of the four nights, so really, it’s us taking quite a big hit. Staying at a smaller property like ours is certainly a bit more risky as far as the cancellation policy goes. However, in my completely unbiased opinion, the benefits of staying at an independently owned inn, (i.e. breakfast, WIFI access, afternoon tea, snacks, room service, DVD library, and use of our fitness center and pool, all for no additional charge), far outweigh the slim chance you will need to cancel at the last minute and lose your deposit. Hey, when you look at it like that – you’re actually saving money with all the freebies at a smaller inn!