Did you know that if you redeem points for a hotel stay and end up needing to cancel within the cancelation period, you could actually be on the hook for the cash cost of the stay? As absurd as that sounds, it is true with some major hotel loyalty programs, and it tends to catch people off guard.
I get emails about this from shocked hotel guests all the time, so in this post, I’d like to cover the basics of this policy. After all, it’s something that I think many people don’t realize when they make a points booking.
In this post:
Hotels may charge cash when canceling points bookings
It’s always exciting to be able to redeem points for a stay at a luxury hotel that may cost over $1,000 per night if paying cash. What many people don’t realize is that if you need to cancel after the cancelation deadline, it could cost you an arm and a leg.
You’d assume that if you cancel a hotel booking after the cancelation deadline, at worst you’d forfeit the points that you spent. But that’s not the case. With both Marriott Bonvoy and World of Hyatt, it’s common that if you cancel after the cancelation deadline, you’ll be refunded your points, and you’ll be charged the cash cost of your stay.
What’s the logic for this? It would appear the issue is that the hotel loyalty programs don’t reimburse hotels for award stays if you don’t actually stay. So therefore the hotel’s only other option to be reimbursed if you cancel within the deadline is to charge you the cash cost of a stay.
Hotels do a lousy job disclosing this hidden rule
I think the policy of charging someone for a cancelation in a currency that’s different than what they reserved in is incredibly shady. But what I think is actually even worse is how poorly this is disclosed by the major hotel groups.
For example, say you book a five night stay at the St. Regis Aspen with cash in peak season, which costs around $13,500.
When you get to the booking page, you’ll clearly see it disclosed that if you cancel past the deadline, you’ll be charged for the entire cost of the stay.
Meanwhile say you redeem Bonvoy points for your stay, at the rate of 648,000 points for the five nights. The cancelation policy that you agree to just indicates that they “will assess a fee if you must cancel after this deadline,” and “we will charge your credit card” for a fee that “equals 99 percent of your room charge for your entire reservation.”
If you ask me, the published policy for points doesn’t at all make it clear that you’d be charged in cash if you need to cancel. Instead, it’s standard for the hotel to send a pre-stay email, where they disclose that you’ll be charged in cash if you need to cancel.
As another example, an OMAAT reader just booked a stay at the Ritz-Carlton NoMad New York. Shortly after booking, he received an email from the hotel about the cancelation policy:
As you have confirmed a Rewards Redemption stay in a [room type] with [hotel confirmation number], we would like to kindly reconfirm the cancellation policy associated with your reservation. While the policy notes that a fee applies if canceled within 3 days of arrival, it does not specify the exact amount.
Please note, should you need to cancel within that window, the points used for your booking will be returned to your Marriott Bonvoy account, and a cancellation fee or no-show fee of $1345 would apply, as this reflects the equivalent value of the points redeemed for your stay.
Isn’t it ridiculous that the hotel literally acknowledges that the cancelation policy at the time of booking doesn’t actually specify how much you’d be charged if you needed to cancel?
Do hotel guests have any recourse in these situations?
Hotels will typically claim they have no flexibility with this policy, and will argue that people should buy travel insurance to deal with any issues that could arise within the cancelation period. The reality is that many travelers don’t have travel insurance, and many policies don’t cover all the potential scenarios that could arise.
I’m no legal expert, but I can’t imagine that the way that hotels use this policy would hold up in court. When you make a booking, they don’t disclose what you’re actually going to be on the hook for if you need to cancel. And then they just send you a follow-up email after the fact, which a guest may or may not read.
I’ve definitely heard of situations where people have been able to negotiate their way out of this policy, though not necessarily consistently. For that matter, worst case scenario, I’ve heard of hotels agreeing to check people in (technically), so that they just forfeit the points, and not cash.
I’ve also heard some people say that they’ve simply lowered the credit line on the card that the hotel has on file, so that they can’t actually charge them the amount due. One important consideration is that ultimately your participation in a hotel loyalty program is at the discretion of the company, so if they don’t like something you do, they can also ban you (which isn’t to say that they would, but they could).
I truly find this to be one of the most ridiculous policies in the hotel industry, and I can’t believe for how long it has gone on, with hotels making no actual effort to better disclose what the cancelation policy is.
This really seems like it shouldn’t be an issue at all, as it only exists because of how reimbursement works between hotel groups and individual hotels when guests don’t actually complete their stays.
As much as we love to pride ourselves in how many cents per point of value we can get for our hotel redemptions, if you need to cancel, you’ll regret having maximized your points so much!
Bottom line
It’s important to remember that canceling a hotel points booking past the cancelation deadline can be very, very expensive. Rather than forfeiting the points you redeemed, you can be charged the cash cost of a stay, particularly with Hyatt and Marriott. For those of us who are good at maximizing points, that can be really costly.
This catches people off guard all the time. I find the policy to be ridiculous in the first place, but I find it even worse to what extent the rules aren’t clearly disclosed when booking.
What do you make of the way hotel groups handle canceled points bookings?
Ben,
Shouldn't this be called "outside the cancellation period"? If I'm within it then my cancellation would still be OK.
If you are "within" the cancellation deadline, then you're on the hook. If you're outside of your cancellation deadline/period, then the date has not yet been reached and you can still cancel.
This is clearly deceptive, and no, it wouldn't hold up in court. The trick is *getting into* court: every hotel rewards program has terms and conditions that require members to use out-of-court arbitration to settle any disputes, and members waive the right to participate in class action lawsuits. Arbitration is time-consuming and one-sided, and few attorneys would want to deal with it, which is exactly why these terms exist.
Lol any half decent attorney knows their way around what you just said.