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Treating Customers Right: Removing Nuisance Fees at Hotels.com

Making a reservation at Hotels.com the other day, I learned they no longer levy cancel fees. If the hotel itself has a last-day change or cancel fee, that still applies, of course. But Hotels.com used to levy their own additional fees -- with a much earlier penalty period than the hotel itself -- which was highly annoying. hotels dot com logo No longer. They call it their "Flexible Booking - No hotels.com Change and Cancel Fees" benefit. I call it smart business. Fred Reicheld in his book The Ultimate Question (highly recommended) describes the difference between good profits and bad profits. Both good and bad profits increase your bottom line this quarter. Bad profits, however, come from policies which tick off your customers, making them less likely to return, thus decreasing the net present value of your company. Think late fees at video rental places, the crazy return-tank-full-vs-empty rules at rental car places, airline nuisance fees for standby changes, crazy long distance pricing "gotcha" plans, etc. I personally learned to shun bad profits in my former job at Crutchfield. Bill Crutchfield has built one of the most customer-fair and customer-friendly companies anywhere. After 5 years in a customer-friendly environment, it gets hard to accept the bad-to-customer policies which are all-too-often the norm elsewhere. (Shameless plug: check out Crutchfield next time you're seeking car or home electronics and need trusted advice making sense of it all.) From the marketing perspective, Hotels.com could stress this great policy more visibly on their site. I couldn't even find it mentioned on their homepage. Think Zappos, with their notable "Free Shipping Both Ways" policy highlighted in a good-sized 164x47 pixel tile. Perhaps Hotels.com is downplaying this policy because they're not yet sure they'll stick with it? I sure hope not. Either way, kudos to Hotels.com for the insight to eschew bad profits and drop their nuisance fees.
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