Cancellation

Definition

A cancellation is when a booked guest withdraws the reservation before check-in. Depending on the rate’s terms they may get their money back (a flexible/refundable rate), lose it (non-refundable), or pay a partial fee. The cancellation rate = cancelled room-nights ÷ total booked room-nights × 100.

What it tells you

A cancellation frees the room early, so it can be resold — unlike a no-show, where the room stays blocked until late on the arrival day. The cancellation rate varies sharply by channel and rate plan: a flexible OTA rate often cancels at 15-20%, a non-refundable rate at well under 5%. Watching it is how you size the gap between on-the-books bookings and actual arrivals.

How to track it

Measured in the PMS (cancelled vs. total bookings, ideally split by channel and rate code). In a BI/RMS view, a run of negative daily pickup on a future date is the visible signal of cancellations eating into the on-the-books position.

Where it fits

The basis of realistic forecasting and of any overbooking strategy: you can only over-sell safely if you know how many bookings typically cancel. Non-refundable rates and deposit/guarantee policies are the main levers for bringing a high cancellation rate down.