Watch Out for Non-Cancellable Hotel Rewards: Reader Got a Surprise $7000 Charge

A reader contacted me several weeks ago about a fairly traumatic situation. She had booked an award stay over the phone at the Andaz Papagayo in Costa Rica for the end of December. She made the reservation by phone nearly a year in advance. Then in May she figured out she couldn’t make the trip work, so she cancelled the booking. A month later she discovered a $7000 charge on her credit card from the property.

  • The reservation, made nearly a year in advance was not cancellable
  • She made the booking by phone and says she was never told this (upon contacting Hyatt once of the answers she was given is that ‘guests agree to this policy with a check box on the screen’ which couldn’t be true in this case)

andaz papagayo resort
Andaz Papagayo

She got bounced around with Hyatt customer service, e-mailed me, and I escalated things with Hyatt. The hotel was insistent on getting paid a full forfeiture amount, even though they had about 7 months to resell the room. Ultimately World of Hyatt stepped in and issued an award to the hotel (so they get paid by the program) and let the member keep her points (which was above and beyond, she was happy to give up the points if need be).

I thought Hyatt did an amazing job for this customer more than making good, but I also thought it’s important to highlight that there are some award reservations which are fully non-cancellable and that if you don’t show up you’re charged a huge cash penalty instead of losing your points. This is not unique to Hyatt.

andaz papagayo resort
Andaz Papagayo

Back in March I wrote about the St. Regis Aspen charging points guests $1000 a night for cancelling reservations within 60 days of arrival. Even customers whose flights were delayed or diverted, and showed up the next day, were getting hit with $1000 charges for their missed nights.

  • When a guest doesn’t stay on an award, the program doesn’t pay them for the award stay
  • The hotel instead goes back to the guest to charge them a forfeiture instead


St. Regis Aspen, credit: Marriott

That’s how Marriott works, it’s how Hyatt works. Starwood used to have a policy that you could email and request to have your points forfeit instead of cash, which is how most members assume this works — if you have a non-cancellable booking made with points and you don’t show you lose the points.

What’s interesting is both that hotels get actual cash from the member, but also that it’s in an amount which is never disclosed up front to the member. And in the case of the Andaz Papagayo they also get to re-sell the room because the guest cancelled rather than no showing.

While we think of most award reservations as fully cancellable, in fact awards usually carry the same cancel rules as paid rates. So if standard paid rates at a property come with a 60 day cancellation policy, not uncommon for remote resorts during peak season, award stays may also. I do not recall ever seeing an award stay that wasn’t cancellable at all booked 11 months in advance.

Unfortunately I don’t think hotels do a great job of disclosing non-standard cancellation rules. Even if guests book online where there’s something to click through, we naturally assume a booking works the way bookings of the sort usually work unless we’re beaten over the head with it. Non-standard cancellation policies, whether on points or cash, should be flagged in a different color or with a popup to click through.

Always check cancellation policies and if you book by phone specifically ask about cancel penalties. In my experience the phone agent won’t even be able to tell you how much you’ll pay if they actually know that you’ll pay cash. Generally they just know what they read on the screen about how far in advance a reservation must be cancelled, if it can be cancelled at all.

Hyatt thanked me for bringing the situation with their member to elevated attention so they could solve it. They shared, “We continuously evaluate the program, cancellation policies and disclosure practices – and will continue to do so. We also appreciate receiving guest feedback that may help us improve our processes”

I’d point out that three Hyatt executives running loyalty come from Starwood where they had a friendlier policy. Hopefully this is something they’ll address, and an area where they can further differentiate themselves from Marriott.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. […] Watch Out for Non-Cancellable Hotel Rewards: Reader Got a Surprise $7000 Charge by VFTW. These types of charges are excessive. Gary highlights that Hyatt did an amazing job, but I’d say allowing properties under your management to charge these excessive cancellation fees in the first place means that they’ve done a bad job. I personally think that if an non-cancellable award stay is cancelled, the points should be forfeit as that’s how any sane person would assume the system works rather than having to pay a fee of $7,000 cash. […]

Comments

  1. Is the Andaz Papagayo cancellation policy a new one specific to award bookings? I just checked my cash reservation for our upcoming stay in September and it has the very reasonable “To Avoid 1 Night Fee Cancel 72hours Prior To” policy. We have stayed there before on Awards and Paid and I don’t ever remember a draconian cancellation policy.

  2. I doubt that this is really about getting paid by corporate for the rooms and is more likely intended to act as a deterrent against people booking points stays. The property can claim to have award inventory (thus complying with program rules), but if it scares people off from booking those rooms, it will still be more likely to sell the rooms for cash.

  3. For online hotel reservations, I save screenshots at each step showing the cancellation policy, room type, and rate rules. Have had to use them a few times. I do the same for flights,

  4. I had a St. Regis Aspen award reservation made for next Winter but upon reading about the crazy cancellation fees….NOPE. I’ll spend the rest of my Marriott points somewhere else.

  5. There are many ways in which points are not as customer friendly. I lost a 7 night category 7 award when we elected to cancel our stay at a Marriott because of a hurricane. If it had been cash reservation I would have got most of it back…

  6. If I wanted to stay somewhere with high humidity, no need to go to Costa Rica. Houston will do just fine.

  7. I ran into this – it’s only true for a short period around NYE. However, I was booking on line and saw the cancellation penalty and changed my stay from 5 nights over NYE to 5 nights starting January 5, which has a 14 day cancellation window/1 night charge penalty within 14 days. But no mention about what the $ would be for that one night.

    I will stay 12/31 to 1/5 at the JW Guanacaste just because of the cancellation policy being better. It’s 75 days – but it gives poor information about how much the penalty will be. When I click through for the details, I get contradictory information – 3 day before arrival cancellation.. I took a screen shot but the screen (actually popup) with the 3 day doesn’t give the reservation number, so I feel like I’m on shaky ground if I actually do cancel. I don’t have a problem with a one night penalty but I bet the $7k would not be displayed to the OP even if they booked online.

    Here’s what the reservation page says:
    “Redemption
    You may cancel your reservation for no charge until October 17, 2019 (75 day[s] before arrival).

    CANCELLATION POLICY”

    When I click through the Canellation Policy link, I get

    “You may cancel your reservation for no charge until December 28, 2019 (3 day[s] before arrival).
    Please note that we will assess a fee if you must cancel after this deadline. If you have made a prepayment, we will retain all or part of your prepayment. If not, we will charge your credit card. This fee equals 1 night(s) of your room charge plus tax.” (I have no prepayment).

    The major issue in my mind is the lack of clean disclosure on what the penalty will be in dollar terms.

  8. “We’re going to charge you, but we won’t tell you how much” sure sounds like an illegal contract to me. I’m not a lawyer, but if things have gotten so skewed, that this is legal corporate behavior, then I’m for socialism.

  9. With all the flak you get in these comments sections and elsewhere, the fact that you still go above and beyond to act as an ombudsman for your readers speaks volumes about you. Kudos for going so far to help this reader – and perhaps many others in the future, if Hyatt follows through on their promises.

    @beachfan – I’ve run into the same type of confusing language with Marriott. I think the hotel can place a hold on your account, but I don’t know when they can do so, and under what circumstances that’s considered a prepayment. Assuming any charge is considered a prepayment, I THINK it goes like this:
    – >75 days before, CC not charged: points refunded
    – >75 days before, CC charged: points and charge refunded
    – <75 days before, CC not charged: points lost
    – <75 days before, CC charged: points lost, charge refunded
    – <3 days before, CC not charged: points lost, CC charged 1 night room rate (probably sky-high)
    – <3 days before, CC charged: In my mind, this is the only place it gets confusing. I see 3 scenarios:
    – – the charge get adjusted to 1 night ("This fee equals 1 night" adjusts "we will retain all or part of your prepayment")
    – – the charge is kept as-is ("we will retain all or part of your prepayment" trumps "This fee equals one night")
    – – the 1-night fee is tacked on to the prepayment ("we will assess a fee" added to "we will retain all or part of your prepayment")

  10. So is you don’t cancel is that the same? Just not showing up? I mean at these kinds of prices, you’d just about be better to advertise on a travel group to pay someone $50 or $100 to show up as the guest to check in wouldn’t you? I booked one for my mom at a regular property, she got delayed and couldn’t make it, they just kept the points, no charges on top of that. Wouldn’t it be considered double dipping to charge and also take her points?
    Would this be covered by travel cards if part is paid by cc?
    Would it be covered if you purchase a travel ins policy?

  11. The person this happened to is a good friend and I’m very familiar with what she went through to get this resolved.

    I applaud Gary for his assistance is getting this to a high enough level at Hyatt that the right thing could be done. Big props for that, Gary!

    But it took his intervention for Hyatt to do so.

    I am a Hyatt and World of Hyatt fan. For me, this was a black mark. It ended up with a positive result, but it shouldn’t have happened and it shouldn’t have been so difficult to resolve.

  12. @Beachfan,

    The screen shot shows the DATES which should be the same dates of your reservation so that should be suffice.

    Also in the confirmation email the cancellation deadline is stated, albeit no $ term – so we should assume the worse – Rack Rate being charged.

    One thing to keep in mind, Marriott has stopped sending out confirmation on Point Advance booking. You NEED to use the email button to send yourself a confirmation email – which would be in plain text without any semblance of the confirmation emails you normally get – but it has all the details, down to how many points cost and IIRC even your pt balance after paying this, though not 100% sure about this. But it definitely shows the point cost per night.
    As for the $ value of Penalty – I would just assume it is the worst type and the Rack Rate used – I bet the affected customer’s reservation in Dec must be during the peak holiday period, may even cover both X’mas and New Year stretch. That is when the cash rates skyrocket.

    Ski destinations charge INSANE rates during ski season, and high penalty – partly due to the very unpredictable nature on ski conditions. The hotels cannot afford to give short free cancellation period – if so, everyone would cancel the last moment when the ski conditions are not good. Hence if you are booking such a location you need to keep this in mind.

    Though the saga of the St. Regis Aspen that dinged a customer for no show just because he could not arrive before 12pm due to flight cancellation and he had called the hotel immediately, about he could only arrive the next day – for a several days point reservation – is a very sleazy lowball act on the property’s part. It took a lot of back and forth and go all the way up the Marriott chain to finally got it resolved. St. Regis Aspen should be avoided during Winter time.

  13. Reader in question chiming in:

    First of all…THANK YOU Gary for getting this to resolution.

    As a longtime fangirl of Hyatt, it was a really disappointing experience, and I’m glad you were able to get this into the right hands.

    I really hope that it makes them take a look at their policies and how they are disclosing them to the consumer.

  14. @Gary – I would not say it is the “same policy” for cash bookings because 1) there is a general understanding (as you note) that points bookings are refundable, and 2) while a cash booking may experience forfeiture, what is described here is actually punitive because it moves the consumer from paying points to paying cash. So same letter of the policy, but different impact on the consumer, obviously.

  15. The Andaz Papagayo is touted by some blogs as being a great value on points or for using a annual cert (in the past). However, because of the stiff cancellation penalty, I have never booked. It might be useful, when touting such places that the harsh cancellation penalties be mentioned. just based on the harsh penalties, I don’t believe that the hotel is a good points hotel or to book a stay there on cash.

  16. Ran into this last month. Had booked a 5 night Conrad Bora Bora on points. Plans changed and needed to cancel – rang Hilton Honors and discovered that there was a one-month minimum or else you were charged the cash rate for one night – about USD1000.

    After some discussions initially per the Hilton Diamond Desk and then directly with the hotel, luckily, the hotel agreed to a change of dates, which just happened to line up with some award inventory business class on QF / TN using QF points.

    The hotel didn’t technically have to make the change.

    In this case, everyone was a winner!

    Oh, and the Conrad Bora Bora was excellent in all regards – we marked them a 10/10 on all feedback criteria.

    I tracked down the reservations manager on-site to pass on a personal thank you!

  17. I think if they charge you an amount that you didn’t agree to, it’s a “billing error” as defined by the Fair Credit Billing Act. If they don’t tell you the exact amount upfront when you book, they can’t charge it later. You can dispute it, and the credit card issue has to remove it. (They may not want to of course, but they have to.)

  18. I never give any hotel an active credit card to secure a room unless I’m booking a non-refundable rate. I keep a few prepaid CCs with about $1 each lying around, and I either use one of those, or a one-time use virtual CC number from Citibank, generated with an expiration date long before my stay.

  19. This is not just an issue for Hyatt in Costa Rica. I avoided booking the Hyatt in Cartagena around new years because the points rate says “full prepayment” and no changes. Even 6+ months out.

  20. IHG has gotten irritating too. When you cancel a night it just has you agree that “sometimes there are charges for cancellation and I agree to pay them.” But there’s no way to see there what the charges might be, and if it’s been a while since you booked you may have forgotten. Then when the confirmation comes it tells you it was cancellable until 24 hours before, etc. A little too late to avoid panic.

    BTW what’s the deal with a $300 or so “early departure fee?” What does that mean?

  21. why not just use a visa gift card to make the initial booking? seems a safe way to protect against bad faith hotels.

  22. Mulbry: I was thinking the same thing. But even if you do this, they can still come after you for nonpayment. They have your name and address, they could sue you, etc. I’d definitely be worried about retaining any status or points I had if I tried this.

    Still, might be a good idea to at least give yourself some leverage against this kind of overt criminality by hotels.

  23. That andaz Papagayo had a change in their cancellation policy and it auto updated everyone’s reservations without notice. I had made a speculative reservation (cash) about a year in advance back in March 2018. The reservation was for February 2019. When I made the reservation, the cancellation policy was 3 days, when I went to cancel it, it now showed “non-refundable”. Luckily I had a screen shot of the original cancellation policy, and the original reservation email, but it still took about 2 hours on the phone to finally get the refund.

  24. From a practical standpoint, how do they ever hope to collect this bill?

    You chargeback the CC and good luck with Costa Rica attempting to collect a wrong bill from someone in the US.

  25. Depends on how much they hold on your credit card I suppose, but I would 100% hedge these greedy hotels by using limited spend cards to book. A dedicated authorized user business card with a spending limit I think would do nicely. I don’t normally advocate disingenuous tactics, but clearly some hotels are laying traps to shake points paying customers down and I have no remorse when those consumers deny them that.

  26. This happened to me with an award stay at the Hyatt Centric in Santa Barbara. I also made the reservation over the phone and was not made aware that it was non-cancelable. I canceled and saw a surprise charge on the Amex card I had on file for incidentals 2 months after the intended stay date. In my case, World of Hyatt was no help and only offered me 15k points as compensation for the $800 charge. However, I disputed it with Amex and they decided in my favor. Charge removed, haven’t heard anything about this in over a year. It was not pursued by Hyatt.

  27. They should look into revising this policy “When a guest doesn’t stay on an award, the program doesn’t pay them for the award stay”. If points are the currency used for the reservation, then any penalties should be in forfeited points.

  28. Just went to do a dummy booking and saw it says: “Terms & Conditions
    Cancellation Policy
    7 Days Prior To Arrival To Avoid One Night Fee”

    Perhaps the bad publicity got them to change this. Was totally unaware of it being the policy before.

  29. We used points at a Hilton in Montreal and confused our dates. Called them and they let us start the next day. Used points at the Holiday Inn on the beach in Miami, when the hotel was having construction issues they wanted to move us 15 miles away. I talked IHG into upgrading us to the Intercontinental Miami (without paying the extra points). We did cancel a IHG in Los Angeles Once and they said because we were such good customers they would waive the 48 hr cancelation requirement .

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