KPI for Measuring of % of Cancelled Reservation Requests posted in category Hotels

KPI details:

This indicator is for measuring cancelled reservation requests as a % of the total reservation requests.

Cancellations can bring major profit loss in the hotel industry, especially when they are not penalized. Managers may keep a monthly record of cancelled reservation requests in order to identify what effects these cancelations have on the hotel performance.

For instance, if a hotel has 20% of its rooms cancelled in a peak season, they could lose 20% of their potential room revenue, if those rooms are not occupied anymore or are sold at a lower rate. To avoid this, hotels charge a cancellation fee, or sell standard and flexible rooms (where standard rooms are not refunded if cancelled and flexible rooms are at higher rates but can be cancelled for a reasonable fee).

In order to measure the cancellation effect even more in depth, managers may choose to use the KPI for % of Cancelled Rooms Occupied.

Formula:

No. of cancelled reservation requests/ Total no. of reservation questions x100

KPI Units:%

KPI Time Frame: Update monthly or quarterly

Posted by Oana Boteanu | Help to protect community: Flag for moderation

Ideas suggested by WinningKPI community:

I am a hotel manager for a small bed and breakfast. On average we get around 10% room cancellations per month.

A year ago, before we introduced the cancelation charge ( $20 up to 72 hours before, and 50% of the room rate for less than 72 h before check in time cancellation), our cancellation rate was around 25%. This made us lose around $2000 + a month.

However, a study we carried out also shown that we lose around 5% of customers because of our high cancellation rate chargers.

For this reason, we will now introduce a flexible rate policy, where for approximately 10% extra on the room rate, cancellations can be made up to 24h before checkout, free of charge.

I trust this will help us minimize that 5% of customers lost to maybe around 1-2% (as not many hotels offer cheap cancellation rates nowadays.)

Oana Boteanu | + | September 8, 2012 at 9:46 am

Articles in Hotels category:

• Infographic for KPIs in Hotel Category
• Tips on using Hotels Key Performance Indicators (KPIs)

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