Highly Questionable: Hotel Reward Night No-Show Policies

When you redeem hotel loyalty points towards a reward night, did you know that failing to show up could result in you being charged an undisclosed amount of money – which is automatically deducted from your credit card?

Neither did I… until I received a call from my bank on the morning before I was due to check in at a Holiday Inn hotel in Portugal. I had pre-paid for my room using IHG One Rewards points. So, I was quite confused when my bank asked me, many hours before I arrived at the hotel, if I’d just made a transaction at this hotel €103.69 (~AU$168).

I had no idea why the hotel would be charging this amount to my credit card. I’d already paid for the room using my points, and hadn’t yet checked in. So, I contacted the hotel.

Turns out, the charge was a pre-authorisation – but not towards incidentals during my stay. Instead, the hotel informed me that it’s “standard practice” for them to pre-authorise the amount that they will charge guests who have booked using points if they don’t show up.

I checked in as planned and the hotel refunded the pre-authorisation. But this left me with more questions than answers… and revealed a highly questionable hotel loyalty program policy that I had no idea existed.

IHG hotels charge a cash amount if you no-show on a reward booking

As it turns out, IHG’s official policy if you no-show on a reward night booking, or cancel after the cancellation deadline, is as follows:

• IHG will refund the amount of points that you paid
• The hotel will then charge your credit card on file a cash amount for the first night of your reservation
• The cash amount is based on the average daily rate that the hotel sold rooms at for that night, and there is no way for a guest to know in advance what that amount actually is.

Yes, that’s right. If you book a hotel night using IHG One Rewards points, and don’t show up at the hotel or cancel before the deadline, you don’t simply forfeit the points paid. Instead, you’re on the hook to pay real money.

The reason for this policy, apparently, is that IHG does not pay the hotel (which is generally owned by a franchisee) if a guest no-shows on a reward booking.

IHG does generally let members cancel reward night bookings up to a day (or a few days, depending on the hotel) before the intended arrival date. If you cancel before the deadline, you should get a full refund of the points paid. (And as a quirk of the IHG One Rewards program, Points & Cash bookings are refunded only in points.) But if you simply fail to show up, e.g. because your flight got cancelled at the last minute, then the no-show policy applies.

If an airline implemented such a policy, there would be widespread outrage. This is the equivalent of someone booking a First Class reward flight using their frequent flyer points, missing their flight, and then having their credit card automatically billed for $15,000.

Granted, most hotel rooms don’t cost $15,000 per night. But you could be on the hook for many hundreds of dollars at higher-end properties.

How does IHG communicate this policy?

To make matters worse, I doubt many IHG One Rewards members realise that this no-show policy exists when they book a reward night.

The cancellation policy on the IHG website simply says:

Failing to show will result in a charge of 1 night per room to your credit card or other guaranteed payment method. Taxes may apply.

The IHG One Rewards T&Cs further state:

Members who do not cancel their Reward Night reservation by the hotel’s cancellation deadline and do not use their reservation (no-show) are subject to a no-show charge based on the applicable hotel policy, plus tax, per room, billed to the credit card used to guarantee the reservation upon booking.

There is an exception in the T&Cs for reward nights at Six Senses properties, where you just forfeit the points paid.

Why I don’t think IHG communicates this well enough

The wording on the IHG website alludes to the actual policy. But I think there are two key things missing from the information shown to customers which makes it misleading:

1. When booking using points, the price you see on the booking page is an amount of points. Therefore, I would have assumed that the “charge of 1 night” would be based on the points price. It is not made clear that this is a cash amount which is different to any price that the customer sees during the booking flow.
2. The exact amount that a customer is liable to pay if they no-show or cancel after the deadline is never disclosed in advance.

I really think that IHG should at least change the text shown during the booking flow to something like this:

Failing to show will result in a refund of your points and a cash charge of €103.69 per room, equivalent to the cost of 1 night, to your credit card or other guaranteed payment method.

Some other hotel loyalty programs are even worse

Unfortunately, some other hotel loyalty programs have similar policies for reward booking no-shows and cancellations after the deadline. I did some digging into this subject, and found the following:

• Hilton Honors will redeposit your points but the hotel will charge its stated no-show fee, or the “best available rate” for the first night of the booking if no fee is specified.
• With Marriott Bonvoy, you’ll get your points back but the hotel will charge you the rack rate for the room in real money. This even applies to “Free Night Awards”. For no-shows on multi-night bookings made using Bonvoy points, some Marriott hotels may even charge the equivalent cash price for all of the nights booked.
• World of Hyatt charges the standard cash rate at that hotel for all nights of the original award reservation, while returning the points to your account.

I personally consider it egregious that cancelling a reward or “free” night booking after the deadline will result in a guest being liable to pay an undisclosed cash amount that could easily add up to 4-figure amounts at some luxury hotels.

How on earth do hotels get away with this? Am I the only person who finds this questionable?!