The search for the best deal: How hotel cancellation policies affect the search and booking decisions of deal-seeking customers

Predicting hotel booking cancellations to decrease uncertainty and increase revenue

“…Nevertheless, in recent years, with the increasingly influence of the internet on the way customer's search and buy travel services (Anderson, 2012;C.-C. Chen et al, 2011;Noone & Lee, 2010), research in this topic has increased, particularly research on topics related to the controls used to mitigate the effects of cancellations in revenue and inventory allocation, cancellation policies and overbooking (Hayes & Miller, 2011;Ivanov, 2014;Talluri & Van Ryzin, 2004). Nevertheless, there is few literature on the subject of booking cancellation forecast for the hospitality industry.…”

“…In the past, some authors considered rigid cancellations policies an effective tool against cancellations (DeKay, Yates, & Toh, 2004) (policies that required full payment or some sort of warranty at the moment of booking or, at least, imposed some kind of financial penalties in case of cancellation). Nowadays, cancellation policies that impose these kind of penalties or impose strict cancellations terms are considered a sales inhibitor and can have negative impact on revenue (C.-C. Chen et al, 2011;Smith et al, 2015;Xie & Gerstner, 2007).…”

“…But, as identified by Chen and Xie (2013) and Chen, Schwartz, and Vargas (2011), nowadays, a big part of these cancellations occur because of deal-seeking customers who are determined in the search for best deals. Sometimes, these customers continue to search for better deals of the same product/service after having placed a booking.…”

“…As a way to manage the risk associated to booking cancellations, hotels implement a combination of overbooking and cancellation policies (C.-C. Chen et al, 2011;C.-C. Chen & Xie, 2013;Mehrotra & Ruttley, 2006;Smith et al, 2015;Talluri & Van Ryzin, 2004). However, both overbooking and cancellation policies can be prejudicial to the hotel.…”

Exploring the Booking Determinants of the Airbnb Properties: An Example of the Listings of London

“…For example, research indicated that, online review comments and previous guests' recommendations played important roles in customers' decision-making process when booking hotels online (Sparks & Browning, 2011;Tsao, Hsieh, Shih, & Lin, 2015;Ladhari & Michaud, 2015;Zhao, Wang, Guo, & Law, 2015;Yu, Guo, Zhang, & Zhao, 2016). Hotels' rating (Ladhari & Michaud, 2015;Cezar & Öğüt, 2016) and terms and conditions (Law & Wong, 2010;Chen, Schwartz, & Vargas, 2011) also influence customers' online purchase intention. Wang, Law, Guillet, Hung, and Fong (2015) and Li et al (2016) argued that the quality of hotel online booking websites can be a predictor of the booking intention.…”