I have noticed that there is a preponderance in the travel industry of varying grades of cost mainly depending on your chance of the need to cancel a booking. This applies from booking an international flight for many $thousands to a simple overnight stay at a caravan park.
To get the cheapest price (and often only with full upfront payment and a minor saving in cost) you get the privilege of losing all rights to any refund if cancelled, no matter what the circumstance or length of notice. While it is possible to get travel insurance to cover this risk, it is only viable for certain circumstances.
As an example: I recently had a booking for two nights at a campsite with a minor cost of $150, paid in full up-front as it was the lowest cost booking! The night before booking in, there was a family crisis which may have stopped me from going to the caravan park. The crisis did pass but if I had cancelled I would have lost 100% of may payment. While I would not have had time to give reasonable notice, the exact same rule applies if the booking was cancelled months ahead of time.
This type of payment rule applies to airlines, all sorts of accommodation as well as caravan parks and I question whether there should be any circumstance where there is a 100% loss of payment because of cancellation. I accept that it need not necessarily be a 100% refund, the businesses do need to cover their costs, but again it should be a “reasonable cost” not some arbitrary punitive fee!
Just think of the recent Royal Commission into Banking where they were vilified for charging a “fee for no service”:
Is the no refund rule when cancelling a travel booking any different?
I will take the business’ side on this one because of human nature. Regardless of how early one might cancel a ‘non-refundable prepaid’ booking, allowing it at any time would encourage customers to shop around, and continue shopping around, cancelling and rebooking ad nauseam.
As it nears ‘the day’ it should not be about a business’ out of pocket costs, but their lost revenue as the business is not the responsible party. It offers a discount for certainty. Remove the certainty for that product or service being paid for and why would they offer the discount?
If the reason for a short fuse no-show was serious and unexpected, travel insurance should cover it. If it was the travellers ‘whim of the day’ why should the loss be on the business who acted in good faith?
That being written, sometimes it is good business to waive one’s right to profit to help a customer who finds themselves in a sudden and serious situation over which they have no control. Some companies will refund for change of mind, and others won’t, and consumers make choices whether that is value re where/who/how to patronise - I suggest the cases have similarity.
And one must also remember closer to the day, many businesses have already arranged staff based on the booked workload. Late booking means the schedule staff still have to be paid and the only real savings to the accommodation business is likely to be the cost of laundering and reduced use of consumerable (soaps, tea, coffee etc). These costs are minor compared to the expenses outlayed through the cancellation.