What's the purpose of a cancellation fee?

[Don Draper]

CANCELLATION charge, an Administrative or Processing fee - what ever you want to call it.
I do not charge a fee for cancellations before the set cancellation date. I charge a 1 night deposit to hold the room, this is not taken until the cancellation window closes (14 days before checkin - 30 for event periods). The only fee I have is not charged unless someone cancels after WITHIN their cancellation period and only is taken IF I rebook the room and I refund their deposit, minus the $10 fee.
I do not get a lot of cancellations, the few that I do get are usually before the window closes. In looking at this closely, I realized I could save myself some effort by not taking the deposit until the window closes, thus decreasing the odds of refunds to nearly zero. If someone cancels after the window, then they should be thankful for any refund and should not balk at the fee.
This works (at least currently) in my market... we are not all in the same market and must look at what the market holds to help us determine our policies..

This makes sense for your kind of market, I like the idea and not having to process refunds would be great. People make reservations here 6-8 months in advance and we need the deposit $$ to keep us going in the off-season so we institute the $25 fee from the time you make the reservation.

 

[Copperhead]

We instituted the $25 processing fee to offset the credit card fee that we are charged for processing the deposit.
This fee is enforced from the moment the reservation is made/we process the deposit (usually the day after the reservation is made).
Our cancellation policy is 14 days and I cannot tell you how many people cancel at 15 days out...no one has yet been upset about the $25 fee..

We instituted the $25 processing fee to offset the credit card fee that we are charged for processing the deposit.
This fee is enforced from the moment the reservation is made/we process the deposit (usually the day after the reservation is made).
Our cancellation policy is 14 days and I cannot tell you how many people cancel at 15 days out...no one has yet been upset about the $25 fee.

Since you have so many canceling 15 days out, have you thought about changing your cancel date to 21 days (or so). This would also provide you more time to rebook.

 

[Morticia]

CANCELLATION charge, an Administrative or Processing fee - what ever you want to call it.
I do not charge a fee for cancellations before the set cancellation date. I charge a 1 night deposit to hold the room, this is not taken until the cancellation window closes (14 days before checkin - 30 for event periods). The only fee I have is not charged unless someone cancels after WITHIN their cancellation period and only is taken IF I rebook the room and I refund their deposit, minus the $10 fee.
I do not get a lot of cancellations, the few that I do get are usually before the window closes. In looking at this closely, I realized I could save myself some effort by not taking the deposit until the window closes, thus decreasing the odds of refunds to nearly zero. If someone cancels after the window, then they should be thankful for any refund and should not balk at the fee.
This works (at least currently) in my market... we are not all in the same market and must look at what the market holds to help us determine our policies..

This makes sense for your kind of market, I like the idea and not having to process refunds would be great. People make reservations here 6-8 months in advance and we need the deposit $$ to keep us going in the off-season so we institute the $25 fee from the time you make the reservation.
.

This is what I was thinking...cash flow! But no one in this area takes a deposit. Being the first for something possibly viewed as 'onerous' is not a good idea for me. Easier to get a job...