Additional OR Cancellation Policy Options

Something I bump into when assisting others and for my own cancelation policies is a lack of options for the timing of the cancellation policy and the creation of the cancellation fee.

•  I would like to see a "Days / hours after booking" option to set the window of how long refunds are distributed. Mainly for the amount of time for which someone can get a full refund. Example: AirBNB allows for cancellation "up to 48 hours after booking". This is for your more strict type cancellation policy. How can I recreate something like that when the only modifief in OwnerRez is "days before arrival"? I have no idea what my lead time is going to be for a future booking. And this setup for the cancellation policy allows for a gap in how I might want to apply the amount of time for when full refund is valid.
  
  
• My cancellation fees are never truly flat. I charge a 3%  cancellation fee of the booking amount for a full refund because I cannot receive that initial 3% back from my payment processor. I do not possess this money, even if I wanted to return it. A true 100% refund would be coming out of my pocket. I would like the ability to apply a percentage based cancellation fee as opposed to having to create some flat rate soon to be orphaned cancellation fee for each cancelled booking.

 

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• My cancellation fees are never truly flat. I charge a 3%  cancellation fee of the booking amount for a full refund because I cannot receive that initial 3% back from my payment processor. I do not possess this money, even if I wanted to return it. A true 100% refund would be coming out of my pocket. I would like the ability to apply a percentage based cancellation fee as opposed to having to create some flat rate soon to be orphaned cancellation fee for each cancelled booking.

 

That is already there. Settings > Cancelation policies > create

You can specify 97% (or whatever percent) refunds or do stepped cancellation policy (ex: 97% is canceled 60 days or more, 47% if canceled 30 days etc). Plus, you can apply a flat cancellation fee if needed. 

Sort of, they're work arounds. But you'll notice that the cancellation fee is not percentage based. In your screenshot it is a flat rate of $10. So in the scenario I describe, if you had a direct booking and processed it through Stripe, if the 3% they take off the top is more than $10, you're paying out of pocket. You set your overall percentage to 97% to make up for the lack of setting a dynamic, percentage based cancellation fee. You're then left with this sort of orphan line item for the remaining money as opposed to properly labeling it as a cancellation fee. It's a preference thing. It looks as though you use the workaround I described (and currently use) to make it work and charge an extra 10 bucks for the bother of having to process the cancellation. And if I want to actually work in a line item for cancellation fee, I have to create an actual fee rule that will later sit in the fees settings, orphaned as I will not likely process another cancellation fee for the same amount.

Sort of, they're work arounds. But you'll notice that the cancellation fee is not percentage based. In your screenshot it is a flat rate of $10. So in the scenario I describe, if you had a direct booking and processed it through Stripe, if the 3% they take off the top is more than $10, you're paying out of pocket. You set your overall percentage to 97% to make up for the lack of setting a dynamic, percentage based cancellation fee. You're then left with this sort of orphan line item for the remaining money as opposed to properly labeling it as a cancellation fee. It's a preference thing. It looks as though you use the workaround I described (and currently use) to make it work and charge an extra 10 bucks for the bother of having to process the cancellation. And if I want to actually work in a line item for cancellation fee, I have to create an actual fee rule that will later sit in the fees settings, orphaned as I will not likely process another cancellation fee for the same amount.

You don't need a percentage-based cancellation fee if you can specify a percentage refund. If you want to charge 10% cancellation fee, then set refund to 90% and do not touch the cancellation fee. Actually, I do not mess with cancellation fees. I just created that screen to show you.  The 3% credit card fee is built into my rates. So if 1 in 10 cancels, I am ahead by 9 X 3% that I did not have to refund. Refunding only part of the total may result in some channels like Vrbo not refunding their service fee, and that can only invite dissatisfaction and possible chargebacks. To me, the 3% is not worth that hassle. I do not get THAT many cancellations to worry about it. But if your model is different, the above set up should work. 

@BlueMtnCabins - Building into your rates... Are you principle or Prop manager. Trying to determine if "Rate" is consumers rental price or a management fee. I can see adding to the rate (price) to consumer. But, it may be hard to increase PM fee by 3% in a competitive market. I definitely see you point about VRBO not refunding service fee if you withold for a cancellation and how that can lead to chargebacks, bad reviews etc. This is a conundrum I'm working on. 3% adds up. A $7,000 booking credit card fee is $210. The guest booking fee is $886! So, if I collect $225 as a cancellation fee, VRBO will not refund their $886 service fee. Now guest is paying about $1,100 to cancel with lots of notice. I think avoiding this scenario is crucial. I appreciate your insight and need to figure out how best to structure this. Additionally, I fear an economic or health scenario can create Lots of cancellations in which case this could become a problem if it's just a business expense without collecting for it on each booking.

if I collect $225 as a cancellation fee, VRBO will not refund their $886 service fee.

This is not necessarily accurate.

According to Vrbo official policies, yes you are correct.  And if you or the guest reaches out to Vrbo about a refund of the service fee, and they find that you the host did not issue a 100% full and complete refund, yes they'll keep the service fee.

But...

We have found that, if you clearly state and in fact keep a reasonably small cancellation fee using OwnerRez custom cancellation policies - and, yes, in our experience, 3% qualifies - and if you patiently allow the automatic systems to do their thing without getting any human beings involved... yes, you can keep your cancellation fee, but even so, the guest does get a refund of their Vrbo service fee.

Of course, to re-emphasize, if anyone calls Vrbo to ask, that will result in the Vrbo service fee not being refunded.  And it can sometimes take a month or two for the fee refund to be processed.  So there is indeed a certain risk there.  Therefore, it becomes a business decision for each individual host as to which approach provides better security and less risk.

@BlueMtnCabins - Building into your rates... Are you principle or Prop manager. Trying to determine if "Rate" is consumers rental price or a management fee. I can see adding to the rate (price) to consumer. But, it may be hard to increase PM fee by 3% in a competitive market. I definitely see you point about VRBO not refunding service fee if you withold for a cancellation and how that can lead to chargebacks, bad reviews etc. This is a conundrum I'm working on. 3% adds up. A $7,000 booking credit card fee is $210. The guest booking fee is $886! So, if I collect $225 as a cancellation fee, VRBO will not refund their $886 service fee. Now guest is paying about $1,100 to cancel with lots of notice. I think avoiding this scenario is crucial. I appreciate your insight and need to figure out how best to structure this. Additionally, I fear an economic or health scenario can create Lots of cancellations in which case this could become a problem if it's just a business expense without collecting for it on each booking.

I am a self-managing owner. Ken outlined how you can do 97% refund and what the risks are. I was not aware that you can refund 97% and Vrbo would refund the service fee. 

[Another topic was closed as a duplicate of this topic (Cancellation policy options)]