How Airline and Hotel Cancellation Policies Actually Work
What airlines and hotels will refund if you cancel
Airlines and hotels have different rules about what you get back when you cancel, and those rules depend on what you paid and when you booked. Most airlines now refund your full fare if you cancel a domestic flight before departure, but they keep the taxes and fees — usually $5 to $15 per ticket. Hotels almost never refund your room rate once you have booked, unless you cancel within their stated window, which is often 24 to 48 hours before arrival. Neither will refund you for a trip you don't take unless the cancellation is their fault or you bought separate trip insurance.
The key difference: airlines are required by the U.S. Department of Transportation to refund the airfare itself if you cancel, but hotels operate under contract law, which means they can set their own terms. A hotel can legally keep your money if you booked non-refundable and cancel outside their window. An airline cannot, though they can rebook you on another flight at no charge.
Key Takeaways
- Airlines must refund your base fare if you cancel before departure, but keep taxes and fees; hotels keep the full room rate unless you cancel within their stated window.
- Non-refundable rates at hotels are legally binding — the hotel can keep your money if you cancel outside the cancellation window, even if you have a valid reason.
- Airlines will rebook you on another flight free of charge instead of refunding, unless you specifically request a refund and meet their conditions.
- Trip insurance covers cancellations for reasons the airline or hotel does not — illness, job loss, weather at your home — but you must buy it before you book your trip.
- Airline change fees are gone for most carriers, but hotel change fees do not exist; what matters is whether your rate is refundable or non-refundable.
How airline cancellation works
When you cancel an airline ticket, the airline must refund the base fare within seven business days if you paid by credit card. The base fare is the ticket price before taxes, fuel surcharges, and facility fees. On a $200 ticket, the base fare might be $175 and the taxes and fees $25 — you get the $175 back. If you paid cash, the refund goes to the original payment method, which can take longer depending on your bank.
You can request a refund by phone, through the airline's website, or at the airport. Most airlines now process refunds online within minutes if you use their website. If the airline cancels your flight or changes it significantly (usually more than two hours for domestic flights), they must offer you a refund or a rebooking at no charge — you do not have to accept a travel credit.
If you cancel for any reason other than the airline's fault, you lose the taxes and fees. Some airlines, including Southwest, allow you to rebook on another flight at no charge, which means you keep the value of your ticket. Others, including American and United, let you use your ticket value as a travel credit for up to one year, but you cannot get cash back. Check your airline's policy before you book if getting money back matters to you.
How hotel cancellation works
Hotels operate on a simple rule: if your rate is refundable, you get your money back if you cancel within the stated window. If your rate is non-refundable, you do not. The window is usually 24 to 48 hours before arrival, but some hotels require cancellation up to 14 days in advance. The hotel will tell you the cancellation deadline when you book — it appears on your confirmation email and on the hotel's website under your reservation.
If you cancel after the deadline, the hotel keeps your full payment. There is no partial refund, no credit toward a future stay, and no exception for illness or emergency unless the hotel chooses to make one. Some hotels will waive the cancellation fee if you call and ask, but they are not required to. Your only recourse is trip insurance, which can cover the cost if you cancel for a covered reason.
If the hotel cancels on you or closes unexpectedly, they must refund your full payment. If they downgrade your room (for example, moving you from a suite to a standard room), they must refund the difference. If you arrive and the room is not as described, you can ask for a refund or a different room, but the hotel can refuse if rooms are fully booked.
Refundable versus non-refundable rates explained
When you book a hotel, you choose between a refundable rate and a non-refundable rate. The non-refundable rate is cheaper — sometimes 10 to 30 percent cheaper — because the hotel keeps your money no matter what. The refundable rate costs more but lets you cancel within the stated window and get your money back. This is a trade-off, not a hidden clause: the hotel tells you which type you are booking before you pay.
Non-refundable does not mean you cannot cancel — it means the hotel will not give you your money back if you do. You can still cancel your reservation; the hotel just keeps the payment. Some travelers book non-refundable rates because they are confident they will go, or because they cannot afford the refundable rate. Others book refundable rates for peace of mind, even though it costs more.
Airlines do not use this system. All airline tickets are technically refundable under U.S. law, but the airline can offer you a travel credit instead of cash. The distinction matters: a travel credit keeps your money in the airline's account, while a refund puts it back in yours.
What trip insurance covers that the airline or hotel does not
Trip insurance covers cancellations for reasons the airline or hotel does not refund. If you get sick, your family member dies, you lose your job, or there is a weather emergency at your home, trip insurance will reimburse you for the hotel room and airfare you cannot use. The airline and hotel will not, because the cancellation is not their fault.
Trip insurance costs 5 to 10 percent of your total trip cost and must be bought within 14 days of your initial trip deposit — usually when you book your flight. If you buy it after that window, it will not cover pre-existing medical conditions. You file a claim by submitting proof of the reason you cancelled (a doctor's note, a death certificate, a layoff letter) and your booking confirmations. The insurance company then reimburses you for the covered costs.
Trip insurance does not cover cancellations because you changed your mind, because you found a cheaper flight, or because you decided not to go. It also does not cover cancellations because of pandemics or government travel restrictions unless you bought a specific pandemic rider, which most policies do not include. Read the policy details before you buy to know what is and is not covered.
Airline change fees and how they differ from cancellations
Most major U.S. airlines stopped charging change fees in 2020 and have not brought them back. This means you can change your flight to a different date or time at no charge, as long as a flight exists on your new date. If the new flight costs more, you pay the difference. If it costs less, some airlines credit the difference to your account as a travel credit; others do not refund it.
Changing a flight is different from cancelling. When you change, you are moving your ticket to another flight. When you cancel, you are giving up the ticket entirely. If you change your flight and then cancel later, the airline will refund the base fare but keep the taxes and fees, just as they would for a direct cancellation.
Hotels do not have change fees because they do not have a "change" option. You can cancel and rebook, but that is two separate transactions. If you cancel a non-refundable rate and then rebook the same hotel for a different date, you lose the first payment and pay the full rate for the new date. There is no credit or discount for rebooking.
What happens when the airline or hotel cancels on you
If an airline cancels your flight, they must offer you a refund or a rebooking on the next available flight at no charge. You do not have to accept a travel credit or a flight on a different airline unless you agree to it. The airline must make this offer before you leave the airport. If they cancel due to weather, they are not required to pay you compensation, but they still must refund or rebook you.
If a hotel cancels your reservation, they must refund your full payment immediately. This is rare but happens when a hotel closes, overbooks, or has a major problem like a fire. The hotel should contact you as soon as they know, and they should offer to book you at a comparable hotel nearby at no extra cost. If they cannot, you get your money back and can book elsewhere.
If either the airline or hotel significantly changes your reservation without your permission — for example, moving your flight to a much later time or changing your room type — you can cancel and get a refund. The airline defines "significant" as more than two hours for domestic flights; hotels do not have a standard definition, so you would need to ask the hotel whether the change qualifies.
How to request a refund from an airline or hotel
For airlines, go to the airline's website, log into your account, find your reservation, and select "Cancel Flight" or "Request Refund." Most airlines process refunds this way within minutes. If you booked through a travel agent or a third-party site like Kayak or Expedia, you may need to contact them instead, though they will direct you to the airline. If the airline refuses to refund, you can file a complaint with the U.S. Department of Transportation, which has the power to fine airlines that break refund rules.
For hotels, call the hotel directly or log into your account on the hotel's website and select "Cancel Reservation." The hotel will confirm the cancellation and tell you whether you will receive a refund based on your rate type and cancellation window. If you booked through a third-party site, you may need to cancel through that site instead. Keep your cancellation confirmation email, which will show the refund status and expected date.
If either the airline or hotel refuses to refund and you believe they should, document everything — your booking confirmation, the cancellation policy as it appeared when you booked, your cancellation request, and their response. Then file a complaint with your state's attorney general or the Federal Trade Commission. These agencies investigate unfair business practices and can pressure companies to refund.
Frequently Asked Questions
Can I get a refund if I cancel because I am sick?
The airline or hotel will not refund you because illness is not their fault. Trip insurance will, if you bought it before you booked your trip and the policy covers medical cancellations. Without insurance, you lose the money. This is why many travelers buy trip insurance when booking trips they cannot afford to lose.
What if the airline or hotel says I cannot cancel?
You can always cancel a reservation — the question is whether you get your money back. If the airline or hotel says you cannot cancel, they mean you cannot cancel and get a refund. You can still cancel; they will just keep your payment. If they refuse to process a cancellation request, contact your credit card company and dispute the charge, or file a complaint with your state attorney general.
Do I have to accept a travel credit instead of a refund from an airline?
No. U.S. law requires airlines to refund your base fare in cash if you cancel. If the airline offers only a travel credit, you can insist on a refund. If they refuse, file a complaint with the U.S. Department of Transportation. Travel credits are the airline's preference, not your obligation.
Can a hotel charge me if I cancel within the cancellation window?
No. If you cancel within the window stated on your confirmation, the hotel must refund your full payment. If they charge you anyway, dispute the charge with your credit card company. Keep your confirmation email as proof of the cancellation window.
What if I booked through a travel site like Expedia, not directly with the airline or hotel?
The airline or hotel's cancellation policy still applies — the travel site does not change it. However, you may need to cancel through the travel site's website rather than calling the airline or hotel directly. Check your confirmation email to see who to contact. If the travel site refuses to process your cancellation, contact the airline or hotel directly and ask them to cancel on their end.