Provide Peace of Mind for Your Hotel with Trip Protection

Provide Peace of Mind for your Hotel with Trip Protection

By Nathan Gawlik

Nathan Gawlik's experience includes being a General Manager of a Hampton Inn and other front line roles such as a Banquet Captain, Front Desk Agent, Housekeeper, Catering Event Manager, and Director of Sales.

The COVID-19 pandemic caused massive shifts in the hospitality industry and the mindset of travelers in general. Many hospitality businesses closed, others had to pivot and adapt, and many people in the service industry found themselves out of work.

As a result, accommodation providers like hotels, campgrounds, and bed and breakfasts are struggling to meet the ever-changing needs of their guests who, in turn, are navigating this new traveler journey. However, a promising recent trend where hotels offer Travel Protection or Travel Insurance, reassures guests that traveling is safe and provides peace of mind. Hotels, and other accommodations,that adapt to this trend will most likely see more bookings now and in the future.

Let's review some options and strategies that help property owners and hospitality professionals get more bookings.

Why Should Hotels Offer Travel Protection?

Simply put, peace of mind. Last-minute illness is every traveler's worst fear, especially since the pandemic.

For example, in 2017 my bride-to-be and I were on our way to Cancun for a destination wedding and a party our friends and family wouldn't soon forget. It was a blast! Late nights, margaritas, fine dining, and waking up to beautiful beaches.

That was until my now wife got sick. I can't say for certain that it was the water or the confined space and recycled air on the plane but unfortunately, it put a dark cloud over our joyous occasion.

Fast forward to today and now the mindset has evolved. Savvy travelers are expecting more cancellation flexibility from their accommodations, often leaving property managers stretched even thinner than before. In fact, 70% of guests want the property to clearly list health and hygiene policies, and 46% of travelers consider free cancellation or refundable accommodation a must-have for their next trip.

After all, travelers have a lot more to worry about today than they have in the past, not the least of which could include any last-minute illness, like my wife experienced, that might creep up prior to or during their trip. Plus, there are plenty of other valid reasons to cancel a trip such as injury, a death of a family member or other medical condition, including COVID-19.

Worrying about medical conditions has always been top of mind, especially for older travelers, but anxiety about these outlying circumstances can force people of all ages to think twice about booking their next vacation.

In addition to the medical factors above, is the worry that comes with the myriad of things that could go wrong on the day of your trip. Your flight could get cancelled, your car could break down, your rental could get double booked and the list goes on.

Once again, the bottom line is that guest expectations have dramatically shifted in regards to flexible cancellations. As the travelers' behavior adjusts to current times, so too, will accommodation providers have to adjust their service offerings to meet the changing needs of their guests.

Properties that provide travel protection or insurance are able to reassure future guests and alleviate hurdles during the booking process. Flexible or refundable cancellations give your guest peace of mind and protect your property.

How is the hospitality industry handling cancellations?

The first companies to respond were the OTA's like Expdia, TripAdvisor and Airbnb. The online travel agencies are handling cancellations in two main ways:

OTAs Provide the Guest Flexible Cancellation
Travelers have many different options to choose from when they book. OTAs like Expedia, TripAdvisor and others allow you to filter your choices to only include those with flexible cancellations. The OTAs offer a valuable service to reassure guests to book with their channel by providing peace of mind in the form of flexible cancellation verbiage.

Flexible cancellations are more and more a required guest expectation rather than an optional feature. Another OTA, AirBnB allows guests to filter by properties that only offer cancellation flexibility as seen below.

Google recently added free cancellations to their hotel platform as well, proving that this is not just a passing fade but a long-lasting industry standard that can help your property get discovered.

OTAs Offer Travel Insurance
OTAs offer various forms of travel insurance. The travel insurance offered to guests is typically administered by a third-party insurance agency and covers things like lost luggage, flight cancellations, medical concerns, and other trip considerations. Oftentimes, these providers require users to enter their age, country of origin, and other personal information not collected during a typical reservation.

Guests are Buying Independent Travel Insurance
When reviewing travel insurance plans at comparison sites like Travelinsurance.com, AARDY.com and InsureMyTrip.com the least expense rates for guests are typically around 20% of the total cost of the trip but could range as high as 135% the cost of the trip for plans with various payouts and coverage options. One plan through ExactCare Value offers guests just a 7% fee but is very limited in scope, offering nothing to the accommodation provider or hotel—as is the case with most insurance options. Very few insurance plans offer travel protection for both the guest and the property. There are far fewer protection options looking out for the business owner and if they do, they often come at a high cost.

Large Hotel Brands and Chains Offer Travel Insurance
Some large hotel chains provide travel insurance as well. For example, Marriott offers a protection plan to their guests, for vacation protection through a third party called Travelex. Although, oftentimes, this same protection isn't extended to their properties, meaning the hotel still has a vacancy without compensation. This vacation protection is only available to Marriott Club member guests. Essentially, it's another incentive to try to get more loyalty members into their rewards program. However, there is no mention on the Marriot page of the company covering COVID-19. This program is unique in that members can pay for their travel insurance using points.

Very few insurances are offering travel protection for both the guest and the property.

Why is it difficult for boutique or small hotels to Provide Free Cancellation and Travel Insurance?

Offering free cancellation to your guests can be difficult for smaller properties as often those cancelled rooms just go down in the books as lost revenue.

In addition, having a small 5- or 10-room bed and breakfast or boutique hotel receive favorable insurance rates is unlikely. Insurance is a game of numbers, and insurance providers rely on the majority of travelers not requiring a refund to remain profitable.

Because many properties can't offer insurance or flexible cancellation, they often offer vouchers as an alternative instead of refunds as a measure to stay afloat.

Is there a Travel Protection Solution that Refunds both the Individual Guest and the Boutique Hotel Owner?

The answer is yes: it's called Enhanced Refund Protection or Enhanced Refund Terms. This new solution allows the hotel to keep the funds of the original booking and refund the guest.

This concept goes by many names. For purposes of this article, I'm going to refer to it as Enhanced Refund Terms because that is the easiest way to understand how it works. It enhances your property's existing refund terms or cancellation policy.

We are seeing this trend in the hospitality industry. Many call it "extended or enhanced refund terms" rather than "travel insurance" or "trip protection" because the term "insurance" often requires a license per state to sell insurances and comes with significant government oversight and scrutiny. Property management software (PMS) providers that offer these "enhanced refund terms" avoid the term "insurance" to protect themselves from liability and in general is a simplified business practice.

This is one of the best options available to the independent hotelier today as a service to their guests.

Common traveler issues that are refunded under Enhanced Refund Terms are:

COVID-19 Infection
Pre-existing Medical Condition
Accident or Injury
Flight Disruption
Immediate Relative Sickness
Home Emergency
Private Vehicle Failure
Other Emergency Circumstances as detailed in the Terms and Conditions

Think about it this way: guests get the option to upgrade and be refunded for unforeseen circumstances that could happen a couple of weeks before their arrival date.

And conversely, if your hotel property gets a reservation in which the guest selected Enhanced Refund Terms, you are going to receive revenue for that booking 100% of the time! In an uncertain world, that is a game-changer.

What are Enhanced Refund Terms and how does it protect my hotel?

Unlike traditional insurance, Enhanced Refund Terms allow individual hotels to enhance their cancellations policies terms and conditions to make it easier for the guest to refund their booking due to an illness such as getting sick with COVID-19 or some other unforeseen circumstance. Enhanced Refund Terms are distinct from traditional trip insurance or cancellation insurance because they allow the hotel property to keep the original booking payment while also refunding the guest if they have to cancel.

So in short, Enhanced Refund Terms offers refundable bookings to guests and, if there's an unforeseen circumstance that forces a guest to cancel,

The property the guest booked with gets to keep the original reservation payment.
The guest gets 100% refund from the PMS provider to their bank account.
The hotel property doesn't lose any revenue!

Enhanced Refund Terms acts as an extension of your property's current cancellation policy paid for by the guest. By giving guests the option to upgrade their booking with Enhanced Refund Terms, your hotel is using the same reassurance flexible cancellation strategy the OTAs are using, while also protecting your individual hotel property from lost revenue from last-minute cancellations.

What's the difference between Enhanced Refund Terms and Travel Insurance?

Enhanced Refund Terms is not insurance. Insurance requires a lot of regulations, legalities, risk assessments and sometimes costs far more while covering less. Going far beyond being sick, Enhanced Refund Terms also offer protection for several unforeseen circumstances that may affect guests' travel plans while also providing compensation for the property.

Now boutique hotels, campgrounds, and B&Bs alike can benefit from offloading the risk of cancellation to a third party.

That is the other distinction from travel insurance to enhanced refund terms. Travel insurance almost always just protects the guest while enhanced refund terms can protect both the guest and the small business owner by allowing properties to keep the revenue from guests for a canceled reservation.

Furthermore, the enhanced refund protection covers "emergency circumstances" such as a divorce or cheating spouse that might prompt a guest to cancel at the last minute. While traditional insurance agencies may have a strategy of providing a list of exclusions, this service makes an effort to cover as much as possible. For more specifics about "emergency circumstances" covered by Enhanced Refund Terms click here.

Some PMS providers even offer revenue share with the property owners, offering a new revenue stream to entice businesses to encourage travelers to add their refundable booking option.

No one else is looking out for an independent hotelier like this. Online Travel Agents have a solution to address this trend in the form of free cancellations. Large brands have a solution to cover their guests by partnering with travel insurance providers. Now smaller boutique independent hoteliers have a solution in the form of Enhanced Refund Terms.

What is the Difference Between a Limited Warranty and a Service Contract?

Limited warranties typically come with a product and are included in the purchase price, being part of the basis of the bargain. While service contracts are agreements that are separate from the sale of the product. They are separate either because they are made after the sale of the product, or because they cost the customer a fee beyond the purchase price of the product.

Some would argue that a unique company Worry-Free Bookings LLC, is a way for property owners to offer service contracts on their reservations to protect them from last-minute cancellations and cover their guests in case of illness or injury.

How Does a Hotel Provide Enhanced Refund Terms?

Typically, this service requires a property management software or system (PMS). There are independent services that offer Enhanced Refund Terms but they can be hard to find and then they require a software integration. One of the easiest PMS providers to find that offers the Enhanced Refunds service is ResNexus.

How do Enhanced Refund Terms work?

The guest adds the Enhanced Refunds Terms to allow for flexible cancellation on their reservation by paying an additional 10% of the booking. A fee of this amount is common practice for a service such as this and sometimes even costs more.

To prevent fraudulent claims, the full cost of the reservation is collected at the time of booking. Otherwise, guests could book and pay a small deposit, then claim a full refund later.

The majority of people who book directly with hotels and other hospitality businesses intend to complete the reservation they booked but if they can't, there are often legitimate reasons as to why they weren't able to make it. For a small fee, these guests can have the added peace of mind that if they or a family member falls ill or gets injured 14 days before their reservation date, forcing them to cancel their reservation they can get a full refund.

How much does it cost the hotel?

There is no cost to the hotel property. All fees associated with the enhanced refund terms are covered by the guest with a 10% fee at the time of booking.

How much does it cost the hotel?
There is no cost to the hotel property. All fees associated with the enhanced refund terms are covered by the guest

Are there other monetary benefits to the independent hotel?
Yes! The program helps you save on labor since all the reservations that are canceled within 14 days of their arrival date are administered on your behalf. Now you don't have to worry about any of the administrative duties associated with a cancellation. Opting in to this service removes the need for you to process refunds when travelers cannot take their trip because of a reason outside of their control. You or your staff no longer have to process the refund, email the guest, contact a payment processor, or do any of the other time-consuming tasks associated with a canceled reservation.

Plus remember: the property gets to keep 100% of the reservation (less than the cost of the service).

Does Enhanced Refund Terms apply to the total cost of the reservation, including packages, or just the room reservation?
Yes, it applies to wine, breakfast, packages, taxes, and any other booking value that is added to the reservation.

Property Considerations

What properties can use Enhanced Refund Terms?
B&Bs, hotels, vacation rentals, campgrounds, and RVs can use this feature among others; no accommodation properties are excluded! Think of this offering as enhancing your current refund policy. It works in tandem with your current policies to support your bottom line. It is an optional service that properties select and offer to their guests who in turn can choose to purchase it or not.

Can my hotel add Enhanced Refund Terms to existing reservations?
No. Reservations must be made at least one day in advance to have the Enhanced Refund Terms option available to them. A full deposit is required when the guest books this type of reservation.

Can my hotel add this feature to reservations taken over the phone?
Yes! In most cases, the property can add on these enhanced refund terms to a new reservation as long as it isn't the same-day reservation and provided that the guest is willing to pay for it 100% upfront and pay for the additional 10% fee. Restrictions may apply.

Can my hotel offer these Enhanced Refund Terms to OTA reservations?
No. This feature is a benefit offered to guests that book directly with you. This is just another way to incentivize guests to book with you and for your property to compete with big brands. Remember, many OTAs already offer their insurance or flexible cancellation program and don't necessarily want to promote direct booking competition.

Are there bookings that aren't eligible for Enhanced Refund Terms?
Yes, the reservation has to be booked at least one day before the scheduled arrival and the full amount of the reservation has to be paid at the time of booking. If the guest needs to cancel, the restrictions are detailed in the Terms and Conditions that are easily accessible from the booking engine.

What if my guest just wants to change the dates of their stay?
In this case, it's easiest to move the reservation and not cancel it entirely. As long as the guest takes the trip within 18 months of the original date of the stay, it will still be covered under the enhanced refund terms.

Simply put, from the reservation stay date, the property has the flexibility to move that reservation up to 18 months out from that date to still be covered under the terms and conditions. It can be moved earlier or later without any additional booking or transaction if the stay dates are within 18 months of the date of stay.

What if my guest just wants to extend their stay?
Property personnel still have full autonomy to make changes to the reservations as they normally would. The staff member extending the reservation should just ask the guest if they wish to make their additional days Worry-Free, which would require them to pay for those days at the time of the extension plus the 10% fee. That being said, reservations do have the option to be partially Worry-Free. If a request for reimbursement is submitted only the portion of the stay that is protected would be eligible.

How do Enhance Refund Terms provide peace of mind and convenience for my guests?

Can the guest opt-out of Enhanced Refund Terms?
Yes! Hotel owners have three options to provide to their guests:

By default, meaning it is already added to their cart, and guests can choose to opt-out. This is the most common option.
Required. Of course with this option, guests cannot opt-out so they must pay the additional 10%.
Or Opt-In. Guests can choose to opt-in by adding it to their cart manually, just like a retail item.

In addition, up to 14 days before to the arrival date the hotel, bed and breakfast, or campground can directly refund all of the booking money back to the guest's credit card. Meaning the guest has and the property has up to 14 days prior to the arrival date to cancel the Enhanced Refund Terms. This option acts as a normal cancellation and the Enhanced Refund Terms 10% is not collected by the PMS provider. However, the property does not get to keep the money from this type of cancelation but instead must hope to book the room anew with a different guest, just like any other reservation.

The Enhanced Refund Terms only kick in on the 14th day prior to arrival, protecting you from last-minute cancellations.

What if my guests choose not to add these enhanced terms to their reservation?
If the guest doesn't add this option, your standard cancellation policy still applies.

However, many properties have chosen to opt into the program and make it optional for their guests to further protect themselves. In this regard, if a guest calls to cancel their reservation within 14 days, the property can lean on this additional service as a means of holding back at least some of the guest's deposit, given it was the guest that chose not to purchase the travel protection.

Can a guest add Enhanced Refund Terms after their reservation is booked?
No. The service must be purchased at the time of booking. The only option they could have would be to cancel the reservation (provided it's outside of the 14 days prior to arrival) and rebook it with the service added to their reservation.

Is COVID-19 covered by the Enhanced Refund Terms?
Yes, but there are restrictions. COVID-19 is covered under the policy if you or your family member gets sick. The restrictions are, it's not covered if the guest got sick way before their trip or if the guest is just concerned about getting COVID-19. Review the terms and conditions for clarification.

What personal information does Enhanced Refund Terms require of my guests?
Only the standard information that is required for completing a hotel reservation, like name and contact details, is needed unlike traditional travel insurance who may require medical information.

Does the rate for coverage or what is covered change with the price of the booking?
No. Whether the guest is booking a $100 stay or a $10,000 stay, a flat rate of 10% is applied to the reservation if the guest chooses to add these enhanced refund terms. What is covered remains unchanged regardless of the cost of the trip. However, there is a limit of up to roughly $14,000 per person, including children.

So consider the group benefits here as travel returns to normal. If you receive a group reservation for $100,000 as long as there are 8 people on that reservation (roughly $12,500 per person) everything booked with that reservation is covered! This should help assuage any concerns your guests may have when making group reservations

Will my guests' information be sold to the Enhanced Refund Terms provider?
No. The provider will not spam you or your guests. Guests' personal information is only provided to the provider in the event the guest requests a refund. An email and other contact details are collected at this time to communicate if the refund has been approved or denied and other pertinent information.

Don't some guests have travel insurance under their credit card?
Some credit cards may offer limited travel protection that is available under travel insurance or trip cancellation programs. Programs vary in terms of coverage, exclusions, and restrictions.

Guests should review their credit card benefits to see if there are any additional travel privileges afforded to them as a card holder. The Enhanced Refund Terms program is limited to the property and does not include flights, luggage, etc.

Will guests traveling to my hotel or bed and breakfast from outside the United States receive the same coverage?
Yes. Since the provider isn't a traditional travel insurance company but rather a refund protection agent. They can offer unique and far-reaching benefits like this.

How does the cancellation process work for the guest?
Instructions on how to cancel are included in the guest's confirmation email as shown in the example below. A guest can click the link provided and follow the instructions to apply for a 100% refund. Guests can claim a refund up to 60 days after their missed stay. But the best part is that you get to keep the money for that reservation!

What if a guest called the hotel to cancel and doesn't click the link in the email?
These enhanced refund terms are meant to help free up your time as a busy property manager. Staff at the hotel should direct guests wishing to cancel that also purchased this add-on to do so through the link provided in their confirmation email.

Other FAQs and Enhanced Refund Terms Details

Should I update my cancellation policy on my website?
Many properties find this as a major selling point on their website. Again since, OTAs like Expedia and TripAdvisor are actively promoting their flexible cancellation option, this is how your property can compete.

That is up to your personal preference but the benefits of advertising this on your website is that it easily lets guests know about this guaranteed benefit. Many properties choose to provide language on their website to showcase this advanced feature. They find this policy can give them a competitive edge over other properties and OTAs. Consider providing something similar as shown below.

What circumstances are eligible for a refund?
An illness or injury on someone on the reservation or an immediate family member for the guest to qualify for the refund. A full list of covered circumstances can be found by clicking here.

Does my hotel get notified if a guest applies for a refund?
Yes! Unless the guest is a no-show and hasn't started the refund process you will receive an email notification. The purpose of this service is to cover your property in the event of a cancellation up to 14 prior to arrival date or up to 30 days after. If a guest doesn't arrive or is a no-show, you have the benefit of not having to clean a room that has been paid for.

However, if the guest does start the refund process, both the guest and the property are notified:

When the guest initially submits for a claim

When the provider responds with their decision

When the provider automatically cancels the reservation on behalf of the property in the event that the claim was successful.

Does the hotel have to pay taxes on the 10% fee paid by the guest?
No. Depending on the provider, this add on is a tax exempt service.

Are taxes included in the refund to the guest?
Yes. The guest will receive the entire cost of the original booking, including taxes, if their refund is approved. The hotel will receive the entire cost of the booking regardless if the guest cancels or not.

What if the guest refund is denied?
In the rare occasion that the guest fails to provide adequate documentation of the unforeseen circumstance, then a full refund may be denied. If the refund gets denied then a secondary review will be triggered for further evaluation.

If the refund is denied a second time, the hotel still receives the funds for the room since those were taken at the time of booking. The property may choose to refund the guest at their own discretion either part or the full amount of the booking. Some properties choose to avoid poor reviews or credit card chargebacks if the guest is adamant about claiming a refund.

How long does it take for the guest to receive a refund?
As long as the refund request is completely filled out by the guest, most refunds are processed quickly. Each application is reviewed within 24 hours, and, if approved, the guest will receive their 100% refund directly back to the credit card used to purchase the booking within 72 hours.

According to the Terms and Conditions, the longest a refund takes to process to the guest's bank account is no more than seven days.

What if someone in my party has to leave early due to illness?
Similar to the above example, if two families are traveling together and booked their reservation together but just one person in the party fell ill and had to leave early, in this case the appropriate proportion would be refunded.

Who administers the Enhanced Refund Term service?
The property management software provider. In this case, ResNexus is the only one I've found providing this service. Any issued refunds are facilitated by them, saving you time, effort and money in processing the refund.

How can my property participate in Enhanced Refund Terms?
ResNexus is currently the only software providing these Enhanced Refund Terms. ResNexus calls their offering "Worry-Free Bookings," the first of its kind offered in the United States by a Property Management System (PMS).

If you wish to find out more about Worry-Free Bookings, click here.

Summary

Guest expectations have changed. They now want more flexible cancellation options. OTAs have adapted by offering free cancelation or travel insurance. Enhanced Refund Terms is now a third option that allows boutique hotels, bed and breakfasts, and campgrounds to receive many of these same benefits.

With Enhanced Refund Terms, you can:

Take the worry away from guests about cancellation
Save time and reduce refund exposure at no cost to you
Keep 100% of the payment collected from cancelled reservations
Compete with OTAs by providing your own travel insurance program

It's up to hotels to adapt to travelers looking for protection from unforeseen circumstances. There are now protection solutions like ResNexus that offer this peace of mind to your guests and your property.

This service is unique in that it covers the guest and the property financially. The guest gets paid and the property gets paid. It's that simple.

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