The Truth about Free Cancellation Policies
Protecting your trip and the truth about ‘Free’ Cancellation policies
Breezy Oak Villas does not offer ‘Free Cancellation’ in exactly the same manner as VRBO properties typically do. Instead, we offer better cancellation flexibility and value to our guests via actual Trip Cancellation insurance. Here’s why…
Q. Why do you put your guests through all of this? (It just seems like a big hassle, and far more complicated than it’s worth, especially when VRBO already has a policy in place.)
Thanks for asking. But the answer is complicated, and may not be of interest. In the interests of full disclosure, we’ll pull back the cover on some aspects of the vacation rental industry you may not be aware of. Feel free to skip this if you want!
When you book your stay with us, we block your dates on our calendar to hold them for you, and take them off the market – no one else can book them. It is quite normal and common that a single vacation rental may get only one or just a few guests interested in booking any particular dates each year. So if a guest cancels a booking, the vacation rental host can’t afford to refund their rental charges, or they will lose 100% of their income for that period!
The booking will have blocked other guests from booking the property, for months or even years in advance (yes, we get guests who book that far in advance in order to ensure they get their dates!) and as the dates get closer, there will be fewer and fewer other guests, or most likely no one, who is looking to book the dates the cancelled guest held off the market. The idea that another guest will likely book dates opened up by another guest who cancels is mostly just a myth. That happens for hotels, which often have many last-minute guests, but not vacation rentals, which are often booked more than a year in advance.
We can’t afford to work for free (who can?) but more importantly, all of our expenses still have to be paid whether or not a guest shows up; interest, taxes, insurance, utilities, property maintenance, landscaping, pool care, cleaning… the list goes on. All have to be paid whether the guest stays or doesn’t. So if a guest books our property but doesn’t pay for the time, no one else is going to be paying those costs for the period of their stay.
This is why vacation rental bookings have to be non-refundable – to be fair to everyone; the host, the guest, and other people also wanting to book the property. If guests can simply cancel and get a refund the host will be out significant amounts of revenue – funds they can’t afford to lose and still hope to stay in business. And with ‘free cancellations’ being offered, some guests will book to hold the property ‘just in case’ preventing other guests who really want to come from booking the property.
This is a fundamental difference between a hotel with many rooms (some of them have hundreds) where a cancellation or two won’t dramatically affect their income. They will still have lots of other guests covering their expenses, and the nature of their bookings means they have potential to get lots of last minute travellers. But if you called up a hotel and wanted to book every single room in the place, they would demand a large deposit, with full payment a couple of months in advance of arrival – and none of it would be refunded in event of cancellation. Otherwise, just like the vacation rental, the hotel would go broke very quickly after a short period of zero income.
Q. Then why do listing sites like VRBO offer guests ‘Free Cancellation’?
Simply because it’s good for their business. It does make some guests more likely to book, and it costs the website nothing out of pocket if the guest cancels! In some cases, guests will book multiple properties with plans to cancel all of them but one (for whatever reason) at the last minute, but it doesn’t matter to the listing site – they still collect their commission on the booking, no matter which property the guest stays at.
Q. Why do the hosts; owners and property managers, agree to allow the cancellations? Don’t they have a say?
Quite simply, the listing site favours properties which accept ‘free’ cancellations, and won’t show those that don’t, to prospective guests searching on the site. So hosts are in effect forced to offer free cancellations, or they won’t get any bookings from the site – and many don’t have any other means of finding guests. The sites use their marketing ‘clout’ to force hosts to do what the sites demand – and because it’s impossible for a small host to compete on the internet with gigantic listing sites worth billions of dollars to attract guests looking for a place to book, many hosts feel they have absolutely no choice but to go along, even if the policy is destructive to their business. The sites even make it possible for guests to only search for those properties which offer ‘Free’ Cancellations, furthering penalizing those hosts who don’t go along.
Q. All fair enough, but I don’t want to lose my money if I have to cancel my vacation! So if free refunds don’t work, what’s the solution?
The solution is the same answer as it has always been for the last couple of hundred years – you cover risk with insurance.
Most people who book a trip don’t intend on cancelling and not taking it, and the vast majority do take and enjoy their trips. Only a very, very small portion of guests ever have to cancel or change a trip. So if a large group of travellers all put a relatively small amount of money into a pot, those funds can be available for the few unlucky travellers who can’t take their trip, and need their expenses reimbursed. That is how insurance, in its simplest form, works.
So now you know why… vacation rentals have traditionally, and must always, be booked on a non-refundable basis. Otherwise, no one could afford to offer them in the long term. A cancellation means total loss for the host, and thousands of dollars in non-recoverable expenses. But that doesn’t mean guests have to be at risk of losing their vacation funds if they have to cancel their trip. The funds just need to be protected with insurance, rather than unsustainable ‘free cancellation’ policies that hosts can’t afford.
We want guests like you to find us on sites that offer ‘Free Cancellation’, but we can’t afford to offer ‘Free Cancellation’ for all the reasons just explained, or we would have to raise our rates so much to cover the cost of cancellations that you wouldn’t want to book with us. (Just an FYI… experience has shown that rates would have to increase 40% to do that!)
If the answer to protecting a guest’s investment in their booking with us is Travel Insurance, then that is what we do! Plus, quality Travel Insurance provides far greater and more benefits than a Free Cancellation policy ever could.
Q. But I don’t want to pay extra for Travel Insurance. Why should I have to pay more?
You don’t! We pay the cost of protecting your stay with us, as one of the benefits of staying with us that most other hosts/properties don’t provide.
Q. Doesn’t paying for travel insurance for my stay cost you money out of pocket?
We’ve been in this business for over seventeen years, and we’re very experienced and very good at it, and we’ve done the math. The cost of providing quality Travel Insurance for our guests, is less costly to us than allowing ‘Free Cancellations’ that we can’t afford. So we have chosen to take it on as a cost of doing business on the website where you found us, in order to boost our visibility on the site and compete on an even footing with hosts/properties offering ‘free cancellation.’
Q. And this was mentioned in your VRBO listing?
Yes. It wouldn’t be fair to not be upfront about it. It’s explained under the Policies tab on the listing, but sometimes it’s not easy to find. VRBO is constantly making changes to their site, including sometimes hiding things behind tabs you have to click on or you won’t see details. Of course, we have no control over that, and it’s sometimes frustrating for us and our guests. Here’s a screenshot (current at time of writing, but it’s always in the listing somewhere) of it in case you missed it:
Q. What if I cancel my stay and ask VRBO for a refund instead?
The dates are already being held for you. We may have already missed out on an opportunity to book them with another party. So we’ll charge you for the full stay cost, which the insurance will reimburse you 100%. We’ll work with the insurance carrier to help get your claim paid immediately. The insurance company provides quality coverage, and getting paid out is easy and hassle free. If you’ve ever had to wait on a refund to be processed by VRBO, you know that the insurance payment is just as fast, and easier!
Q. What if I don’t want this insurance?
You can cancel your booking for a full refund from VRBO and free up the dates for another guest. Or make your booking with us, but at your own risk, by booking directly with us. Obviously VRBO’s refund policy will not apply to bookings made directly with us. Guests who book with us directly can certainly purchase this insurance as well. Because you booked with us through VRBO initially, we appreciate you leaving your booking with us through VRBO. It helps our relationship with VRBO, and boosts our properties on their site, helping us get more bookings, which we can always use! (Just be sure to book directly with us for a return visit, and save yourself the expensive VRBO guest booking fees!)
Q. Is it difficult to collect on a claim?
If a covered peril occurs, you’ll receive a prompt, courteous payment. Or, for even more flexibility, top up at purchase to include CFAR – Cancel for any Reason, and you can just change your mind about going and still receive a refund!