Did you realize that if you exchange points for a hotel booking and subsequently need to cancel within the cancellation timeframe, you might actually be liable for the cash price of the stay? As strange as it may seem, this is true for some major hotel loyalty schemes, and it often surprises individuals.
Hotels may impose cash charges for canceling points reservations
It’s always thrilling to redeem points for a luxury hotel stay that could exceed $1,000 per night if paying in cash. Many individuals fail to understand that if a cancellation occurs after the deadline, it might result in significant costs.
One would think that if you cancel a hotel reservation after the cancellation cut-off, at most you would lose the points you used. However, this is not the case. With both Marriott Bonvoy and World of Hyatt, it’s typical that if you cancel past the cancellation deadline, you will receive your points back, but you will incur the cash cost of your stay.
What’s the reasoning behind this? The issue seems to be that hotel loyalty programs do not reimburse hotels for award stays if you do not complete your stay. Thus, the only alternative for the hotel to receive compensation if you cancel on time is to charge you the cash amount for the stay.
Hotels poorly disclose this hidden policy
I believe the policy of charging someone for a cancellation in a currency different from what was reserved is quite dubious. However, what I find even more concerning is how inadequately this is communicated by major hotel chains.
For instance, suppose you secure a five-night stay at the St. Regis Aspen using cash during peak season, costing approximately $13,500.
When you reach the booking page, it is clearly stated that if you cancel after the deadline, you will be responsible for the full cost of the stay.
Conversely, if you redeem Bonvoy points for your stay at the rate of 648,000 points for five nights, the cancellation policy you accept merely 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.”
In my opinion, the published points policy does not clarify that you would be billed in cash if cancellation is necessary. Instead, it’s common for the hotel to send a pre-stay email, where they reveal that you’ll be charged in cash if you cancel.
As another illustration, an OMAAT reader recently booked a stay at the Ritz-Carlton NoMad New York. Soon after booking, he received an email from the hotel regarding the cancellation policy:
As you have confirmed a Rewards Redemption stay in a [room type] with [hotel confirmation number], we would like to kindly reaffirm the cancellation policy linked to your reservation. While the policy states that a fee applies if canceled within 3 days of arrival, it does not explicate the exact amount.
Please be aware that if you must cancel within that timeframe, the points used for your booking will be credited back to your Marriott Bonvoy account, and a cancellation fee or no-show fee of $1,345 would apply, reflecting the equivalent value of the points redeemed for your stay.
Isn’t it absurd that the hotel explicitly acknowledges that the cancellation policy does not specify the charge amount at the time of booking?
Do hotel guests have any recourse in such instances?
Hotels usually assert they have no leeway with this rule and argue that travelers ought to acquire travel insurance to cover any potential issues during the cancellation period. The truth is many travelers lack travel insurance, and numerous policies do not cover every possible situation that could arise.
While I’m no legal expert, I find it hard to believe that the way hotels implement this policy would be upheld in court. When you make a reservation, they fail to disclose what you will actually be responsible for if you need to cancel. Then, they simply send you a follow-up email afterward, which a guest may or may not notice.
I’ve certainly encountered cases where individuals managed to negotiate their way out of this policy, although not consistently. For that matter, in the worst-case scenario, I’ve heard of hotels allowing guests to check in (technically), so they only lose the points, not cash.
Some individuals have mentioned that they’ve reduced the credit limit on the card the hotel has on file, preventing them from charging the owed amount. One crucial point is that your participation in a hotel loyalty program is ultimately at the company’s discretion, so if they disapprove of your actions, they can also exclude you.