Flexible Non-Refundable Rate in Uncertain Times

Lior SlepkovNews

At hostel.consulting we advocate for the use of Non-Refundable Rates (NRR) to capture mid/long term demand. However, during the uncertain times of COVID-19 people are much less likely to commit to rigid policies. This does not minimize the need to offer such “Early Booker Special” to capture more bookings in advance.

Another benefit of the NRR is that they are paid upfront and inject immediate cash flow to the business. Now more than ever, hostels need this cash flow in order to support their expenses. So if NRR is no longer effective, what can be done?

If you have not already read our article to understand the use and benefits of a NRR we suggest you do so here.

Let’s look at airlines who are in a very similar situation to see what they are doing.

Visiting American Airlines we see a clear focus on flexibility.

Messages about changing a trip and booking with confidence are apparent to those visiting the site. Where once we had to pay for flexibility, it is now being offered for free. Visitors looking to reserve can now feel confident in doing so knowing that if the situation does not allow them to fly on their dates, they have the flexibility to swap flights without a change fee.

How does this apply to Hostels?

This strategy is very similar to our already existing NRR. People reserving our hostels with the NRR pay upfront for preselected dates. The difference here is that the NRR rate, as we currently know it, does not allow flexibility in date changes. In these uncertain times, this is very critical for the potential booker’s decision to reserve or not.

If people are looking at your property for future visits, what is incentivizing them to make the reservation now rather than waiting? If you have an NRR (or any other Early Booker offer) with no flexibility, they will most likely not reserve it. As for the standard rate, they are fully aware that they can just wait and book later as you are probably not going to fill up any time soon, nor are your prices likely to go up. The price difference which once was seen as an incentive to confirm a reservation in advance is now seen as a penalization for flexibility.

Now is the time where we must introduce some flexibility into our Early Booker Specials. By setting up an NRR with the added flexibility of date changes, hostels are more likely to continue to benefit from early bookers willing to pay upfront for a lower rate. To be successful, proper communication of this flexibility will need to be on the front lines of a hostel’s website and online presence.

Setting up a Flexible Non-Refundable Rate

The way to set up a Flexible Non-Refundable Rate will depend on the hostel’s booking method.

Contact Form / Email / Phone

Hostels using these methods to handle their reservations will need to ensure to properly communicate a Flexible NRR rate along with its discount and Cancellation/Change policy (see T&C below).

We strongly suggest hostels still using this outdated method to consider using an integrated booking engine. Technology to help simplify and automize the reservation process has become essential, very easy, and now also very affordable. If you would like our help in selecting and/or implementing a booking engine will be happy to help! Simply contact us.

Website Booking Engine

Hostels using a booking engine that allows them to make personalized rates can set up a rate called “Flexible Non-Refundable” and include its T&Cs in its description. If your booking engine does not allow for personalized rates, you can still use your current NRR. Just ensure to communicate very well throughout the booking process that the NRR is Flexible (and the applicable T&Cs). If you would like to know your options for booking engines that allow for personalized rates we can help! Simply contact us.

OTA’s

Reach out to your partnering channels and ask them how they can support you selling a Flexible NRR on their site.

We have already spoken to Hostelworld about the current need for a Flexible NRR and they are working hard on developing it. Hopefully, we will see this roll out very soon! Booking.com have been leaders in creating a variety of rates and offers. We have no doubt they will also be presenting us soon with this option.

T&Cs of the Flexible NRR

As for any rate, the Terms & Conditions must be very clear and accepted by the booker before they reserve. The following T&Cs are our recommendations and are, of course, adaptable.

Non-Refundable Payment

The Flexible NRR as we describe it is still non-refundable. Again, the booker is making the commitment to stay at the hostel and should pay in full upfront. In doing so, they get a discounted rate and (in the case of the flexible NRR) flexibility in changing the reservation if needed.

How to change a reservation

Be it by a simple email or through the channel they reserved, the booker should understand the process they must follow in requesting a change to their reservation. We recommend that any request and confirmation be traceable. Consider not allowing requests or confirmation of reservation change by phone.

Subject to availability

The booker should understand that their reservation change is a request subject to availability (and restrictions) of the new dates. Originally reserving a Flexible NRR reservation does not guarantee availability on the newly requested dates. It is also possible that other dates have a special restriction such as minimum stay.

Reservation price difference

The possibility of a price difference and how it will be handled must be displayed within the policy of the rate previous to booking. If the new reservation requested has a higher price, the booker will need to pay the price difference. If the new reservation requested has a lower price, no credit or refund will be given for the difference.

Limitations

If there are any limitations to change requests in reservations stipulate this as well in the T&C of the rate. For example, Make clear how many changes a booker can make to their reservation.

Will you implement and use a Flexible Non-Refundable rate in your hostel? If you have any questions or doubts about your rates and how to use them, let us know in the comment section below. We will be happy to help.

We discussed the concept of the Flexible Non-Refundable rate on April 9th, 2020 in our weekly hostel chat. You can view the recording of the chat here.

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