No More No-Shows: Leveraging IVR Systems for Hospitality Success

According to a 2016 Mirai study, cancellation rates on hotel brand websites were, on average, 19% lower than those on Booking.com and Expedia, which had average cancellation rates of 39% and 25%, respectively.

These figures can rapidly demonstrate that cancellations are common in the hospitality sector and that you must be equipped to deal with the issue.

In this article, we will discuss how to handle and reduce no-shows in hotels with the use of IVR. But before let us understand,

What are no-shows in the hospitality industry?

No-shows occur when a customer or guest does not arrive at a scheduled appointment without notifying the hotel in advance. These clients confirm a reservation and do not cancel it before the hotel’s cancellation deadline.

The Visa Reservation Service (VRS) allows the hotel to charge the customer’s Visa card but if the cardholder denies the charge, the transaction becomes a no-show and the hotel is answerable to them.

This brings us to the question,

Why don't customers just cancel their reservation?

Well, because they can! Unless the hotel has a non-refundable deposit policy.

A survey by Carbon Free Dining explained the following data.

9% booked multiple hotels and chose one in the minute, leaving the rest deserted.

18% forgot their bookings due to no reminders by the hotel.

45% didn't know how to cancel their reservation.

27% didn't want to go through the trouble of cancelling reservations.

How do no-shows affect the hospitality industry?

Loss of revenue

A reservation is an agreement that says you will hold a place for a guest if they pay for the service. When a guest who has made a reservation does not show up, your business doesn’t generate the expected revenue.

Opportunity Loss

A no-show represents a loss of opportunity for your hotel if you have to turn away other guests because you reserved a space for a guest who has confirmed a reservation with you. If the reservation turns into a no-show and you have to turn the guest away, you may not be able to win back the business of either party.

To avoid this circumstance, many hotels turn to overbooking. Yet, this strategy is a risky business because if things go south, i.e., hotels oversell, the cost to departing guests can be very high, severely affecting customer retention.

Labour costs 

Reservations help make the unpredictable hospitality industry a little more predictable. Your hotel hires its staff according to bookings. If half of your reservations don’t arrive, your business may be spending more money on staff.

‍Did you know?

Multiplying the average no-show rate of 1%-2% with the average room rate results in an estimated loss of $50 million to $100 million per year to the hotel industry!

Top 7 reasons for No-Shows at a hotel

• Guests checking in at the appropriate hotel brand, but the incorrect property.

• Hotels are unable to locate a reservation if a guest calls the property to cancel before the set deadline.

• Wrong reservation was cancelled because the guest did not receive a confirmation number at the time of booking.

• Guests failed attempts of contacting to cancel due to busy servers.

• Around 3-5% of no-shows are the result of administrative errors, for example, incorrect dates or misspelt names.

• Guest contacts the CRO, The Central Reservations Office which is a system allowing agents to receive reservation requests by phone and handle them immediately. 

These agents instruct guests to call the property directly for cancellation, leading to the guest's hesitation.

How to reduce or handle no-shows with IVR?

The answer is easy:

Automated appointment reminders by Interactive Voice response systems.

Sending automated reminders can reduce no-shows by 85%, without spending time making manual calls.

Let us understand some of the primary features of IVR systems that have proven to be beneficial to the hospitality sector.

Documentation

• An IVR system's primary functions include receiving and documenting customer calls. 
• Relevant information can then be provided to guests, tailored to meet their needs and aligned with the organisation in question.

‍Personalized Customer Service

• The IVR system can also enable a more personalised interaction with guests by offering local and regional language options, thereby providing convenience for all consumers. 
• Determining the caller's language is as simple as using caller ID to identify the call's origin. 
• This feature is particularly useful for out-of-town customers, as it allows the hospitality industry to overcome language barriers effectively.

‍Automated Operations and Information Hub

IVR facilitate tasks such as,

• Hotel room bookings
• In-house information assistance
• Providing room rates
• Informing guests about room availability
• Offering details on tour packages, attractions, shows, and weather conditions, among others.

‍In-house Options and Amenities

• Customers expect and demand the utmost convenience and comfort during their stays away from home. With the help of the Interactive Voice Response system, you can fulfil this with a wide range of features from the comfort of their rooms, without needing to speak with the front desk or housekeeping.  
• Tasks like requesting laundry service, room cleaning, billing inquiries, reporting issues, or contacting staff members can be easily assigned to the IVR options, streamlining organisational functioning while also ensuring that information is logged and recorded.
• Services like wake-up calls, voice messaging, do-not-disturb requests, and booking slots for the gym, spa, or other facilities will no longer be prone to human error or memory lapses. Instead, they will be reliably registered within the IVR system's computer programming.

‍Effective ways of reducing/handling no-shows with IVR systems

• Ensure that the consequences of not cancelling the reservation through phone communication are made known at the time of reservation. Request the caller to confirm their understanding by making announcements through the IVR. 

For example, play recordings such as, 

"Kindly note that failing to cancel by the specified deadline will result in charges (state the amount) for one night's accommodation. Do you still wish to continue?"

Await the caller's affirmative response. 

• Dispatch an SMS confirmation containing all necessary details, including the cancellation policy, and retain a copy of the sent SMS for record-keeping purposes. 
• For peak periods, conduct IVR calls a few weeks to a few days before the scheduled arrival date. When contacting the guest, repeat the cancellation procedure to ensure that they have received the message loud and clear. 
• Regularly conduct checks in your IVR database to identify duplicate reservations, similar names, and differences in dates. 
• Establish a partnership with top travel agents and integrate your IVR system with their software to regularly review their upcoming bookings, especially during busy periods or for group reservations. 
•  Designate trained agents to be available on calls when guests want to speak with them directly.
• To calculate the cost-benefit ratio, conduct IVR test confirmations and analyse the No-Show rate
•  To begin, reach out to the absent guest using the contact details you have on record and politely inquire about the reason for their absence through a live agent. 
• Often, no-shows are unintentional, which is why it is crucial to approach these conversations with empathy and understanding.
• Guests may have experienced an emergency or simply forgotten to cancel their reservation, so utilise phrases such as "we missed you" and "we're reaching out to enhance our hotel" to encourage guests to provide feedback through SMS with links.
• Streamline this process by automating it through SMS. A guest feedback solution can promptly send surveys to guests marked as no-shows.
• Allow guests to reschedule through their IVR options.
• Stay connected with local guests by occasionally sending them reservation invitations.
•  Rather than the staff having to call guests manually to remind them of their reservations, automate confirmation and reminder messages. Look for a reservation solution that offers two-way SMS reminders, requiring guests to confirm their attendance.
• If you intend to collect deposits and enforce no-show fees, it is crucial to make it easy for guests to cancel or reschedule their reservations through IVR.

The benefits and profits associated with implementing an Interactive Voice Response system in your hospitality business far outweigh the initial costs and hurdles.

Not only can you offer popular 24/7 customer service, but your customers can also continue to interact with the system, feel heard, and have their needs met at all times. 

Furthermore, this system drastically reduces your company's costs by streamlining your workforce and minimising human workload. All customer interactions can be recorded for future quality assurance purposes and backed up at all times, significantly reducing the margin for error.

To reduce the occurrence of guest cancellations, it is crucial to establish consistent procedures within your hotel. By ensuring a transparent cancellation policy with IVR, you can safeguard your hotel's reputation from negative feedback.

IVR solutions such as Alohaa can enhance revenue generation while optimizing costs. For an effective solution to reduce no-shows in your hospitality business, schedule a demo with us now.