Niko Krauseneck recently tackled a common worry among hoteliers: “What if we get too many cancellations with fully flexible rates?”

He pointed out that this fear often ignores the Endowment Effect, a psychological principle where we value something more once it feels like ours.

In our case, when guests book a stay, they imagine themselves relaxing in the room, or enjoying a welcome drink.

This sense of ownership kicks in, making the booking feel much more valuable and, as a result, less likely to be cancelled.
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So, with this in mind, why lean into flexible rates?

1. Higher conversion rates: Guests feel safer booking without penalties.
   
2. Fewer cancellations than you think: That sense of “owning” the room keeps reservations intact.
   
3. Loyalty & trust: Flexible policies make guests feel valued and encourage repeat bookings.

Nick explains that the the biggest mistake here is overvaluing the “loss” of a canceled booking and undervaluing the “gain” of increased conversions and guest trust.

Also, if this hasn’t convinced you, smart overbooking strategies can help fill any unexpected gaps. 😉