Guest blog from CGA by NielsenIQ
Research conducted in 2021 by CGA by NielsenIQ and Zonal uncovered the true cost of no-shows to the hospitality industry, with unfulfilled bookings costing the sector an estimated £17.59bn in lost revenue per year.
The research and following #ShowUpForHospitality campaign aimed to raise awareness of the issue, and despite a fantastic positive reduction in no-shows as a result, the cost-of-living crisis has seen numbers creeping back up again demonstrating that more needs to be done to continue educating consumers and mitigate the impact on venues.
With this in mind, here are ten of the key takeaways from the research.
- No-shows are a multi-billion problem
With one in seven (14%) consumers admitting to not turning up for a reservation and with no-shows doubling from 6% to 15% since September 2022, lost sales from no-shows are costing the hospitality industry £17.59bn a year in sales
- Young people and families are a particular problem
In 2021, CGA data revealed that nearly a third (30%) of 18 to 24-year-olds missed reservations without cancelling, which was more than twice the national average of 14%. Since then, this number has decreased to 21%. However, it continues to have a detrimental effect on the industry, with nearly a quarter of 18-24-year-olds being no-shows.
In 2021, a quarter (26%) of 25 to 34-year-olds admitted to this behavior as well, and families also over-index, possibly due to their busy lives and changing plans. Recent research has shown this has now decreased to 19%, indicating that consumers are becoming more conscious of the industry’s no-show impact, but that isn’t enough, we want a no-more-no-shows future.
- Reasons are complex
Previous research revealed a wide variety of reasons for no-shows, led by changes in plans (19%), or someone else in a group cancelling (19%). Other excuses are hard to plan for, like the weather putting people off (14%), or a venue turning out to be too expensive (15%). But other reasons come with potential mitigations for operators, like people forgetting about a booking (16%). “We can’t mitigate all of this, but there are steps that can be taken,” said CGA’s director – hospitality operators and food, EMEA Karl Chessell.
- Reminders are the most obvious solution
Previous research uncovered that reminding people about reservations is the first step to reducing no-shows. Of consumers who forgot about a booking, more than a third (36%) would be more likely to show up if the venue reminded them. The timing of reminders is important, and just over a quarter (28%) would like to be reminded on the day, while half prefer a few days in advance (38%) or a week ahead (11%). “Restaurants that reconfirm all their bookings have a far lower no-show rate than ones that don’t,” said Amber Staynings, CEO of Bums on Seats. Establishing automated workflows and timelines can make reminders routine and easy, added Henri Jooste, strategic product manager at Zonal: “It’s just good business process.”
- Venues need to make it easy to cancel
The volume of no-shows can also be reduced if operators make it simple and fast to cancel. Understanding how people want to do this is crucial: previous research shows more than half (58%) now prefer to cancel digitally—either via websites (21%), text messages (19%), apps (10%) and email (7%)—so tech must be optimised to make the job easy. It’s also important to remember that two in five (39%) still prefer to cancel a booking by phoning. “It’s all about giving people choice,” said Staynings.
- Deposits can be effective, but they’re not for everyone
Deposits have been touted as a possible solution for some time now, and just over half (55%) of consumers say they would be willing to pay one if they didn’t turn up for a booking. But they remain a divisive issue, with other people averse. The solution is to use deposits sparing, and understanding things like occasionality and local demographics. People will also be more open to leaving deposits on busy days or in big groups than on everyday occasions. “If you put blanket deposits across your business you’ll lose sales—you have to use them tactically,” said Staynings. The deposit issue isn’t something that can be tackled in isolation, Chessell agreed. “There’s a risk to being the first person to do it and I can understand why operators are resistant.”
- Over-booking can help
Many operators have been hesitant about over-booking venues, but the crisis in no-shows means it might be time to rethink that. Businesses need to analyse their data to see when and by how much they might over-book, Jooste said. “We don’t want to stop people from booking… [so we need to] take more so we can compensate for those that are lost.” This comes with a risk that booked guests may occasionally have to wait, but that can be overcome, Staynings said. “Consumers might get shocked at first, but if it’s something we did as an industry as a whole then people would get used to it.” Staff could be well trained in dealing with over-booking too.
- Higher loyalty can lower no-shows
Beyond reminders, cancellations, deposits and over-booking, operators have many opportunities to build guests’ loyalty and make them less likely to miss their visit. “There’s lots we can do to make guests feel special and give them a good experience… and make them feel more loyal about coming into our venues,” Jooste said. Restaurants could learn a thing or two from retail on this, Staynings added. “Retail’s been doing it well for years, but hospitality hasn’t… it’s really new for our sector… about 70% of any sale is about how people feel about you, and that’s what brands need to be working on to get loyalty.
- Improvements start with awareness
“The Show Up For Hospitality campaign has started to open people’s eyes to the consequences of no-shows, there’s a lot of love for hospitality out there, and people recognise to an extent the hit that [no-shows] have had—though clearly there’s some way to go. Awareness campaigns are so important, because once people are fully aware of the impact they’re less likely to no-show.” said CGA’s director – hospitality operators and food, EMEA Karl Chessell.
- This is the moment to act together
No-shows have always been around, and they always will—but this feels like a good time for the industry to take concerted action on the issue. “People are responsive to doing new things [at the moment] and this is an opportunity… but it’s going to take a long time to fix and it’s going to be a collaborative effort,” Amber Staynings, CEO of Bums on Seats.
Join the conversation and help us make no-shows a thing of the past
No-shows cost the hospitality industry an estimated £17.59 billion in lost sales every year. Join our group of passionate industry supporters to help spread the message far and wide and encourage customers to #ShowUpForHospitality.