Nonrefundable hotel rates: modest savings, big risk

November 23, 2008|By Jane Engle | Jane Engle,Los Angeles Times

Nonrefundable airfares make unwelcome travel companions I tolerate only because they save me hundreds of dollars. And at least with most cruises and tours, thanks to deposit schedules, I lose my stake gradually.

Not so with nonrefundable hotel rates. Popping up as "Internet-only" or "advance-purchase" rates on Web sites of big lodging chains, these offer generally modest savings in return for taking a hefty risk: forfeiting the total cost of your stay (not just the first night) if you change or cancel your reservation.

Unless you're the gambling type, this deal might not be worth it. Often, you may pay less without giving up the right to cancel. You just have to know where to look and whom to ask.

Lesson 1: The risk-reward equation might not favor you.

Take my experience with the Westin Monache Resort, an upscale condo-hotel at Mammoth Lakes, Calif.

In a recent Web search for a two-night stay in early December, I found an Internet-only, nonrefundable rate of $329 plus tax for a deluxe suite, or $30 less than the lowest refundable rate. For two nights, I would save $60, but if I were to cancel, I would lose $658, or more than 10 times my savings.

For taking this risk, Westin gave me an 8 percent discount. That's pretty puny compared with what airlines give you. When I recently searched United's Web site for early December round-trip flights from Los Angeles to Chicago, the airline was charging $364 for a nonrefundable economy fare, or less than half the refundable fare.

On the Web sites of two other hotels I checked for December stays, the Hilton San Francisco Fisherman's Wharf and Marriott's Courtyard New York Manhattan/Fifth Avenue, nonrefundable rates were 15 percent less than refundable ones.

Lesson 2: You might get a lower rate by dealing with a person.

I called Westin's reservations desk, requesting the lowest price for the same early December stay, and was offered $359 a night. When I asked if there was an even less expensive rate, the agent offered the suite for $287 per night, citing a 20 percent-off deal for two-night stays. That rate, which he said was unavailable on the Internet, was fully refundable until Nov. 28.

My experience was not unusual, said Bjorn Hanson, associate professor at the Tisch Center for Hospitality, Tourism and Sports Management at New York University.

If you're persistent, he said, reservation desks, eager to fill rooms, often will lower the price in steps to a base rate set by their manager. This might apply especially if you visit, rather than call, the hotel late in the day.

Don't be shy about asking, he added.

"You're not trying to date the desk clerk," Hanson said. "People shouldn't be embarrassed."

Lesson 3: You might get better terms through a third party.

I also checked out two travel Web sites for the Westin stay.

Expedia.com and Priceline.com offered the same price as the hotel's Internet-only rate, $329 plus tax, and both said they immediately would charge my credit card for the full stay. But their terms were more generous.

Expedia said I could cancel until Nov. 28 and get a full refund, minus a $25 fee. Priceline.com said I could cancel until Dec. 2 and get a partial refund, minus the first night's cost.

Through negotiated contracts, travel Web sites sometimes get better deals than you can on your own.

Lesson 4: Bait and switch might pay off.

Another strategy is to reserve a room at a refundable rate, but check the hotel's Web site shortly before the cancellation deadline. If a lower, nonrefundable rate is available, book that and cancel your previous reservation.

If the hotel is booked heavily, of course, you might get stuck paying the original, higher rate. So this tactic works best on weekdays or other low-demand times.

If this all seems like a game, that's because it is. Hotels are trying to guess your intentions, based on past customer behavior, and fill their rooms at the highest price they can get. If you're willing to remove their risk of losing room revenue, they'll reward you with a less expensive rate, said Jan D. Freitag, vice president of Smith Travel Research in Hendersonville, Tenn.

"The consumer should think of it as discount, not as a right," he said.

And like any discount, it's all about the math.

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