A cancelation rate is the percentage of canceled orders in relation to the total order number. In hospitality, a cancellation rate refers to the share of canceled bookings.
Generally, a cancelation rate is higher with online reservations made through OTAs and lower with offline and direct bookings. Another statistics shows that reservations made in advance have a higher chance of getting canceled than last-minute bookings.
A cancellation rate is an important metric of hotel revenue management. To minimize losses, hotels adopt cancelation policies that allow guests to annul their booking free of charge within a certain timeframe (typically, 24-48 hours before arrival) and define a fee or penalty for late cancelation.