Canceling Hotel Points Bookings Can Be Expensive

OMAAT reader Steve emailed me about a frustrating situation he’s dealing with for an upcoming points booking, adding stress to an already difficult situation. I wanted to highlight that, because I think it’s something that many people don’t realize when they make a points booking.

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.

I’ve written about this policy before, including how your five night award stay at the St. Regis Aspen could cost you $13,000 if you need to cancel within 60 days, for whatever reason.

A reader’s situation with canceling a points booking

Last year, reader Steve made a three night award booking at the Grand Victoria Hotel in Lake Como for 63,000 World of Hyatt points, though Hyatt’s Small Luxury Hotels of the World collaboration. The hotel has a 15-day cancelation policy.

Tragically, Steve’s father recently passed away, and his service is now planned over the same dates where he’s supposed to vacation in Italy. Obviously Steve is going to attend his dad’s service over going on vacation, and since it’s within 15 days, he’ll have to forfeit his reservation.

Steve thought he’d just lose the 63,000 World of Hyatt points he redeemed, but he instead received an email from the hotel, informing him that his credit card on file will be charged €4,800, and his credit card has already been charged.

Steve has reached out both to the hotel to explain his circumstances, and to his World of Hyatt Globalist concierge. He realizes the hotel may not be able to resell the room last minute, and would like for either just the points to be pulled, or to be able to reschedule for other dates.

As Steve tells me:

This reservation was made with Hyatt points. The circumstances around my cancellation are completely out of my control. The fact that the hotel immediately charges a cash rate based on a points reservation cancellation not only feels wrong but frankly criminal. I understand they may not be able to fill the room and would expect my points to be forfeited. However, this is an extremely disappointing policy that has a real impact financially.  It has made a very stressful time more stressful as I am facing a $5200 USD charge for a hotel reservation I can’t use for a very real reason.

I totally understand the frustration here…

First and foremost, I’m really sorry for Steve’s loss, as I can only imagine how tough all of this is on him. Regarding the issue of canceling hotel points stays and having to pay cash, let’s discuss that more broadly, and then more specifically to this situation.

Generally speaking:

• I think hotel groups need to do a better job explicitly disclosing that you’ll be charged cash if you cancel a points booking within the deadline; for example, Hyatt terms typically state you’ll be charged 100% of the cost of a stay if you cancel within X days, but it doesn’t clarify that it’s 100% of the cost in cash, rather than points
• It’s possible for something to both technically be the rule, and to still feel wrong; the concept of being charged in a currency other than what you paid with when canceling simply makes no sense to the average consumer
• Seemingly this issue exists simply because of how reimbursement works between hotel groups and individual hotels when guests don’t actually complete their stays; this is a matter that should be worked out internally to be less punitive

More specific to this situation:

• You would hope that a hotel would have some compassion in a situation like this, where someone isn’t able to complete a hotel stay due to the loss of a parent
• I’m sure hotels would argue that you should just always buy travel insurance for situations like this, but that’s not something a vast majority of consumers are going to do, since you’re not going to come out ahead that way in the long term
• Short of a hotel showing some compassion, I think this is an important factor to keep in mind if you’re booking a luxury hotel with points with a strict cancelation policy, especially if paying the cash cost of a stay would have a meaningful impact on you financially

Usually we pride ourselves in getting as many cents per point as possible with redemptions. In this case, Steve getting over eight cents of value per World of Hyatt point is very much working against him. I hope that the hotel and Hyatt can work with him.

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. For those of us who are good at maximizing points, that can be really costly.

A reader is facing this very tough reality at the moment, after losing his father. He can no longer complete his stay, and is learning that rather than forfeiting his 63,000 World of Hyatt points, he’s being charged €4,800.

What do you make of the way hotel groups handle canceled points bookings?