The business case for booking protection in hospitality

The reality on the ground: bookings are later; cancellations are higher

If forecasting feels harder than it used to, you’re not imagining it. Across the hospitality industry, booking windows are becoming increasingly shorter, while cancellations remain elevated. STR has highlighted how shorter booking windows are reshaping in-market conversion and pace; more stays are getting booked closer to arrival, which squeezes decision time for revenue teams.

In some places, the shift is dramatic. Marriott noted the booking window in Greater China dropped to under three days, complicating pricing and yield decisions.

Cancellations remain a costly drag. D-EDGE’s global distribution report indicates that cancellation rates remain high, with notable channel variation; notably, over 40% of Booking.com revenue in the study cohort was cancelled.

Guests still value flexibility; in one Expedia Group case study, switching to a more flexible policy increased bookings by 26% and revenue by 53% per listing. This is great for conversion, but a management challenge for hotels without a safety net.

That’s the backdrop: later decisions, higher cancellation risk, and travellers who still expect options.

Booking behaviours for hotels and attractions

Guests plan trips around life events, holidays, concerts, and family gatherings, then the unexpected happens. Shorter lead times add pressure; longer lead times add risk. The rate mix reflects this reality: value seekers opt for non-refundable options, while risk-averse guests prefer flexible ones. Most people want confidence without the premium.

How flexible cancellation policies affect revenue management

Flexible policies can be effective, especially during soft periods, but they also introduce churn. Late cancellations can distort the pace, create staffing headaches, and necessitate last-minute discounts. Rigid, non-refundable rates protect revenue but can suppress conversions when flexibility is a table stake. The trade-off is fundamental; strategy and data should manage it, not guesswork. For context on how free-cancellation messaging influences demand and visibility on marketplaces, refer to industry commentary from HospitalityNet and its partners, including Expedia's guidance.

There’s also evidence that higher prices can increase cancellation risk, which argues for tools that protect rate integrity while absorbing downside (SSRN working paper). SSRN

Refund upgrades: the middle ground between non-refundable and fully flexible

Refund upgrades create a practical third option. Keep your sharp BAR or advance-purchase rates; at checkout, let guests add protection against life events they can evidence. If they cannot travel due to illness, family emergency, or other covered reasons, they apply for a refund. You keep the original booking revenue; your protection partner handles adjudication and payout. This reduces hesitation at the point of decision while avoiding the blanket cost of fully flexible policies.

The role of embedded refunds in increasing ADR and occupancy

Confidence changes behaviour. When travellers feel protected, they are more likely to book (and book earlier), choose higher-rated rooms, stay longer, and pre-book ancillaries. That mix can lift ADR and occupancy without leaning on broad free-cancellation policies. Embedding the upgrade directly in the booking flow keeps UX clean and impacts the moment that matters. For a broader context on how flexibility affects conversion and revenue, see the Expedia/Evolve data point here.

Opportunities for hotel tech providers

For PMS, CRS/booking engines, and channel managers, booking protection is high-impact and low-friction:

• Differentiate your platform with a guest-loved, RM-friendly feature
• Add a new revenue line aligned with property outcomes
• Enrich pricing/forecasting with demand signals (who protects, when, at what rate)
• Increase stickiness by solving a persistent pain point

With booking windows in flux and flexibility expectations rising, providers that operationalise protection deepen partner trust and retention.

Bringing it together

Hospitality is about juggling two truths: guests want flexibility, while hotels need predictable revenue. The classic binary choice, between non-refundable and fully flexible, forces a decision that either dents conversion or yields.

Refund upgrades are the practical middle ground. They preserve pricing power and pace while giving guests the confidence they want. Embedded in the booking flow, they help raise ADR, stabilise occupancy, and curb last-minute leakage. For hotel tech providers, this opens a clear path to measurable value and more stable partnerships.

More certainty for you; more confidence for your guests.