As an online tour activity operator, it's imperative to have a clear and concise policy for refunds and cancellations in place. Customers cancel for unforeseen circumstances and conflict with legal requirements, even with short notice. Travel restrictions, border closures, flight delays, weather changes, and personal conditions may cause cancellation requests.
Truly, another cause of stress for a business owner working in the tourism industry.
Our comprehensive guide offers the best practices on how to manage the cancellation process and request refunds for your online tour activity business in the tourism industry. We are also sharing helpful tips on how you can prevent cancellations in the first place.
Having a solid cancellation policies and procedure in place will give your customers peace of mind and make them more likely to book tours with you. It also helps protect your business from any potential losses due to canceled reservations.
What is a Good Cancellation Policy?
A policy for cancellation and refunds is a set of rules that dictate when and how customers can modify their bookings. Cancellation terms should be fair to both the customer and the business.
- Gives the customer time to change their reservations without incurring a penalty, while also protecting the business from last-minute cancellations.
- Clearly stated during the booking process so that the customer is aware of what to expect.
- Consistent regardless of the cause of turnaround, creating consumer confidence and providing a great experience.
Manage Tour Cancellation Policy
Cancellations and refund management can be tricky issues for an activity company. On the one hand, you don't want to miss out on company revenue if a customer cancels their booking.
And surely, you don't want to anger potential customers by being too rigid on the cancellation process and terms.
So how do you strike the right balance?
1. Examine your Refund and Cancellation Policies
When a tour is canceled, it's helpful to have a timeframe that gives you enough time to secure a new booking. You, tour operators, could provide free cancellations up to 24 hours, 48 hours, or 72 hours after the departure date.
Alternatively, you can offer free cancellation up to 24 hours after the booking, or up to 7 days before departure time.
Whichever option you choose, make sure you give yourself enough time to find a new booking. Otherwise, you may end up losing money if you have to cancel last minute.
What should be included?
- How long should customers be allowed to cancel? Should you charge a cancellation fee or not?
- How do you handle customer cancellations? In what ways can they communicate with you? Should you deal with it with manual phone calls and e-mail or can you use automation tools and services, instead?
- What happens when customers cancel their reservations? How will you respond? Can you create a marketing strategy to fill in the empty dates?
- Or what if, you should be the one who should cancel? How can you give a notice?
Why it is important to have a clear policy for refunds and cancellations?
How you handle refunds and cancellations creates a significant impact on your customer's impression.
Besides, having a simple, clear, and consistent policy protects you from any liability and saves you time and resources in trying circumstances.
During the making of a reservation, customers must agree to the policy to move forward. If someone has to modify or reverse a booked trip, this will help you cover your fees for no-shows (or you have to).
Here's an example of a clear reversal and refund policy for tour operators: Please Note: You have 7 days to cancel your reservation and get a full amount refund of monies paid. If you cancel within a week and up to 24 hours before the departure date, you will be charged the deposit. If you cancel within 24 hours or no show, you will be charged 100% of the price. If the trip is canceled because of bad weather or a breakdown, we will refund your booking.
Ensure to inform customers of the steps they should take to cancel a booking. Including their contact details, like phone numbers and e-mail addresses.
2. Cancellation Fee Management
Higher Price = More Flexibility
Operators in the tour and activity industry, like in the hotel industry, set a non-refundable fee for small group tours and cheaper bookings while allowing full refunds on more expensive trips. For instance, trips with travel insurance.
The higher the price, the more flexibility they offer.
Offer Alternatives for Full Refund
Instead of allowing canceled bookings, why not offer to reschedule or rebook? This way, you can ensure not to fail revenue and customers.
On the other hand, some activity providers also charge a fair fee for canceling a booked tour instead of issuing a full refund. Choosing this method helps you recover and protect the costs of the time and resources spent on the booking process.
Book Now, Pay Later
In case you offer a 'book now, pay later, and have a non-refundable deposit for the tour. This should be enough to cover the cost of your time and effort.
3. Review Cancellation Policies with 3rd Parties
Most tour companies work closely with third-party vendors and with local businesses for their tour experience services. If you do, make sure to connect well with them to determine solutions that should work for both parties.
Working with OTAs
Most OTAs offer a full refund for cancellations made 24 hours before the tour. Make sure this aligns with your company's cancellation policies, as shown on your website. So you can maintain consistency across all of your sales channels.
Working With Suppliers
Review the policy for refunds and cancellations you have with 3rd party suppliers.
For instance, working with Stripe as a payment gateway, Stripe charges cancellation fees but it largely depends on your contract with them.
It’s the same for your reservation systems. Some will still charge you fees when you refund a customer.
Can you perhaps communicate and contact them and request flexibility?
The better your communication is, the more specific you can make your cancellation policies, and the more control you have over your bookings.
4. Reduce Cancellations and Refunds
You have three possible ways to recommend travelers products and services to avoid voiding transactions:
- Changing ticket into a voucher (valid for 1-2 years)
- Discounts or deals
- Rescheduling dates
- Transfer a booking
TicketingHub's Magic Link feature allows guests to manage and access their bookings, refunds, and cancellations with live availability. Guests have the option to change their booking into a voucher, reschedule pick-up time, or transfer to someone else before cancellation.
This way, you guarantee every trip and do not lose bookings, while you lessen admin work in the backend.
5. Focus on Existing Customers
It is found that low-cost trips or events often have the most canceled bookings. Guests might easily decide to let it go since they did not spend much on booking.
To provide and deliver guests the finest value, avoid lowering your pricing to attract more bookings. Instead, make it an opportunity to create an exceptional travel experience that will exceed their expectations.
Perhaps consider, can you combine services and offer a unique experience?
Show your guests why they should purchase your tour over competitors in the area. Providing exceptional service and value reduces cancellations. So they will return and suggest your services to others.
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