Strategies for Reducing No-Show and Cancellation Rates at Your Rental Properties

Every property manager has experienced cancellation challenges. Sometimes, guests book their accommodations before they’ve fully ironed out their plans and end up deciding against your property. Other times, they experience an unexpected life event and need to cancel at the last minute. 

The good news is that there are some effective ways of reducing cancellations. Here are some strategies we suggest: 

Screen Your Guests 

As a short-term rental manager, welcoming strangers onto your properties comes with the territory. However, that doesn’t mean you can’t do a little research on guests to ensure they are a good fit. By pre-screening your guests, you can identify high-risk renters and take extra precautions to protect yourself. 

Are you unsure where to begin? Safely offers a non-invasive and automated guest screening solution that ensures prospective renters are who they say they are. Check it out today. 

Write a Detailed Cancellation Policy

Every short-term rental property manager should have a comprehensive cancellation policy. Creating a detailed agreement that outlines how you handle cancellations can go a long way toward reducing no-shows, especially if your policy states that you’ll be keeping any deposits. 

On that note, you should also need to spell out your stance on deposit refunds. Explain whether you issue refunds and what criteria renters have to meet to get their deposits back. 

While it’s acceptable to write a cancellation policy yourself, it’s important to be thorough when doing so. If you are able, consider running the agreement by an attorney who has experience with short-term rentals. Remember, this policy is your first line of defense against no-shows, so it needs to be detailed, comprehensive, and legally binding. 

Collect a Deposit at Booking

Hopefully, you have already been collecting at least a small deposit at booking. If not, it’s time to start. Collecting a deposit incentivizes people to show up for their reservations. After all, if they are going to be paying you either way, they might as well enjoy your short-term rental property. 

The trick is in choosing the right deposit amount. Some short-term rental property managers require a 100% deposit up front. Others charge a percentage of the total rental costs (e.g., 25% or 50%). While you don’t necessarily have to charge a full deposit, you should bill renters enough to incentivize them to show up. 

Make Providing Credit Card Information Mandatory

Whatever you do, make sure you collect credit card information up front. You also need to verify that the card is active and capable of covering the rental costs. 

Charging a deposit takes care of both of these concerns. If a renter can’t reserve your property without paying a deposit, they won’t be able to complete the booking process using a bad credit card.

However, it’s important to use a reputable and secure payment processing platform. Once you collect someone’s credit card information, you become responsible for keeping it safe. Failing to do so could expose you to liability and damage your reputation. 

Consider Collecting Full Payment in Advance for Lengthier Stays

Generally, you don’t need to collect a 100% deposit for short-term rental reservations. If someone is going to be booking up your short-term rental property for multiple weeks, though, you should probably charge them the full amount up front. 

Think about it this way — if they cancel, you will lose out on weeks of short-term rental revenue. It will also be incredibly tough to fill such a huge stretch of dates at the last minute. Requiring people to pay the full rental fee in advance eliminates this risk.

Advanced payments are a topic that you need to address in your cancellation and refund policy. For instance, you can require full upfront payment if a renter will be staying longer than seven nights. 

Benefits of Reducing No-Shows

Proactively reducing cancellations can make your portfolio of rental properties far more profitable. Here are some other benefits associated with lowering the number of no-shows:

Consistent Revenue

If you don’t have a cancellation policy to protect your bottom line, you could be missing out on a ton of revenue. Conversely, implementing a detailed cancellation policy and requiring deposits will help you generate a steady stream of cash. 

Once someone books a stay at your property and pays a deposit, you know you’ll be generating at least some revenue from the reservation. Integrating a deposit structure and cancellation policy into your management strategy also promotes revenue consistency. You can reduce the odds of cash flow mishaps and more effectively calculate revenue for each of your rentals.  

Fewer Missed Opportunities

Last-minute cancellations can be detrimental to your rental business, especially without a cancellation and deposit policy in place. In an instant, you can go from having a profitable month to barely breaking even all because a renter bailed at the last minute. 

Collecting non-refundable deposits offsets these losses and helps you capitalize on every booking. Even if you don’t turn a major profit on a cancellation, you’ll at least bring in some cash for your troubles. When implemented at scale, this strategy can make your portfolio of short-term rentals much more profitable. 

Less Frustration

When you implement no-refund policies, deposits, and guest screening, you’re helping to discourage cancellations. Over time, these strategies will make managing your short-term rentals much less of a hassle. You can avoid the frustration that comes with constant cancellations and transform your portfolio into a revenue-generating machine.

Additionally, these strategies will help ensure that your properties are available for reputable and respectful guests who rarely cancel their vacation plans. The end result is better consistency, less worry, and stronger cash flow. 

Implement These Strategies and Watch Cancellations Plummet

Reducing cancellations requires a nuanced approach that uses the strategies outlined above. Additionally, you need to be transparent about your cancellation policies so that guests know what’s at stake if they bail on their reservations at the last minute. 

By being more proactive about guest relations, screening renters, and collecting deposits at the time of booking, you can protect yourself from the risks of cancellations.