Just in time for summer travel, guaranteeing a hotel reservation by credit card has gotten more complicated. Once upon a time, 6 p.m. was the witching hour for canceling a guaranteed reservation. It's not so simple any more. Part of the difficulty is different credit cards now use different rules.
Earlier this year, MasterCard took four surveys, including one survey of 200 cardholders that showed they believed that 50 percent of the time, hotels did not explain their reservation-cancellation policies in the reservations call. Forty percent said that they did not cancel reservations because it was "too difficult" or they failed to understand the requirements.
MasterCard itself then called 15 hotel chains anonymously to hear what was being said. According to Lawrence Biondi, vice president for travel and entertainment, the reservationists for eight of the chains volunteered information on cancellation policies; one gave the information when asked, and six never mentioned cancellation.
Learn the rules
These results indicate that travelers will have to take responsibility for learning the rules, if they are to avoid penalties.
On April 1, American Express, which still had a contract with its hotels protecting cardholders against paying for a guaranteed room if they canceled by 6 p.m., abandoned this rule and agreed to accept whatever hour, or day, the hotel established as its deadline for cancellation. In this it joined Visa, which for some years had been allowing hotels to process charges for unused rooms based on varying cancellation deadlines.
Here are the broad outlines of existing rules on guaranteeing hotel reservations with a credit card.
When a room reservation is made, the hotel or travel agent will ask: "Would you like to guarantee that reservation on a major credit card?" If travelers agree and give credit card numbers and expiration dates over the phone, the hotel agrees to provide a room at whatever hour the travelers may arrive, up to 6 in the morning. If guests arrive and there is no room left, the hotel is bound to provide a room at a comparable hotel nearby, without charge, to take guests there free and to provide a three-minute phone call to inform office or family where they will be. The hotel must forward incoming phone calls to the new hotel.
The obligation on the guest's side is to pay the fee for an unused room if it isn't canceled in time.
The sticky part is the hour at which a cancellation is timely -- now being changed for American Express card holders.
American Express began the system of what it calls assured reservations in 1978, and says it was the first. It set 6 p.m. as the cancellation deadline for hotels and 4 p.m. for resorts, according to Elizabeth S. Cohen, vice president for establishment services. Recently, she said, the organization began to find that hotels were setting different deadlines.
"In franchise chains," she said, "individual hotels were often allowed to set their own rules." In hotels accustomed to business travelers, the time might be 6 p.m., but on graduation weekends, it could be 30 days in advance.
When American Express surveyed the national scene last October, according to Cohen, it found that 50 percent of its participating hotels and motels were using some deadline other than 6 p.m. The reasons, of course, were improving occupancy rates. Hotel occupancy rates in 1995 were 65.5 percent, the highest in 11 years, according to Arthur Adler of the accounting firm Coopers & Lybrand. This success, after the 1994 figures, also a record, gave hotels the muscle to install tougher policies. The projections for 1996, according to Adler, are also favorable to the industry, now only fractionally up, to 65.6.
Visa released its hotels from the 6 p.m. rule four or five years ago, according to Michael Sherman, a spokesman. However, he said, Visa's rules require that the traveler be given written confirmation of a guaranteed reservation, including the cancellation hour or day, and the phone number for cancellations.
Policies not uniform
With Visa, if the reservation is made 72 hours or less before the expected arrival, nullifying the possibility of written confirmation, cancellation reverts to 6 p.m.
MasterCard, which said a year ago that its policy would be changing, has not changed it yet.
Biondi said that his company believed that the consumer confusion shown in its surveys meant now was not the time to change the rules. MasterCard is trying to produce a standard model for informing consumers, he said, and when this is complete, sometime this summer, he hoped his company would lead the way toward restoring uniform standards. He said he hoped this would enable hotels to set deadlines without the consumer's being "hit on the head" with unexpected penalties.