Don’t get your hopes up: Hotels likely won’t follow airlines in eliminating change fees

Major U.S. airlines shocked the travel world this week when they announced that they would be permanently dropping change fees for most flights. While airlines have been waiving change fees due to the pandemic, no one expected this policy to last. After all, change fees are big money makers for travel companies. This begs the question: are hotels going to follow suit?

Like airlines, most major hotel chains have been offering flexible change and cancellation policies for new and existing bookings. Hotels even beat airlines to extending elite status. However, it's unlikely that hotels will match airlines in permanently offering flexible bookings.

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Airline and hotel change fees aren't the same

First things first: airline and hotel change fees cannot be compared apples to apples. While the majority of flights you book are nonrefundable, many hotel reservations are fully-refundable, even pre-COVID. Most hotels offer nonrefundable room rates, but the discount you'd get for booking one is much smaller than when booking basic economy flights.

Even if you book a nonrefundable room, change fees are typically irrelevant. Unlike nonrefundable flights, these room reservations can't be changed. In other words, you typically can't pay a fee to adjust your trip. Your only option to change a nonrefundable reservation would be to cancel and forfeit the amount you paid.

Related: Why do airlines bill in advance when hotels let you pay after your stay?

Flexible reservations typically need to be canceled 24 to 72 hours prior to arrival. Otherwise, you'll typically be subject to a change fee equivalent to one night's stay. Flights, on the other hand, could be canceled right up until departure time.

Most hotel stays booked with points are refundable. However, certain properties – especially luxury ones — have stricter policies. For instance, as TPG reader Justin found out the hard way, the St. Regis Deer Valley Resort in Utah will only allow you to cancel your reservation penalty-free for 30 days before arrival. After that, you'll have to pay a fee equal to 99% of your entire stay.

Related: Your guide to booking refundable travel

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Hotel flexible reservation policies are ending

To boost traveler confidence, most major hotel chains have allowed new and existing reservations to be canceled at no charge for up to 24 hours before arrival. For a long time, the flexible cancellation policy for new reservations did not have an end date. However, in the past few days, most major chains have updated their policies to reflect that they're only valid for bookings made through Sept. 30. That means that beginning next month, all new nonrefundable/pre-paid bookings will be subject to the usual terms and conditions.

At the time of writing, Hyatt is among the few chains to still offer flexible changes and cancellations at no charge for all future bookings. Hyatt's flexible booking policy covers new reservations made July 1 "or beyond."

A spokesperson for Hyatt told TPG, "We do not plan to end this flexible cancellation policy early at the end of September, and in fact, this policy will extend for reservations booked for arrivals through July 31, 2021." "We also do not plan to eliminate non-refundable rates at this time," the spokesperson added.

TPG reached out to Hilton, Marriott and IHG to ask if they are considering backtracking and extending their flexible booking policies beyond September. A Hilton spokesperson responded that they understand that travelers have needed greater booking flexibility. "We're closely monitoring the situation and actively discussing how we continue to deliver the flexibility that our guests need beyond that date," the spokesperson explained.

Related: An inside look at how Hilton is cleaning hotel rooms between guests

What I'd like to see hotels do

While hotels have ramped up cleaning procedures, there's still a lot of uncertainty with booking travel right now and it will likely go away by Sept. 30. Hotels have been very generous for effectively making all room rates completely refundable for this long and I don't expect them to continue to do so forever. After all, airlines will continue to restrict changes on basic economy tickets and nonrefundable rates are essentially hotels' versions of basic economy. Also, unlike airlines, which can easily fill empty seats at the last minute, hotels often end up losing money from last-minute cancellations.

That said, airlines extended free changes for basic economy fares for new bookings made through the end of the year. Given the current situation and the constantly changing travel restrictions, hotels should do the same. Occupancy rates are still extremely low and customers need some security if they're going to book future travel.

Beyond 2020, it'd be nice to see hotels allow nonrefundable reservations to be changed or canceled in exchange for a travel credit. This way, travelers would have greater flexibility and hotels won't need to forfeit revenue.

I'd also love to see hotels get rid of resort fees, but that's an entirely different discussion.

Related: Ready to work from a beautiful hotel? These properties let you do it

Bottom line

We're living in unprecedented times. Although no one expected airlines to drop change fees for good, it's unlikely that hotels will follow suit. As of now, beginning Oct. 1, regular rate rules will apply for new stays booked with most major chains, except for Hyatt. However, there are other steps hotels could take to give customers the confidence they need to book future trips.