Friday, March 7, 2014

How to manage delayed bookings

A chronic problem for agents and operators, the links in the middle of the chain, is how to deal with clients delaying booking confirmation or payment. This is especially nagging if you deal with corporate bookings as your client contact is also a link in their own corporate chain and is often just as caught in the middle as you are. While there are generally very good reasons up the chain for the delay, there are just as good reasons down the chain for declining to extend the deadline or worse, decline for being sold out.

Never extend a booking deadline!

The very first rule is to never extend a booking deadline, but instead, issue a new quote with a slightly different price if you only have the back office costs to do the new quote, or more if your providers down the chain also change their quote to you. Issuing a new booking gives the clear message that you cannot extend deadline without you having to say no (especially important in Asia). If you extend the deadline, the client will perceive that the deadline is flexible and, consequently, that you are too! Leading to further payment delay and late changes expected without charges. By issuing a new booking altogether, you avoid a number of potential problems. First, it shows clearly that you cannot extend deadlines, which the client will likely understand being that of hotels or other providers’ deadlines. The message will get up the chain and further delay are far less likely than if you agree to an extension in the first place. Second, you can accurately charge for the “always guaranteed to happen” last -minute changes because you have now demonstrated that the booking is not flexible. And third, as the price of the new booking is always higher, even if only a little, it gives a clear indication that further delay will cost further more.

Looking down the chain

You also want to avoid asking for an extension to your service providers “because the client has not yet confirmed” unless you have already have an established track record with that provider and your requests for extensions are rare. They might give you the extension, but you can be sure that they will remember on your next inquiry resulting in a little higher quote or a shorter deadline to account for the expected delay from you. Either way, that will make you less competitive in the future and damage your reputation toward your providers.

You can avoid the deadline issue altogether if you structure your quote with two prices, one by a given date, and the other by a second date. The price difference can be quite motivating if the client knows the cost difference up front. Down the chain, some hotels will quote you accordingly, assuming you are not blocking too many rooms. If none of the above fits the situation, then you have manage the risks and evaluate deposits.

Risk management

When an hotel gives you a quote with a deadline, they are taking the risk of waiting too long to be able to sell the rooms you did not confirmed past the deadline. But, if they make it too short, they could lose your business to a competitor. Add another factor: the non-refundable deposit to bring the deadline closer to the booking date. That’s risk management as the amount of the deposit should offset the loss of income from a late cancellation where only a portion of the rooms released can be expected to be resold. On your own side, the link in the middle, you don’t have any hard cost related to a late cancellation, so the deposit you request from the client only needs to be what you have to pay to your providers. Too large of a deposit could make your quote uncompetitive, even if your total price is lower than that of competing quotes.

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