Archives for : april2017

Bevraging Paasvakantie.

Beste Collega’s,

op vraag van de dienst Toerisme graag onderstaande invullen en op Submit klikken om jullie gegevens door te sturen.

Deze bevraging is volledig anoniem.

Hebben jullie nog vragen dan kunnen jullie deze in het antwoordformulier aangeven, maar vergeet dan niet jullie email bij te plaatsen

zodat we weten wie we moeten contacteren.



Cancellations shooting up: implications, costs and how to reduce them

What was just a concern a few years then became a problem and now it has become a nightmare. We are referring to booking cancellations, which have increasingly grown to unsustainable levels, in some cases above 40% and 50%.

Some hoteliers have considered this normal and have adapted their daily operations and even their strategy to such levels of cancellations, even stating that it’s no trouble and that it doesn’t incur any extra cost. A surprising statement and one I could not disagree more with.

Why so many cancellations? Who is responsible?

There is no doubt that advances in technology make it increasingly easy and simple to book a hotel on the Internet. This factor encourages us to do it even when we are not sure that we are travelling, which results in many cancellations.

At the same time, there is growing pressure from OTAs for clients to finalise their booking, which once again generates new bookings that, in many cases, will end up being cancelled.

Lastly, the client has got used to booking “in case I go” or with the idea of carrying on looking: “I book a couple of hotels now but when the date arrives I will look for a better or cheaper one”. Once again, more cancellations.

Are OTAs to blame for so many cancellations?

Many hoteliers are furious and blame OTAs for this huge amount of cancellations, arguing the fact that “many bookings are cancelled a few days before check-in and this causes many problems”.

It’s obvious that OTAs have an impact on cancellations one way or another but let’s not forget that OTAs are just the tool and that it’s the hotel who sets the rules. The main reason behind so many cancellations is the passivity of the industry who, due to lack of time or not knowing how to deal with the problem, has been carried away assuming that these are the new rules of the game and that they must be accepted.

All OTAs allow you to create and apply different cancellation policies depending on dates and/or rates: “non-refundable”, “flexible up to 24 h.” and “up to 7 days before check-in” are just some of the examples. However, hotels tend to abuse flexible cancellations, even on the “hottest” dates. A few years ago, the main reason was the economic crisis (“I will take everything that is coming in because I need it”) and now it’s “if the competition is doing it, I cannot do the opposite”, which sounds a bit like “if everyone is jumping out of the window, so will I”.

Costs associated to cancellations

However, are so many cancellations bad? Do they affect our RevPAR or our GOP? Of course they do, and for many different reasons.

  • Loss of income in the shape of unsold rooms (opportunity cost). An unsold room due to a cancellation (especially close to the check-in date) is something that you cannot afford, especially during high season. This impact, which is difficult to measure, is critical since it fully attacks your most important part of your income statement: the income itself.

  • Special mention to the impact of no-shows. A no-show is just a cancellation with no notice. It’s the worst-case scenario since it leaves the room unsold for at least the first night. For the rest of the nights, you have very little room for manoeuvre. For urban destinations where average stays range from 1.5 to 3.5 nights, the problem is not as big when compared with holiday destinations (avg. stay 4 to 10 nights), where the problem is much bigger.

The no-show impact can be reduced by:

    • Charging the client for the first night or the first two nights (assuming that it the charge doesn’t bounce, something which is not always the case).
    • In hotels with high last-minute sales and walk-ins where you can find occupants for the rooms from the second night forth.

In the event of no show

  • Lower RevPAR when edged towards wrong revenue management. Seeing how bookings come in means you have to make decisions on the prices that, in the end, may be wrong. How many more rooms could you have sold if you had carried out a proper revenue management? It’s hard to estimate but there’s a high probability that it could’ve been many more. This affects both high and low seasons, which places a question mark on the statement that “cancellations aren’t a problem during low season”.
  • Lower RevPAR when selling cheaper at the last minute. Cancellations just before check-in leave you with very little room for manoeuvre and, on many occasions, no alternative but to lower the price in order to sell the room, which then lowers your RevPAR.
  • Higher distribution cost (or net RevPAR) when using OTAs too much for last-minute sales. It’s normal to lean on OTAs when you’ve had last-minute cancellations and you are trying to desperately sell the freed-up rooms. The problem is that you do so at a higher cost (channel cost, override, etc.), something which happens especially when they cancel a booking from your direct channel (the one with the lowest cost).

Some hotels see last-minute cancellations during high season as a “blessing” since they can then sell those rooms at a higher price. This may be true in some particular cases but a calculation should be made on how much extra production did you get compared to unsold rooms. Awaiting cancellations to increase the price is a huge gamble.

  •  Direct operating cost. For hotels that do not have an automatic download of bookings and cancellations, the time that a person takes making bookings which will then be cancelled is high. Time is money.

Cancellations aren’t the important part, here. The important part is the notice period of the cancellation

It’s better to have 70% of cancellations and knowing about them in good time than 20% of cancellations that are notified at the last minute. purists will quite rightly argue that many cancellations penalise you in the ranking. However, let’s leave this point aside for now.

The notice period of a cancellation is therefore the important part and the one on which you have to work on and devise a strategy orientated towards putting the cancellations forward as much as possible in order to put the cancelled rooms back on sale and not end up with an unsold room. In this example, the cancellation has barely any impact because you have not yet increased the price and you have plenty of time to resell the room.

How to reduce the impact of cancellations on my hotel?

In order to minimise the impact, as well as knowing the hot dates of your hotel as well as the destination pickup, it’s important to abandon the concept that “non-refundable” implies discount. Let’s see why:

Some techniques to minimise the impact of cancellations are:

  •  Measure, measure and measure. If you want to deal with the problem of cancellations, first you need to understand the problem at hand. What percentage of cancellations do you have? How does it vary per channel? Per month? Per source market? Per room type? What is the notice period of the cancellation? Your PMS should be able to provide you with all of these details. If he can’t, you have a problem. You are trying to solve a problem which you don’t know of. At Mirai, we publish a detailed cancellation report in order to make our clients’ decision-making process a lot easier.

  • Identifying false bookings. Bookings that you know are going to be cancelled but can do nothing but wait for that to happen are a big problem for many hotels. In these cases, you can charge and then refund 1€ for suspicious bookings the day it comes in and they will quickly come to light.
  • Along the same lines, limit the number of nights on flexible rates to 4-5 (in urban destinations) and 7-8 (in holiday destinations), especially for OTAs. In these cases, leave just the non-refundable one available. In some countries, bookings of 15 or more nights are required in order to obtain a travel visa.
  • Preventing cancellations.  Another good idea is to communicate with the client who has booked stays of higher value and give him a good pre-stay service, which will then reduce his tendency to cancel the booking.
  • Control the price on other channels. If you don’t control your distribution, your clients may find a better price for your hotel on an OTA with which you usually do not have a contract with. If this happens, the client will cancel the booking he had on your channel and book it again on another, where you will most likely have a lower margin of profit. Also, it will portray a bad image of the hotel to the client.

  • Do not waive cancellations in your non-refundable rates. If your client gets used to cancelling non-refundable rates, that can be a problem. This practice can be done on your direct channel (to build loyalty) but never through an OTA (since it’s the OTA who then builds loyalty).
  • Apply a revenue-management strategy that goes beyond the price. As occupation increases, as well as gradually increasing the price you should also make the cancellation policy more restrictive. Prepare your system with 24 h. notice, 2-3 days and even 7-14 days for holiday destinations. It won’t be a large obstacle for the sales and it will give you more room for manoeuvre in the event of a cancellation.
  • For low and middle season dates, you can apply a strategy combining flexible rates with non-refundable ones (this time linked to a discount). This does not necessarily imply lowering your average price. We wrote a post dedicated to this matter here.

  • For the hottest dates where demand exceeds your number of rooms, apply a non-refundable policy as the only one available, even if your competition does not do so. In this case, we would never apply the discount that we would normally associate to “non-refundable” but rather maintain the rate. It’s important to do so, even if there is not much time left for high season. Forget about leeway. If you are certain you are going to fill your hotel, don’t accept a single booking with a high probability of cancellation.

Your booking rhythm will slow down and this can be scary, which is why many hotels don’t do this. If it’s a hot date that you’ve always been full for, you won’t be wrong. In any case, you will fill the hotel up later than usual (the competition will already be full) but you will do so at a higher price.


Assuming a high level of cancellations is a dangerous game that can make you lose money and increasingly depend on intermediaries. Despite the fact that OTAs encourage the client to book (and cancel) with great ease, remember that the conditions of that sale are set by you. Is the objective to make money or fill the hotel as soon as possible?. Managing your distribution and controlling cancellations instead of them controlling you is in your hands.

How to calculate the real cost of each sales channel

Cheap? Expensive? Are you sure that you are measuring each action you carry out precisely? Grab your calculator and read this.

Calculating the costs of each channel and of each optional proposal with which you are continuously tempted with is essential to understand its profitability, comparing and making well-founded commercial decisions.

The analysis that we propose is based on two premises: calculate the percentage and consider everything, astutely adding what is not usually evident.

10 examples:

1. How much does cost?

logo 2015

Usual answer: “15%

Correct answer: 16,5%

Reasoning: commissions on your retail price and not only in your taxable base. If you sell at 110€ (100€ + VAT) and pay 15% commission, that will be 16.50€.

You earn 110€ but 10€ of those are taxes that go to tax office and are not part of your income. In the end, you end up with just 100€ and 16.50€ of those are 16.5%.

  • A few years ago, it wasn’t like this. It allowed hotels to show prices without VAT and it calculated the commission on that net price. When it began to demand final prices, VAT included, it started charging commission on that final price. In the end, it was a covert commission increase. Why were they still talking about “15%” as if nothing had changed?
  • When the VAT rose in Spain, in practice this was also an increase in commission. Did anyone complain?
  • If the IGIC (Canary Islands tax) is 8%, in practice hotels in the Canary Islands pay less commission than those in mainland Spain (10%).
  • Pays on VAT, and why not on the tourist taxes of some territories?… I don’t want to give any ideas.
  • It is not about charging “15%+VAT” like we often hear. No, their invoices do not have VAT because they are among European countries. It is an apparently clean VAT.

Charging commission on taxes is a disgrace. Since it already does it (and nothing will change because of its dominant position), the hotel must at least be intelligent enough to re-calculate it internally and know about what numbers we are really talking about.

2. ¿How much does Expedia cost? (in its merchant model)

expedia-logo 2015

Usual answer: “22%”.

Correct answer: Between 24,2% and 34,2%


Expedia also charges commission on taxes, so we should be talking about 24.2%. Also, in bookings with packages with 10% discount, your accumulated reduction of income will reach 34.2%.

As an example, a hotel that sells 10,000€ on Expedia of which 7,000€ are complete price and 3,000€ are discounted-package prices, the average cost of Expedia is 2,520€, which is 27,2% commission.

The numbers are like this: 8,000€ x 24.2% = 1,694€ plus 3,000€ x 34.2% = 1,026, which results in a total of 2,720€. Dividing it by 10,000€ of production, we get the average commission.

3. ¿How much does it cost to be Preferred with

logo y hotel preferente

Usual answer: “17%, in other words, 2% more”

Correct answer: 18,7%.

More precise answer: For the sale that you already had without being preferred, you don’t pay anything extra. For the new sale that being preferred, you pay between 20% and 60% commission. It all depends on the volume of new sales generated. Calculate it yourself.


A hotel that sells 10,000€ + 10% VAT and its non-preferred commission is 16.5%, pays 1,650€ in commission.

It decides to become “preferred”, and its commission rises to 18.7%. Let’s say that its sales increase to 12,000€ (20% more).

Therefore, it pays 2,244€ in commission.

  • For the 10,000€ that it sold before it pays the same, therefore 1,650€
  • For the new sale, 2,000€, it’s paying the difference, in other words, 594€. This means 29.7% of the cost for this new sale.

Therefore, depending on the increase in sales that accessing the Preferred programme has meant, you will be paying one commission or another. Do your own calculations but you will probably be surprised.

Sale increase Comission on new sale
5% 62,7%
10% 40,7%
20% 29,7%
30% 26,0%
40% 24,2%

4. And over-commissioning on

Usual answer: “The commission that I choose”

Correct answer: The commission that you choose, taking into account once again that you will pay for amounts that are going straight to the tax office.

More precise answer: Just like in the Preferred programme, the cost on the sales that you already had does not change. However, the cost of the new sale generated by over-commissioning oscillates between 30% and 113%.

A hotel that sells 10,000€ and its preferred commission is 18.7%, therefore pays 1,870€ in commission.

It decides to over-commission “for a few days because it has low occupation” and sets the commission on the extranet at 22% (in truth, 24.2%)

Let’s say that its sales rise to 14,000€ (40% more). Therefore it pays 3,248€ in commission

  • For the 10,000€ that it sold before it pays the same, in other words 1,870€
  • For the new sale, 4,000€, it’s paying the difference, in other words 1,518€. This means 37,9%.

Therefore, depending on the sales increase that over-commissioning has meant, you will be paying one commission or another:

Sale increase Comission on sale increase
5% 113%
10% 68,2%
20% 45,7%
30% 38,2%
40% 34,4%

5. ¿How much does Booking Genius cost?

logo booking genius

Usual answer: “10% price discount for Genius clients”

Correct answer: Apparently simple:

  • For non-Genius clients there is no increase in cost. They will pay normal commission.
  • For Genius clients (both those who booked before at the hotel at a price without discount -cannibalisation- and those new ones who would not have booked at the hotel had it not been for Genius) the commission will be of 26,83% (18.7% for preferred + 10% discount in price). It would be of 24,8% were it not preferred.


Let’s go back to our preferred hotel that sells 10,000€ on Booking

It decides to participate in Genius. Let’s use this hypothesis:

It increases sales by 20% but it has 10% cannibalisation at the same time.

○      9,000€ from non-Genius clients at preferred commission (x18.7%)=1,683€

○     1,000€ from Genius clients that used to book the hotel and that now still book but with 10% discount (x28.7%) = 287€

○     2,000€ of sales from new Genius clients (x28.7%) = 574€

The total cost rises to 2,544€, which on a sale of 12,000€ is a cost of 21,1%

We could consider a third block, that we omit to simplify calculations: Clients that used to book through another channel (i.e. the official website) and that now book on because they have an additional 10% discount. The damage is terrible because the cost shoots up. Every action of lowering price exclusively to a channel results in a large impact in sales on another channel (since most of them compete for the same clients).

To see how the cost of Booking Genius changes, we need to evaluate 2 variables: degree of cannibalisation and real increase in sales.


Real increase in sales

Total cost






















6. How much does a channel with commission + fixed costs? Or commission + volume discount on sales?

Usual answer: “The agreed commission”.

Correct answer: The result of applying the fixed costs or volume discount to the sale and adding said percentage.


For instance, a hotel that pays 20% and a fixed monthly rate of 400€.

Let’s say that its yearly sales are of 80,000€.

  • The commission cost is 16.000€
  • The fixed-rate cost is 400€ x 12 months = 4,800€

The total cost is therefore 20,800€, which on a sale of 80,000€ is a total of 25.5%.

The less that your fixed-rate channels less, the larger your commission will be, in many cases reaching 30% or 25%. Because many times we just look at the commission cost, we do not realise this.

The same calculation applies to the volume-discount channels over sales.

7. ¿How much does it cost to participate in a Groupon promotion?

groupon logo

Usual answer: “The agreed commission, I negotiated just 15%”

Correct answer: To the commission, you must add the considerable decrease in price that they ask in order to participate: 40%-50%?


For instance, let’s have a hotel that decides to take part in a promotion. Its price is 100€ and they ask for 50% discount, in other words 50€. On top of that, they have to pay up 15% of all income.

Therefore, the real cost of Groupon in this case rises to 65%.

Let’s ignore once again the new cannibalisation sales effect that occurred in other channels at correct prices and that are done now through this channel without such elevated costs.

8. ¿How much does a merchant channel cost?

tui logo

Usual answer:Nothing. I have no cost”.

Correct answer: True, there is no variable cost but there is a cost in loss of opportunity of having been able to sell at a higher price and earning more.


For instance, a hotel that sells 10,000€ through a channel like TUI with whom it works only with net rates. On those 10,000€ it has no costs. What the hotel does not look at or tries to quantify is how much TUI has earned with the revenue on these rates that you give as net.

9. How much do my corporate sales and sales via agencies cost?

corporate hotel

Usual answer: “The commission that I pay the agency. Or the salary of my sales rep.”

Correct answer: It depends on the volume of sales that this sales rep or agency generates.


Let’s say that our hotel has a sales rep for companies with a gross salary of 20,000€, which results in 27,000€ approximately if we add costs such as social security.

Let’s say that his/her work generates sales of 85,000€ for the hotel.

The cost of the corporate channel is no other than 27,000€ divided into 85,000€, which is 31%.

10. And how much do the direct sales through my website cost?

web hotel

Usual answer: “The commission or fixed rate of my search booking engine.”

Correct answer: A lot more. The sum of all the costs associated to the direct sale divided by the production.


For instance, let’s have a hotel that sells 200,000€ per year on its website/engine.

Let’s count the costs of direct sales:

  • The booking engine commission (let’s say 3%) which is 6,000€
  • Adwords in Google, 4,000€
  • Website cost (9,000€) to amortise over 3 years, which is 3,000€ per year.
  • Company in charge of the SEO: 1,200€ per year
  • Plus Profile on Tripadvisor, 2,650€ per year.
  • Tests carried out to appear on the price-comparison website Trivago: 970€
  • Web hosting: 350€ per year

If we add all of these costs we get 18,170€, which over a production of 200,00€ is a cost of 9% on the direct sales cost through the website.

And now use all of this knowledge

Costs are necessary, of course. It’s also acceptable that some costs are bigger than others. Getting different clients costs different amounts. What we are saying here is that the measurement should be done correctly.

With these considerations, next time that a sales rep or an account manager describes the “low costs” of his attractive proposal, take out the calculator in front of him and ask him the uncomfortable questions that we have posed on here. He won’t know what to say.

After, when he’s gone, study your proposal and contrast it to what it would bring you, taking into consideration what you would have remaining from other channels and, especially, in comparison to all those other cheaper initiatives that you rejected for years for being “too costly”. You will find that they are not as costly as you first though. At Mirai, we could put forward a few of them for you.

Cancellations on 104% more than on the hotel website. Expedia, 31% more

Many hotels do the right thing by offering better stock and price conditions to, and of course to their own website, rather than to Expedia after seeing that they make more money that way, since the net price (after taking out the commissions) is almost always superior.

However, rarely are these same decisions made depending on cancellations and the costs that these generate per channel. It’s not easy to estimate or measure this cost since it doesn’t leave a direct trail (albeit an indirect one) on the average price or production of each channel, but we should not ignore it nevertheless.

We will analyse these costs as well as determine who is responsible for the fact that cancellations are shooting up: the hotel or the channel?

Do cancellations vary subject to the channel?

We have chosen 40 of our channels and analysed the cancellations (% on room nights) in the last four months (January-April 2016) of our three most important online channels:, Expedia and the website itself. The results are as follow:

How cancellations vary subject to the channel

According to our analysis, the cancellations are 104% more than the direct channel ones, while they are 31% up in the case of Expedia. The relation between and Expedia is +56% in favour of the former., Expedia and official website cancellations

It’s important to note that Expedia’s cancellation varies a lot subject to the model that hotels are using. The cancellation of the Package rate is very low, less than 3% (airline rates are mostly non-refundable); the Expedia Collect (Expedia charges the client) cancellation rate is around 12% and the Hotel Collect (pay directly at the hotel) cancellation rate is close to levels at around 35%.

An example will help to better illustrate how distribution costs vary per channel if we take the opportunity cost into account had we not sold any of the rooms after the cancellations.

Let’s work with 100 room nights generated by each channel at a price of, let’s say, 150€. We then assign the resulting cancellation percentage from our analysis to each channel. We assume 85% recovery of these cancellations (an optimistic percentage), in other words, that the hotel manages to sell them through the same channel after the cancellation and that they can still maintain the sale price of 150€. After adding this opportunity cost, we see how the final commission of would go up to 24.8% (increasing by 4 points), the Expedia one to 26% (increasing by  4 points) and lastly the website one (in which we assume 8%) which would go up to 11% (+3 points).


These numbers would vary in the different hotels. We invite you to make this calculation in your particular case and to start assigning cancellation costs to each channel in order to have a more complete picture of your distribution.

Why is the channel with the most cancellations?

If the hotel applies the same cancellation restrictions to the three channels equally, why are the results so different? We believe that the reasons are as follow:

  • Fraudulent bookings. The truth is that most of these bookings (like, for example, to obtain a visa to enter a country) go through, since it’s the most popular and important OTA in the world. These are bookings that the hotel usually identifies as fraudulent and cancels on the spot, therefore with little impact.
  • Payment method.  Expedia generates many of its bookings in the Expedia Collect mode, where Expedia charges the client directly (not necessarily non-refundable). It has been psychologically proven that you pay in advance when you are sure that you will be going, and therefore have less of a chance of cancelling. Also, this payment method avoids any kind of fraudulent booking.
  • Package rates. A high percentage of Expedia bookings (depends on the hotel) include a flight, which is usually a non-refundable rate. The cancellation of these bookings is, therefore, very low, thus considerably reducing Expedia’s cancellation average. It would seem fairer to compare with Expedia in its mode of paying directly at the hotel, although unfortunately the data that hotels have is not always broken down in this way, thus making it very difficult to measure.
  • OTAs work more on inspiration. The hotel doesn’t with its website. Mail marketing campaigns are commonplace to generate booking interest. Many clients end up doing so but, since it’s so casual, they book first and then see if they have time and money to actually go. In any case, cancellation is free. The inspiration phase is still far from the booking phase and therefore there is a higher probability that many bookings end up being cancelled.
  • Culture of each channel. is increasingly encouraging clients to book even if they’re not sure that they will travel. For that, it employs dozens of booking accelerators that pressure clients with a message such as “book now or you’ll lose the room”.  Here is a message that it regularly sends to its clients:

2016-05-19 (1)

This speculation suits Even if many rooms are cancelled, many won’t be. The hotel will most likely use again to sell them, since it is the channel that best works with last-minute bookings. itself made a test some time ago where it notified the client when the hotel lowered its booking price (so that the client would cancel and make a new booking). This is an excellent service for the client but it was not received with open arms by the hotels, who themselves had an answer to it: make all rates non-refundable. In the end, stopped this practice but it’s still active on, and

The traditional OTA discourse is that the final result is what matters and it ends up benefitting the hotel if it’s a positive one. Cancellations aren’t a problem. This statement is only partially true and supports itself on how hotels fail to calculate the impact of cancellations.

  • The hotel-website client is different. Our experience tells us that this client is the most loyal client to the hotel and, therefore, speculates less. If he books at your hotel, he almost always goes (unless he has a setback).

The truth is that knows that all of these cancellations are a problem for the hotel and they are working to reduce their impact. For that, they recently introduced two new tools to facilitate charging the bookings from their extranet and there seem to be movements to exempt the hotel of non-payments by clients, with taking on that risk. The latter seems like a great move by We will await more details on the matter.

What to do to take into account the cancellations of each channel?

As we’ve seen, even if you apply the same distribution strategy and cancellation restrictions, each channel will have a different percentage and cancellation notice period. These cancellations are costing you money and you should look to assign them to each channel.

If we penalise Expedia for their large commission (closing sales or increasing prices), we should also do the same to other channels with a higher cancellation impact.

If has the largest index of cancellations, you should consider applying a more restrictive cancellation policy in comparison with the rest of the channels, especially in comparison to your own website and particularly during high season. A holiday hotel, for example, would add a 21-day cancellation notice period for its hottest dates on (or, directly, non-refundable) and would maintain 7 days on its website. An urban hotel, during dates of high demand, could do the same with 24 h. and 72 h.

The other tool the hotel has is the price. Increase the price on the channels with a higher cancellation rate. If you manage to monetize them in each channels (unsold rooms, average price reduction, staff costs, etc.), and bring it to a total cost, you should add it to the commission of each channel, which would give you a more complete picture of reality. The difference in cost between and Expedia would be reduced and, on the other hand, would further increase between OTAs and your own website.


When we compare the costs per channel, we should broaden the analysis and have a global view. Direct commission is just one of the many costs that each channel has. Other ones that are also known, albeit rarely calculated properly, are the yearly/monthly fixed costs and the sales rebate. On the other hand, we rarely include the cancellation costs in this analysis.

If we were able to monetize it, we would realise that the channels that appear to be more profitable are not as profitable as we think. Once again, it continues to show that the direct channel is the most profitable one of them all and one that the hotel should strongly commit its long-term strategy to.

20 reasons to leave Booking Genius

Reasons to join Booking Genius

Hotels usually resort to the Genius programme when:

  • They look for more sales on low-demand dates.
  • They consider that has “high-quality” clients under control (frequent travellers) which they wouldn’t otherwise have access to.
  • They want immediacy.
  • They don’t see a problem in giving an exclusive discount to these Genius clients because they are low-demand dates and “what does it matter because the hotel won’t fill up anyway”.
  • They consider that they have the situation under control and that they will “leave Genius” when everything goes back to normal and they don’t need it.
  • They follow recommendations from their account manager and try it out. In fact, com argues that, by activating Genius, many hotels see their average price go up instead of down. This, according to them, is due to many Genius clients booking rooms without the discount.

This reasoning means that joining Genius is logical, understandable and I would even go as far as saying that it’s the right decision in certain scenarios. However, in most cases, it doesn’t adjust to reality, it’s basis is wrong and, above all, it’s a strategically dangerous decision.

Why do hotels perpetuate the use of Genius?

After activating Genius, time goes quickly. Weeks, months and even years go by and “being in Genius” is perceived as normal. Many hotels do not re-evaluate it periodically (which they should do) to see if it’s still worth it. This happens because:

  • Comfort. One of the key successes of is that it makes life easy for hoteliers. Genius is also comfortable.
  • Lack of time to measure results and analyse whether the value it adds is bigger than the one it destroys. Comfort and lack of time go hand in hand and exploits this to perfection.
  • Lack of tools to automatize data for subsequent analysis. Whoever wants to analyse something, has to do so by hand. Neither the PMS nor help you with this task.
  • Lack of knowledge to make the right exercise. Despite having the data at hand, how do I measure the impact Genius has over my income? And over my expenses and, therefore, my GOP? And over my average price? Which part of the sales is new and which one is cannibalised? How does it impact the sales from other channels?
  • Ignorance or fear of “what will happen if I leave?”. Although many hotels have not been part of Genius for very long, they now feel fear if they leave, almost as if there was an abyss out there.

Visibility, new sales vs. profitability

We do not question that Booking Genius adds visibility to your hotel – a word that sounds great although it’s used lightly and even wrongly in many cases. This visibility allows you to access a larger pool of clients that you supposedly couldn’t previously access, although it also cannibalises clients that you already had and that booked rooms at your price without a discount. All of this ends up as an alleged larger sale, but at a much larger cost, although this is overlooked since it’s “low season”.

What we do question is the suitability of the Genius programme, its profitability on a global scale for your hotel and, above all, the model’s sustainability (is this the path we want to follow?). Therefore, our recommendation is to permanently revise the programme in all cases and, in most of them, leave it.

20 reasons why you should leave Booking Genius

We are only talking about hotels participating with 10% discount, not about hotels offering amenities. doesn’t allow this second option anymore.

10% vs. extras

  1. For its high cost, no less than 29.8%. If we add up the income you are no longer making (opportunity cost) and the commission and we divide it by the income without VAT (tax base which is 10% in France and Spain), you get 29.8% for preferred clients and 27.6% for the rest. Would you accept a channel that asks for 30% commission? Well, you’re accepting it with Genius.imagen1EN
  2. Do the new sales compensate for cannibalised ones? By also having the discount applied during your high season, which is when you don’t need Genius, the income you miss out on making with these high-season discounted bookings -bookings which would have been made anyway at a normal price- means that this alleged new income made during low-season, which is when you want to reinforce sales, is cancelled out.Let’s see a comparison between two bookings: one during low season -a booking that is allegedly received thanks to being in Genius- and another made during high season -which you would have received anyway without being in Genius. This comparison does not apply to Genius hotels that don’t offer the 10% discount but rather differential values, an option that is gradually eliminating.imagen2ENThe “new” booking brought in by Genius during low season (we put “new” in quotation marks because we question the fact that it wouldn’t have come in without Genius) means a new income of 53.21€.On the other hand, the booking made during high season that comes in through Genius -when you didn’t need Genius to have this booking anyway- makes you lose 20€ of income, which ends up being 18.18€ after taking away the VAT.If the ratio of bookings that come in through Genius is 3 to 1 during high season in comparison to low season, you are clearly losing money. You are missing out on 18.18€ per booking, which is 54.55€ for 3 bookings, and only making 53.21€ thanks to the new booking from Genius.
  3. Because you are building customer loyalty for (and not for your hotel) and, on top of it all, you are paying the bill for it. It makes no sense whatsoever.
  4. Because selling at a discount has no merit, not even during low season. Speak to any bed bank or OTA, give them an exclusive 10% discount and wait for the clients to arrive.
  5. Because exclusive discounts are something of the past… or perhaps not? If another channel asks for an exclusive 10% discount, do you accept it?
  6. Because there are other ways of gaining visibility when you need it without having to activate Genius and losing control:
    • Moving your prices more actively and aggressively, both upwards and downwards.
    • Launching commercial actions on other channels, including your direct one, and that they cost the same as that 30%. Have you tried calling a channel to offer 30% commission to boost sales on specific dates? They would love to hear from you.
    • Over-commissioning on these low-demand dates. You can reach the same cost without giving the advantage of the exclusive rate.
  7. Because Genius clients are not under control nor exclusive. If they are “frequent travellers”, then they know how to search and compare before choosing a hotel on different OTAs and price-comparison sites. In other words, you can have access to them without having to join Genius. Also, your hotel still appears on searches of Genius clients although, naturally, with less presence than Genius hotels.
  8. Because the programme is not as clear as you would need. Despite that is committed to giving more information of what is going on in the Genius world -for example, we already know the bookings from Genius clients with discount, Genius clients without discount and non-Genius clients- the key question for hotels still remains: how many NEW sales does your hotel have for being Genius and how many sales has it cannibalised from clients who would have booked anyway at a normal price? assumes, from a self-interested point of view, that the sale that comes from Genius clients is a new sale when that is never the case.image4
  9. Because it’s a rigid programme in which you cannot set the limits that you would like. Genius is applied on your most popular room, no matter which one it is, and you can configure 30 blackout dates, which are the dates that the Genius discount cannot be applied. 30 blackout dates is a very low number, and you’d need many more days to protect. In order to be able to choose single days in the calendar (not a range of dates, which limits you even further), you have to do it through your account manager, which is an inconvenience from an operational point of view.
  10. Because offers Genius rates to companies that are registered on and this may attack your corporate segment. On top of it all, anyone can create a corporate account, since they do not require a VAT number or any kind of credentials for registration (just a name, which can be made up).image6
  11. Because, further down the line, you can reactivate it if you need to, respecting the six-month hiatus imposed by to rejoin.
  12. Because Genius openly competes with your loyal and direct clients and even with your rewards programme if you have one or wish to set it up. What will your loyal client think if he sees that it’s always cheaper for him on Genius? Nothing good, as you can imagine.
  13. Because it increases your dependence on a channel that in most cases is already dominant, particularly for urban hotels.
  14. Because the more it sells for you, the more fear you will have to leave.
  15. Because, believe it or not, you cannot compete with your own rewards system. It’s the equivalent of a local independent store trying to compete with a large department store. On equal terms, the big fish always wins.
  16. Because it you tell your account manager that you want to leave Genius, he will be on alert and this once again shows the (strategic) importance that gives this programme.
  17. Because Genius, with its exclusive price advantages, eats up the rest of your distribution channels, including your direct web and phone sales.
  18. Because it may damage your preferential rates for groups or weddings. They see a better rate on Genius and they could ask for the same discount you gave them albeit over the Genius rate, an absurdity that many hotels are currently experiencing.
  19. Because it’s the year and month to do so. If you don’t make these decisions in 2017, which is forecast as a record year in Spain, when are you going to make them?
  20. Because deep down you know it’s the correct decision, but you never find the time to make it.



Genius is a simple, comfortable, functional and highly attractive programme for hotels. It’s easy to give in and get carried away, since it makes your life easier and you barely have time but do have many open fronts.

Once again, the question is: do we prioritise comfort or profitability? Both in the same formula are not compatible. At Mirai, we are committed to profitability by working harder. Everyone chooses what they want or can but make sure you are consistent and accept the results.

Non-refundable rates: everything you need to know

Non-refundable rates: everything you need to know

There are all kinds of cases: hotels that don’t offer them, hotels that let you choose, others that only have them on certain dates… Is there a criteria to go on? Any specific guide of what to do? What does it depend on? Here are a few ideas that may help you.

The option to cancel is a SERVICE to clients

Payment at the hotel and free cancellation, a generous and attractive action. However, like all services, it comes at a cost to the hotel: operational logistics, uncertainty

and empty rooms, especially when occupation could reach 100%.

The client is used to it… Both to paying more for having the cancellation option and, looking at it from the other side, to paying less in exchange to committing to the booking. This action is now employed in other services of the travel industry, such as airlines, trains, etc. Even elite and corporate hotels, which would normally be open to offering this service, have made non-refundable rates commonplace (and they are thinking about being more restrictive with their refundable-rate conditions).

A service that includes everyone? Some hotels always allow you to cancel up to the last minute. In the end, this means that all clients are going to pay for it, whether they enjoy the service or not. These services come at a cost and the general price will go up in order to carry these costs.

  • It is not a simple matter of eliminating the cancellation option on all of them, since that would reduce the standards of service. If it also includes prepayment, it could put some clients off, clients who would not be prepared to pay in advance and who may have been prepared to pay a higher rate.


  • It is also not about “lowering” the price by creating non-refundable offers at a lower price. That would have an impact on the price.

For those hotels that start with a single option, the vision would be to charge more to the group of clients who would be ready to pay for it and, on the other hand, compensate the increase by reducing the prices for the rest. A good compromiseseems to be to let the client choose. You will be giving them more options and the hotel would have another tool to play with. Most of the hotels are already doing this.

Deciding when and with what conditions is what everyone should focus on and perhaps some of these ideas will help to decide how to do it:

Objective: having a large number of non-refundable bookings

While still offering refundable rates (for those who will pay for them), a large amount of confirmed bookings has many advantages for the hotel:

  • More efficient revenue management, by reducing the impact of cancellations.
  • Less overbooking. A few decades ago, when last-minute cancellations were the norm, hotels used to force overbooking in order to compensate for cancellations. Today, the more confirmed bookings the hotel has, the less need there is to overbook.
  • Better cash flow. “Non refundable” is synonymous with prepayment, or at least with the option for the hotel to pre-charge (some hotels just need the credit card to guarantee the booking without charging it). If you are a hotel with need for cash, this high number of confirmed bookings will help you.
  • Fewer arrears. There is a huge difference between the tranquillity that comes from having a large number of prepaid bookings and, as an extreme case, a hotel that is trapped due to what it’s owed by Orizonia, Marsans or Transhotel.
  • More profitable CPC investments. Measuring the return of online marketing is complex. CPCs are twice as complicated since they are paid for per click, without taking currency conversion into account and on top of that not having discounts for cancellations (something which does not happen with CPAs, which come with an adjustment to deduce cancellations). The fewer the cancellations, the more secure the return of your CPCs will be.
  • Less damage if you lower the prices. Last-minute offers, or price reductions in general, are not recommended, but sometimes it is inevitable to resort to them since predictions can fail us. One of the disadvantages is that clients that already have a booking find out and, as well as going through the bother, have their booking price reduced to match the lower one.

The probability of that cannibalisation effect decreases with the more non-refundable bookings that have been made. It is not because they will get annoyed if they find out about the price lowering but rather because it’s less likely that they will discover it. They have already paid your hotel and cannot cancel it: they will no longer monitor your hotel and have given up looking, and are only looking forward to the stay. However, those who can still cancel have their eyes wide open, proof of which is their high cancellation ratio.

If the overall cancellation percentage of channels such as reaches 30-50%, which is the percentage of their refundable rates? 60%? 70%?

When to offer them and at what price

They don’t always have the same value for the hotel. Two variables will show you the way to design them:

1. The further in advance, the more value. A booking made months in advance is a gem for the hotel and a blessing for the revenue manager. On the other hand, a last-minute booking has little chance of cancellation.

2. During low season, it doesn’t matter. If you are going to have spare rooms, the “unattended demand” effect disappears. Cancelled bookings will be less damaging because they will have not left clients out who would have stayed in them but had no availability.

Once again, it’s not about launching non-refundable offers during high season when you need them the least. The focus should rather be on pushing to charge the refundable rooms during those key dates at a high price.

Also worth noting

Non refundable = Prepayment? The two concepts go hand in hand but are not exactly the same and there is no reason why they should be linked.

For a non-refundable rate, all that is needed is the guarantee that the hotel will eventually charge for the room, although it won’t necessarily do it as prepayment.

On the other hand, charging prepayment could also not be linked to a non-refundable. In this case, refunds should be anticipated.

The Riu chain, for example, allows clients to prepay voluntarily, thus keeping flexibility in their cancellation option.

Be careful with payment gateways. A virtual TPV system that charges during the booking process is the most comfortable and secure way for a hotel. However, it could affect the conversion rates. Virtual TPVs are restrictive when it comes to accepting charges, even more so than the charges made subsequently at the hotel TPV. It could be refusing bookings without the hotel knowing.

Sometimes, the operation can be conditioning. Funnily enough, some hotels have problems when it comes to organising prepayments or charging for penalties. These limitations end up conditioning their decisions. If it’s the case, perhaps they should consider whether something is going wrong.

Waiving penalties? A strategy for non-refundable rooms must think about what answer to have for this subject. Judging by the pressure exercised by, it doesn’t seem easy to find the balance between a good service and coherence.

  • Waiving penalties would make the non-refundable concept pointless and it would be unfair towards the clients who did pay more for having the right to free cancellation.
  • Never waiving penalties requires being ready to holding out to the pressure from Even though the hotel has the last word, sometimes it’s itself who pays for the penalty costs in order to keep the client happy, making it seem like is the good guy and the hotel is the bad guy.
  • Waiving the penalty only if requested would be discriminatory towards other channels.

Although most hotels have found an answer to these topics and have defined their policies throughout the years, it’s not always easy to make the right choice. At least, by taking into account everything that must be anticipated, hotels are closer to doing things properly.