Deposits - Do You Charge Them? For What and For Why

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BTW
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Hello ...... Do you all have deposits?  For What?  Why?   Just picking some brains to see what is the norm and / or if we should be thinking about it.  You cannot charge a guest without their permission.

 

Thanks

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BTW
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Thanks everyone, as usual ...... just completely outstanding feedback and support.   We really appreciate it here.   Cheers, Rock

Highlands John's picture
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We charge a non-refundable deposit of 25% of the total at booking time. These are all processed through Stripe (on my web site and external booking sites) which keeps the card details for later charges.

 

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notAgrandma's picture
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Usually I charge a $75 nonrefundable deposit, which serves as our cancellation fee, no exceptions. I know a lot of innkeepers prefer to take 1 night stay or 50% to ensure income in the off season, but I hate having to deal with refunds and I don't like counting on money that isn't definitely 100% mine. Plus, since I take a $75 nonrefundable deposit, when someone calls to cancel & asks for a refund, I gently remind them that unlike many inns, we didn't charge the entire amount, 50%, or even a single night of their stay so there's nothing to refund.

I take 50% nonrefundable deposit on bookings of 2 rooms or more, or during big events like graduation weekends, Memorial weekend, etc.

Cancellations within 14 days of arrival are liable for the full amount of their reservation; exceptions are made on a case-by-case basis. I'll issue a gift certificate for the full amount if guest is claiming there's been a death in the family. After 6 years, it continues to astound me how many people have to cancel due to funerals.

OTA reservations are immediately charged the full amount. I used to collect funds upon arrival, but after my horrendous February with 6 cancellations / no shows with bad credit cards, I run the cards immediately & reject the reservation if the card fails. All OTA reservations are nonrefundable. My OTA listings clearly state that the reservation is nonrefundable, and it's stated again in the confirmation email that's automatically sent to OTA guests. Expedia stood by me when a guest cancelled with 6 hours' notice. I feel pretty confident that since "nonrefundable" is clearly stated on the OTA site, I have a CYA in the event of a chargeback.

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PhineasSwann's picture
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No deposit for room reservations, but they have to give us a valid credit card. (Exception is Boo.com which I charge 100% immediately).

Weddings are 50% deposit to hold the date, with the remaining 50% of the wedding fee due 30 days before the event. Rooms are handled the same - pay at checkout.

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I  charge the cost of the full stay when they make the reservation.  If I don't, we get people inquiring as to why a charge didn't show up on their credit card.  It may cost us $4 dollars or so if we have to do a refund at some point if they cancel their stay but I can live with that.

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Past 12 years, 10K guests later always:  One night's stay or 50%, which ever is larger.  Deterrent for cancellations and cash flow through the slow season.  Refundable up to 14 days prior with a $25 Service fee; Guest responsible for the entire reservation 5 days out, unless we rerent.  This type of deposit is standard in our area across all types of properties, as we are a tourist destination.  Can't imagine not protecting yourself.  Cruises, airlines, resorts, etc, all do.

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TheBeachHouse's picture
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Hubby stopped taking deposits because he was sick of processing refunds. Last summer, we had two no shows through miscommunication.  A deposit would have helped in those situations.

This summer, I think we will go on a case-by-case basis.   He is planning to charge the whole room or a portion of the room rate at the two week mark.

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Morticia's picture
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TheBeachHouse wrote:

Hubby stopped taking deposits because he was sick of processing refunds. Last summer, we had two no shows through miscommunication.  A deposit would have helped in those situations.

This summer, I think we will go on a case-by-case basis.   He is planning to charge the whole room or a portion of the room rate at the two week mark.

Do you have a cancellation fee? THAT seems to get more attention than the actual deposit. 'How much am I going to lose?' seems to be the deciding factor. Some people are prepared to lose $25 without flinching. (That's our fee.) Also, if you use something like Square, you get refunded the processing fees when you refund. So, you don't actually lose any money on the processing.

We don't charge a deposit to repeat guests. Why not? Because we wouldn't charge them if they cancelled. It's a perk.

BTW, for people who whinge about 'fees' we just paid $140 in 'resort' fees for using the WiFi in Vegas. Given the room rates ranged from $41 - $75 I can see why they keep jacking up the fees and adding more in. (Parking was $10/day or you could pay each time you moved your car.)

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Momma Smurf's picture
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Morticia wrote:

 Also, if you use something like Square, you get refunded the processing fees when you refund. So, you don't actually lose any money on the processing.

Really?  Now that's a perk!

 

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I believe Stripe is the same, no fee for refunds

Morticia's picture
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Yes. I've done a couple of refunds when there were no other charges for the day and my daily report shows that for a $75 refund they only took $73 something from my account. The rest is made up with the refund of the fees.

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We charge a $10 non-refundable deposit, hopefully it proves that the credit card is good and cuts down game playing, yet small enough not to deter our guests.

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OnTheShore's picture
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We changed the name of what we charge (to confirm a reservation) from "deposit" to "downpayment." We ask for 25% of the rent to confirm the reservation. In the event of cancellation, the downpayment is non-refundable unless we succeed in renting the unit to someone else.

We do collect a security deposit from Wedding rentals. This is paid a month in advance of the event (along with the rest of the balance on their contract. The deposit ranges from $1,000 to $1,250 depending on the details of their contract. We've only had to withhold a portion of the security deposit once, due to some damages and clean up costs (as per the contract).

In a separate business (boat rentals) we collect, in lieu of a cash security deposit, a signed authorization to charge their card up to a specified amount for specified reasons, but usually when there is an issue, we try to catch them upon checkout and get them to agree to the charges and take a dip of their card then. Otherwise we'll call them or e-mail them to let them know what's coming....

ETA - in the boat rental business we do also collect a "deposit" (one day's rent) to confirm an advance reservation. This downpayment is refundable if the cancellation comes more than 10 days prior to their reservation; within 10 days the downpayment is only refundable if we succeed in renting the boat to someone else, or if the weather or other conditions are such that we would not let them take the boat.

 

One of the problems with the word "deposit" is that it can have multiple meanings, and which may have a legal definition in the context of renting rooms or houses -- so my question to BTW, are you talking about "deposits" taken to confirm a reservation (which as I say above, we've started calling "downpayments" instead of calling them "deposits") or are you talking about "security deposits" which are taken to cover any damages that might occur? Your statement "you can't charge their card without permission" seems to imply maybe the latter (security deposit)?

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Morticia's picture
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$100 deposit. All reservations except repeats. Partially refundable with advance notice. Non refundable inside one week.

Has cut down tremendously on place holder reservations. OTA guests don't read anything so they end up losing the deposit.

Good for cash flow in the off season.

It's made very clear online both on my booking engine and the OTA that a deposit will be taken and the guest has to agree to that to continue. On the phone we tell them.

Arks's picture
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05/22/2010

I charge first night's bill at the time the reservation is made, so they have "some skin in the game". It's refundable up to a week before arrival, but I keep a $25 handling fee if they cancel. This eliminates people who might make a reservation without being serious about keeping it, and I get the $25 to cover my trouble to generate/program/delete their door key code, send them confirmations and other emails, process a refund, etc. if they cancel.

Plus, when they book, that room is no longer available for anybody else. So I could lose someone else who wanted that room and couldn't get it. That $25 helps cover some of that situation also.

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Generic's picture
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02/24/2011

I have non-refundable deposits on all reservations via third parties. I don't have them for direct reservations. Essentially, I added them to the third parties because I was getting a lot of reservations that cancelled, often people who thought that having a reservation would help with their visa application (it doesn't). So, I put in the non-refundable deposit. It's cut down on a lot of reservations/cancellations. 

But I don't have them at all for direct reservations. I find it makes people think twice about reserving and it makes them reserve at the last minute rather than far in advance and especially in the summer, I survive on longer reservations. But it's also a cultural thing. I get a lot more cancellations from some countries and not from others. 

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We do a deposit to stop time wasters and placeholders - its becoming more and more (thanks Bk. com) that people are booking a few places and then cancelling nearer the time, booking then continuing to shop around or waiting till your cancellation kicks in (ie they book places with a short cancellation) and then see who else has dropped their prices and then book them and cancel you. Also weeds out bad cards

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