s a business owner, it is important to establish clear booking rules for your customers when booking a rental or activity. Having a cancellation policy and fees in place that is stated up front will ensure that your customers are aware of the rules at the time of booking.

Cancellation Fees can be very useful for your business operations, let’s learn a few reasons how they work for your bottom line.

Better Quality Customers When a customer knows the fees associated with canceling a booking, it will encourage them to honor their commitment to the rental or activity. Cancellation fees will reduce no-shows and attract customers who are serious about your service.

Help with Lost Revenue Any booking that is made will almost always cost you something whether it be a transaction fee, employee wages, or other business expense. These are fees that you cannot recover once the booking has been made, so incorporating a minimum fee or percentage that covers this into your cancellation fee schedule is the best option.

Consider applying a cancellation fee for all bookings regardless of time:

  • Fixed fee of $15-$25
  • Small percentage of the booking total of 5-10%

These amounts will guarantee you recover this lost revenue if there is a cancellation, and are small enough that it won’t deter someone from booking with you in the first place.

Increasing your Earnings Cancellation fees can also be a revenue boost for your business. If you charge a cancellation fee, and you are able to rebook the time slot to another customer, then you’ve collected the fee on top of getting a new booking for the full price of the rental or activity.

This is especially true in busy tourist areas as you likely have customers who are waiting to book as soon as they see an opening. You may even have a wait list of customers that have asked to be contacted in the event of the cancellation. Here’s your opportunity to contact potential customers and get that canceled slot booked.

What should the fees be? We’ve established that fees are important, but how much should you charge? The answer will depend on many factors, so consider the following when determining your fees:

  • Industry norms - see what others are doing in the rental and activity space
  • The type of rental or activity you offer - how easy will it be to rebook this rental or activity
  • The costs you incur to offer this service or item - Consider employee pay, transaction fees and other business expenses

The fees you decide upon should not be too high that it will discourage a customer from booking in the first place, but enough that you can ensure that you are not losing money.

Building a fee schedule that increases the fee as the arrival date approaches is the best option since it may be harder to rebook a reservation closer to the activity date, so higher fees will help with any lost revenue. Consider a larger percentage fee of 50% or more for cancellations that are close to the arrival date.

See an example of a strict fee schedule:

  • 10% cancellation fee if canceled more than 30 days in advance
  • 25% cancellation fee if canceled less than 30 days in advance
  • 50% cancellation fee if canceled less than 14 days in advance
  • No refund if canceled less than 48 hours in advance

Here’s an example of a less strict fee schedule:

  • Full refund minus a $25 processing fee if canceled more than 14 days in advance
  • 25% cancellation fee if canceled less than 14 days in advance
  • 50% cancellation fee if canceled less than 7 days in advance
  • No refund for no-shows and cancellation less than 24 hours in advance

Once you decide on the fees, include them in your cancellation policy, and properly communicate them to customers in emails and waiver. You can now feel confident when cancellations occur that you are able to charge the required fee. The booking platform can help you to automate the fees by calculating automatically based on the rule set, but also allow you to be flexible if there are extenuating circumstances where you want to adjust the fee.

Cancellation Fee


To learn more about BookingCentral and how we support you with your business, reach out to our team today!

Mar 14, 2024
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