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The Growing Importance of Flexible Booking & Cancellation Policies

Until recent years, strict policies on bookings and cancellations have worked well for tour operators. In fact, non-refundable policies in travel and tourism have been industry standard and a good revenue strategy, however, that culture has changed. Research conducted by Arival and Regiondo in 2021 showed that three in five tour operators made their cancellation and refund policy more flexible in response to the pandemic.

In the past, flexible cancellation policies were often seen as a negative as you’d potentially lose that sale and customer forever. Moreover, non-refundable rates for tours, rentals, and travel have been the standard. Typically they offer a cheaper and more attractive price for customers, but any savings are quickly lost if they have to cancel – and that’s something tourists are thinking about more.

It is becoming a bit of a cliché, but there is no getting away from the fact that the impact of the Coronavirus pandemic has changed the course of the tourism industry forever. With the help of extensive vaccine programs, the vast majority of countries have managed to reopen their borders to the world for the vaccinated population and in turn, tour operators have been able to regularly run full tours again.

However, the world is becoming increasingly unpredictable with the threat of new Covid strains, old diseases reemerging and new viruses on the horizon. All this, coupled with the impact of climate change and its role in increasing extreme weather conditions, means that threats to tour operators are still lurking out there and could lead to surges in cancellations again in the future.

It is therefore now more important than ever to pay heed to the needs and concerns of customers and ensure you remain flexible with your cancellation policy. Although cancellation rates in both Europe and the US have returned to pre-pandemic levels, travellers are still looking for flexibility. A study by Phocuswright, a leading authority in travel, tourism and hospitality market research ran a survey in 2021 to gauge trends across the whole industry and the results were telling. Seven out of 10 expected travellers in the US prioritise flexible bookings more than ever now.

Moreover, even pre-pandemic, there was research showing that tourists were increasingly looking for, and demanding, more flexibility from travel and tour operators. Covid-19 has brought that topic even sharper into focus and we are now seeing tour businesses not only reviewing their cancellation policies, but are also looking for ways to offer more flexible booking policies.

What Does a Flexible Booking Policy Look Like?

Secret Paradise, a sustainable multi-day tour operator in the Maldives decided to change their booking policy in 2020, and have continued the process of customer-focused feedback according to owner Ruth Franklin: “We’ve been frequently talking to clients, both past and present, throughout the past 18 months and have paid close attention to their feelings and feedback. Like you, our clients are anxious and apprehensive, yet they’re also seeking something to look forward to when they feel the time is right for them to travel again.”

That research led Secret Paradise to offer two different booking options depending on what the customer feels comfortable with, both with the generous opportunity to change the dates and/or tour package up to 14 days before departure or even cancel the tour completely. With their full flex option, you pay a $100 deposit per person and you can change the dates on up to two occasions for free while ultimate flex offers unlimited changes as long as the booking has been paid in full.

Offering flexibility as generous as this and in that timeframe will not be possible for every tour operator. To increase your chances of being able to offer a flexible booking policy, it is important to keep long-standing partners in the loop and maintain good relationships with them to help establish the range of flexibility you might be able to offer. As with Secret Paradise, don’t be afraid to speak with customers to hear their thoughts.

If a customer cancels a tour, consider offering a credit voucher that can be used within 24 months and can be gifted or transferred to somebody else. It should be sold to the customer as something they can still look forward to, but also maintains the all-important sale for your tour business.

Overall, giving booking options where customers can make changes to their tour booking for free (especially if they have already paid) or for a small fee/deposit at a certain point in their customer journey is something all tour operators should consider implementing sooner rather than later.

The Benefits of Flexibility

If you’re operating your tours in a particularly competitive field or region then consider that the benefits of a flexible cancellation policy will almost certainly far outweigh any missed revenue. Agreeing to cancel a reservation and offering the customer something in return is a great way to preserve the relationship. It may just help encourage another booking and eventually could lead to a more positive review. Your booking and/or cancellation policy could be a USP and another way to stand out from the crowd.

Ultimately, nobody wants an unhappy interaction and flexible booking and cancellation policies are a way of putting your customer’s mind at ease. Every tour business has its different needs and will have to cover its different costs whatever the cancellation scenario. But giving customers the choice to reschedule their tour, even if it means offering them the option of charging them more in advance, should be something for you to consider.

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