Hilton Ditches Cancellation Fee. For Now.

by Jessica Montevago

Hilton Worldwide has decided not to go ahead with a strict cancellation policy it’s been testing in a dozen hotels. But it likely will implement a two-tiered system that charges slightly more for the option at some point this year.

“We have collected the data we need from this test and have ended the trial to evaluate the results,” the company told Travel Market Report in a statement.

The parent company of Hilton, DoubleTree, and Embassy Suites probably will allow guests to pay more if they want the option to cancel and less if they don’t, Hilton CEO Christopher Nassetta said during the company’s earnings call with analysts Friday.

“I think you'll see us start to move customers down that journey of recognizing, yeah, if you want total flexibility, there is a price for that,” he said.

The program, tested in November and December of 2015, charged guests a $50 fee for cancelling reservations any time after booking. "Customers hated it," Nassetta acknowledged, “but that's not really surprising.”

The fee did not apply to members of the Hilton HHonors loyalty program.

The company said late cancellations have historically created challenges for both guests and owners.

The airline industry has already adopted cancellation fees, and the method may soon be spreading to the cruise industry–Norwegian Cruise Line launched cancellations fees this year.

As last-minute booking apps and short-term rental sites like Airbnb continue to grow in popularity, hoteliers have to find new sources of revenue, including implementing new fees. Both Hilton and Marriott International last January launched a 24-hour cancellation policy, charging one-night's room cost for guests who fail to cancel before 11:59 p.m. the day before arrival.

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