A recent study by Cloudbeds '2026 State of Independent Hotels Report', based on their 30,000 plus hotel clients, confirmed a very worrisome trend: cancellation rate of OTA bookings is TWICE as high as the one for direct bookings.
According to the report, Cancellation Rates in all of 2025 were:
- OTA Bookings - 21.8%
- Direct Bookings - 10.6%.
Needless to say, cancelled reservations are bad for the business of any hotel. They result in lower occupancy, trigger last minute discounting which is detrimental to the property’s ADR and RevPAR, etc.
Why do travelers cancel their hotel reservations? People do not book hotels and then cancel just to have fun. Apart from legitimate reasons like illness and change of plans, the main reasons are rate parity and market parity issues, better marketing and promotions by the competition are some of the main reasons.
What can hotels do to decrease their cancellation rates?
- Maintain Rate Parity! If travelers find a lower rate for your hotel on the OTAs, they can cancel their direct booking and be tempted to book your hotel on the OTA or be lured away by a competitor with lower rate or better value.
- Maintain Market Parity! Are your rates on par with competition and market conditions?
- Offer Advance Booking Specials: Introduce 7-, 14- or 21-day advance booking rates (based on the prevailing booking windows) at 15%-20% discount that are non-refundable, or at least make the first night non-refundable.
- One super successful approach for reducing cancellations is changing your marketing strategy from selling on rate alone to selling on value. Do you have enticing weekend specials, spa packages, family packages, activity packages, special occasion and F&B packages and promotions, etc. that travelers cannot find on the OTAs or at the competition?
At my company NextGuest, now part of Cendyn, we have always recommended the above to our hotel clients. When these recommendations were implemented, cancellation rates plummeted by 50%-75%.
Max Starkov
Hospitality & Online Travel Tech Consultant & Strategist
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