Travel Tricks

Are Non-Refundable Hotels Rates Worth It?

non-refundable hotel

I recently had to cancel a non-refundable hotel room and agonized over wasting 60,000 Citi ThankYou points. I usually don’t book non-refundable rates because I value the flexibility though in this case, I apparently thought it was worth it. In my view, the decision to book this rate type basically comes down to two factors:

  1. How much money you’re saving by booking the non-refundable rate
  2. How likely it is that you will need to change your travel plans

So How Much Money Do You Save By Booking a Non-Refundable Rate?

There isn’t a definitive answer to this question as each hotel has their own pricing policies. As you’ll see below, the big, international hotel chains all have varying strategies as it relates to both flexible-rate pricing and offering discounts to members. To compare, I did a simple search for a room in New York City for a Friday in April, roughly one month away from the date of my search. From here, I compared member vs. non-member rates and refundable vs. non-refundable rates. Here’s what I found:

Marriott

Courtyard by Marriott New York Manhattan/Fifth Avenue
–  Members save 22% for booking the non-refundable rate ($207 vs. $265)
–  Non-members save 22% for booking the non-refundable rate ($218 vs. $279)

Algonquin Hotel Times Square – Autograph Collection
–  Members save 15% for booking the non-refundable rate ($306 vs. $360)
–  Non-members save 15% for booking the non-refundable rate ($322 vs. $379)

For these properties, Marriott offered a 5% membership discount on all rates.
FYI – I have Marriott Gold status which comes as a benefit of the Amex Platinum Credit Card.

Starwood

W New York – Times Square
–  Members pay a 1% premium for booking the flexible rate ($374 vs. $379)
–  Non-members pay a 1% premium for booking the flexible rate ($394 vs. $399)

Four Points by Sheraton – Times Square
–  Members pay a 4% premium for booking the flexible rate ($228 vs. $238)
–  Non-members pay a 4% premium for booking the flexible rate ($240 vs. $250)

For these properties, Starwood offers a 5% membership discount on all rates.
FYI – I have Starwood Gold status which comes as a benefit of the Amex Platinum Credit Card.

Hyatt

Grand Hyatt New York
–  Non-members pay a 8% premium for booking the flexible rate ($294 vs. $319)
–  Flexbile Member Rate – $288 (Hyatt did not offer a non-refundable rate for members.)

Andaz 5th Avenue
–  Non-members and members pay a 4% premium for booking the flexible rate ($408 vs. $425)

Hyatt has taken a property-by-property approach to their rates. At the Grand Hyatt, members were given the lowest possible rate and it was refundable while they offered no membership discount at the Andaz 5th Avenue.
FYI – I have Hyatt Discoverist status which comes as a benefit of the Chase Hyatt Credit Card.

Hilton

Hilton Times Square
–  Members pay a 5% premium for booking the flexible rate ($352 vs. $371)
–  Non-members pay a 8% premium for booking the flexible rate ($359 vs. $391)

Hampton Inn Manhattan – Times Square South
–  Members pay a  7% premium for booking the flexible rate ($314 vs. $339)
–  Non-members pay a 10% premium for booking the flexible rate ($321 vs. $357)

Hilton offers a 2% membership discount on non-refundable rates and a 5% membership discount on refundable rates.
FYI – I have Hilton Gold status which comes as a benefit of the Amex Platinum Credit Card.

IHG

InterContinental New York Times Square
–  Members pay a 5% premium for booking the flexible rate ($359 vs. $376)
–  Non-members pay a 5% premium for booking the flexible rate ($381 vs. $400)

Holiday Inn Express New York Times Square
–  Members pay a 15% premium for booking the flexible rate ($258 vs. $303)
–  Non-members pay a 15% premium for booking the flexible rate ($263 vs. $309)

IHG also has different membership discounts for each property, offering about 6% at the InterContinental New York Times Square but only a 2% membership discount at the Holiday Inn Express.
FYI – I have IHG Platinum Elite status which comes as a benefit of the Chase IHG Credit Card.

You probably noticed that I changed the language a bit as I went through these examples. I think looking at the offers from a slightly different point of view can help you to make an easier decision. Hotels want you to see this as a savings but you could also think of this as paying a premium for the ability to cancel. The ability to cancel within a 24 or 48 hour window is quite valuable to many travelers (myself included) who are willing to pay slightly higher prices in order to have choice and flexibility. Clearly, this becomes a more complex decision with Marriott properties (22% price premium) and the Holiday Inn Express (15% price premium) but for the majority of these properties, the additional cost to protect yourself from the need to change is well worth it. Put another way, if you change at least 1 in 20 hotel reservations, then paying a 5% price premium for the flexible rate is a good idea.


How Likely Is It That Your Travel Plans Will Change?

Of course, only you can know how likely it is that you will need to change a hotel reservation but there are a few things to consider. First and foremost is time. If you’re booking a hotel more than 30 days in advance, I think it’s probably advisable to pay a little extra so that you have options when you travel. Think about all the things that can change. For example, part of my decision to cancel my recent non-refundable hotel was based on incredibly poor weather at my destination. Life happens and some things you just can’t predict that far out.

In the end, the answer to this question may come down to each individual’s preferred style of travel. Some people are planners and like to stick to a more rigid itinerary. Some people are a little more spontaneous and like to have choices when they travel. Personally, I’m a little bit of both. I love to plan my upcoming trips but I know that I may want to make changes along the way so I appreciate the flexibility that hotels offer, even if I have to pay a little extra. On the other hand, I have great friends that don’t plan anything more than a couple of weeks out. To each their own…


When Does a Non-Refundable Rate Make Sense?

As you can tell by now, I prefer to pay a small price premium in order to maintain flexibility in my travel plans. However, there are times where I might consider a non-refundable rate. For example, if you are planning a somewhat spontaneous weekend getaway that’s a couple of weeks away, it may be a nice opportunity to save a few dollars by booking the cheaper rate. Of course, hotels don’t offer these non-refundable discounts up to the last minute, but at 10-14 days out, you may still find some non-refundable rates available. In this case, you know with greater certainty that you’ll actually honor your reservation and you’re committed to a single destination so you don’t need to worry about wanting to change hotels midway through.

Another exception to the rule may be if you’re booking a long trip and/or a trip with a more complex itinerary. In this case, it may make sense to combine non-refundable rates with travel insurance to save money. In fact, some credit cards offer pretty decent travel protection as part of their benefits package so you may not need to pay for insurance at all… as long as you use the right card (the Citi Prestige card, one of my favorites, has particularly strong travel protection).  Most people are pretty committed to these kinds of vacations and would only make dramatic changes and/or cancellations under conditions typically covered by travel insurance. These trips are also more expensive so saving 5%-10% on hotel reservations can make a big difference.

Like so many other things in life, the answer to this question is “it depends.” My first choice is always to use points for hotel reservations, which typically comes along with generous cancellation policies. If I’m paying cash, I’m generally willing to pay a little bit of extra money for the opportunity to change if I need to. But you may be different…


(Disclaimer: I included referral links in this post. If you decide to apply for one of these cards, I’d appreciate it if you used these links to apply. I’ll earn some bonus points if you do.)

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