Hotel Revenue Glossary · Forecasting

Cancellation Rate

The percentage of confirmed reservations that are cancelled before the arrival date. Cancellation rates vary by booking channel, rate type, and lead time — non-refundable bookings have lower cancellation rates than flexible ones.

Why it matters: Understanding cancellation patterns by segment and lead time is essential for accurate forecasting. High cancellation rates on far-out bookings mean early pace figures can be misleading if not adjusted for expected attrition.

Worked example: Take 620 reservations made 45 or more days out across a quarter: 149 cancelled, or 24%. Reservations made inside 7 days cancelled 31 of 810 - 3.8%. So a Friday holding 55 rooms of far-out flexible business is realistically 42. Close the last fifteen rooms because the screen says the date is nearly full and you finish thirteen rooms emptier than you were promised.

Common mistake: Discounting a date because pace collapsed, when what actually happened was one twenty-room block cancelling. Cancellations arrive in lumps, and a single event moves the number further than any change in demand. Look at what cancelled before reacting - a group falling out and twenty individual guests walking away call for opposite responses.

All glossary terms No-Show Rate Forecast Booking Window (Lead Time)