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Deposits for cashflow

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mooseberry

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I have never taken a deposit on my bookings, only a credit card to guarantee the reservation and swipe when guest arrives.
Right now is a very slow time for us until mid may.
I have read someplce that thanks to taking 50% deposits their cashflow is doing good.
Do you all take deposits?
 

swirt

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Yes we take them upon reservation. It is the only way you can guarantee getting some money in the event of a cancellation. Just using a card number to hold a reservation guarantees only slightly more than taking their word for it ;)
 

Morticia

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We don't but we're in the minority. Keep one very big thing in mind if you take deposits for cash flow purposes...that money can only be spent once. ie- Come the time when the guest actually appears, you have already spent that money. So, look ahead and decide if it's a good idea to spend your money before the chickens hatch (to mix a couple of metaphors).
I had a biz consultant tell me I should wait until the last possible minute to pay bills. If we all did that, everyone would be in the same position as if we all paid immediately. It made no sense to me.
 

Copperhead

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There are many variations in taking deposits or to guarantee a reservation. I have tried the following in my 10 years:
1) taking a deposit of 1st night at time of booking
2) taking the credit card number & checking only to see if it was good, charging on arrival
3) taking CC# at time of booking, taking deposit at cancel cut off date, balance on arrival
1- I found that it mattered not whether a deposit was taken or not, if they want to cancel they will and I will have to refund the deposit. It was costly in the cost of credit card fees and that money must be 'ready to refund' at any given time, prior to cancel cut off date.
2 - Not good in the case of a no show. I did charge a couple for no shows and 1 tried a charge back. I won but do not like to fight for it.
3 - My current policy. My cancelation cut off date is 2 weeks prior to check in, for regular reservations. My confirmation letter states that cancelations must be made by 5pm on X day, at which time the deposit equal to .... will be taken. Cancelations after this date forfeit the deposit unless we are able to re fill the room for the entire reservation period. If a refund is due, it will be credited back to the card on file, minus a $10 fee. No shows are charged for their entire stay.
So far this has worked out the best for me. I am assured the money I take in is MINE. If a refund is given, the $ have been replenished by a replacement booking. The fee I charge takes the bite off of the credit card charges too.
 

josh

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I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that.
 

Penelope

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I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that..
josh said:
I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that.
Would you mind sharing what the reasoning is behind the 15% off for upfront payment?
 

Copperhead

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I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that..
josh said:
I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that.
What is your cancelation policy? And how often do you have to refund due to cancelations?
 

JunieBJones (JBJ)

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If you policy states that as your booking requirement, then take it (the deposit). There is no reason not to when times are tight. Guests think you already have (if that is your policy). If you don't have that policy you might consider adding it, you will have less cancellations when guests think they have already prepaid for one night anyway. or however many nights, 50% or whatever it may be.
 

hawley

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We are in a little different position. Almost no one vacations here. People come here because of the Universities, businesses or personal reasons to visit family or something else. Almost all come by plane to either here or Omaha. A few drive. So if they already have their plane tickets, I register them and take payment in full. If they are driving and are coming for business and want the room for a week, I take full payment. Others I may take a 1 night deposit or not take a reservation and tell them I will call them when it is closer to the time and take payment, but won't rent the room to anyone else unless I call them. This is for those that are out 6 months or so for football weekends, etc.
 

josh

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I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that..
josh said:
I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that.
Would you mind sharing what the reasoning is behind the 15% off for upfront payment?
.
Well if someone is viewing your web site and sees that your rates are $150 a night for a room, Lets say that 2 other Hotels or B&Bs they are comparing with are the same price?
Now lets say they want 5 nights at $150.00 = $750.00 before tax.
Now , lets say they call around and say so and so offers it for the same price,,,Right.
Instead of offering a discount, say take $15 off a night. You might want to say I will give you
Blank% off if you reserve and pay entire reservation upfront, Let them also know if they cancel the money is 100% non refundable. Based on 15% off. You get paid up front $637.50 + Tax and they get $112.50 off. They feel they got a savings and there happy! You now have money to pay your bills forward and so on. Also I only offer discounts for a "Limited time"
I had 25% off for a week, got 5 reservations, then did 20% off for 2 weeks and got 11 reservations, did 15% off and got 9 reservations, Now I am at 10% off and so far got 5.
I am 35% booked for the summer now. A lot just paid 20% down (Non refundable) Regular rates, But still booked as they did not have all the funds upfront!
Raise your rates if you need to, to get people in. -:)
It's Just like buying on sale at stores, There really are no good deals until it's 35% off or more!! It's Just good Marketing.
Just remember to have the money for your mortgage if you presale all of July in advance.. -:)
 

josh

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I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that..
josh said:
I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that.
What is your cancelation policy? And how often do you have to refund due to cancelations?
.
My cancellation Policy is very strict! On Vacation Rentals, I require 20% down (Non refundable) No changes to Reservations. Also they have 45 days (6 weeks) prior to taking occupancy to cancel out, otherwise they owe balance.
In 4 years I have refunded once and that was because I screwed up on my end!
Always have them read policies and sign, always have the financials listed, that way if they try a chargeback or something.. you have a paperwork trail.
ALWAYS CHARGE SOMETHING NON REFUNDABLE UP FRONT! It weeds out the screwballs who want to waste your time.
Hope that helps.-:)
 

Morticia

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I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that..
josh said:
I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that.
Would you mind sharing what the reasoning is behind the 15% off for upfront payment?
.
Well if someone is viewing your web site and sees that your rates are $150 a night for a room, Lets say that 2 other Hotels or B&Bs they are comparing with are the same price?
Now lets say they want 5 nights at $150.00 = $750.00 before tax.
Now , lets say they call around and say so and so offers it for the same price,,,Right.
Instead of offering a discount, say take $15 off a night. You might want to say I will give you
Blank% off if you reserve and pay entire reservation upfront, Let them also know if they cancel the money is 100% non refundable. Based on 15% off. You get paid up front $637.50 + Tax and they get $112.50 off. They feel they got a savings and there happy! You now have money to pay your bills forward and so on. Also I only offer discounts for a "Limited time"
I had 25% off for a week, got 5 reservations, then did 20% off for 2 weeks and got 11 reservations, did 15% off and got 9 reservations, Now I am at 10% off and so far got 5.
I am 35% booked for the summer now. A lot just paid 20% down (Non refundable) Regular rates, But still booked as they did not have all the funds upfront!
Raise your rates if you need to, to get people in. -:)
It's Just like buying on sale at stores, There really are no good deals until it's 35% off or more!! It's Just good Marketing.
Just remember to have the money for your mortgage if you presale all of July in advance.. -:)
.
Based on prior years, could you have filled those rooms without the discount? Or, are you looking at this as a way to have money in hand NOW? I worry about having too much in advance and not enough on hand when the biggest bills come in!
 

muirford

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There are many variations in taking deposits or to guarantee a reservation. I have tried the following in my 10 years:
1) taking a deposit of 1st night at time of booking
2) taking the credit card number & checking only to see if it was good, charging on arrival
3) taking CC# at time of booking, taking deposit at cancel cut off date, balance on arrival
1- I found that it mattered not whether a deposit was taken or not, if they want to cancel they will and I will have to refund the deposit. It was costly in the cost of credit card fees and that money must be 'ready to refund' at any given time, prior to cancel cut off date.
2 - Not good in the case of a no show. I did charge a couple for no shows and 1 tried a charge back. I won but do not like to fight for it.
3 - My current policy. My cancelation cut off date is 2 weeks prior to check in, for regular reservations. My confirmation letter states that cancelations must be made by 5pm on X day, at which time the deposit equal to .... will be taken. Cancelations after this date forfeit the deposit unless we are able to re fill the room for the entire reservation period. If a refund is due, it will be credited back to the card on file, minus a $10 fee. No shows are charged for their entire stay.
So far this has worked out the best for me. I am assured the money I take in is MINE. If a refund is given, the $ have been replenished by a replacement booking. The fee I charge takes the bite off of the credit card charges too..
I don't take a deposit now, but if I were going to I would follow your current policy. Take the deposit at the start of the cancellation period. So far I have not really had any issues with lots of cancellations so I have not done it, but that seems like the cleanest way to handle it.
 

Morticia

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There are many variations in taking deposits or to guarantee a reservation. I have tried the following in my 10 years:
1) taking a deposit of 1st night at time of booking
2) taking the credit card number & checking only to see if it was good, charging on arrival
3) taking CC# at time of booking, taking deposit at cancel cut off date, balance on arrival
1- I found that it mattered not whether a deposit was taken or not, if they want to cancel they will and I will have to refund the deposit. It was costly in the cost of credit card fees and that money must be 'ready to refund' at any given time, prior to cancel cut off date.
2 - Not good in the case of a no show. I did charge a couple for no shows and 1 tried a charge back. I won but do not like to fight for it.
3 - My current policy. My cancelation cut off date is 2 weeks prior to check in, for regular reservations. My confirmation letter states that cancelations must be made by 5pm on X day, at which time the deposit equal to .... will be taken. Cancelations after this date forfeit the deposit unless we are able to re fill the room for the entire reservation period. If a refund is due, it will be credited back to the card on file, minus a $10 fee. No shows are charged for their entire stay.
So far this has worked out the best for me. I am assured the money I take in is MINE. If a refund is given, the $ have been replenished by a replacement booking. The fee I charge takes the bite off of the credit card charges too..
I don't take a deposit now, but if I were going to I would follow your current policy. Take the deposit at the start of the cancellation period. So far I have not really had any issues with lots of cancellations so I have not done it, but that seems like the cleanest way to handle it.
.
muirford said:
I don't take a deposit now, but if I were going to I would follow your current policy. Take the deposit at the start of the cancellation period. So far I have not really had any issues with lots of cancellations so I have not done it, but that seems like the cleanest way to handle it.
I'm considering it. Probably will start it next year, tho, not this year.We DO get a lot of cancellations.
 

mooseberry

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There are many variations in taking deposits or to guarantee a reservation. I have tried the following in my 10 years:
1) taking a deposit of 1st night at time of booking
2) taking the credit card number & checking only to see if it was good, charging on arrival
3) taking CC# at time of booking, taking deposit at cancel cut off date, balance on arrival
1- I found that it mattered not whether a deposit was taken or not, if they want to cancel they will and I will have to refund the deposit. It was costly in the cost of credit card fees and that money must be 'ready to refund' at any given time, prior to cancel cut off date.
2 - Not good in the case of a no show. I did charge a couple for no shows and 1 tried a charge back. I won but do not like to fight for it.
3 - My current policy. My cancelation cut off date is 2 weeks prior to check in, for regular reservations. My confirmation letter states that cancelations must be made by 5pm on X day, at which time the deposit equal to .... will be taken. Cancelations after this date forfeit the deposit unless we are able to re fill the room for the entire reservation period. If a refund is due, it will be credited back to the card on file, minus a $10 fee. No shows are charged for their entire stay.
So far this has worked out the best for me. I am assured the money I take in is MINE. If a refund is given, the $ have been replenished by a replacement booking. The fee I charge takes the bite off of the credit card charges too..
Thanks CH,
this looks like a good policy and I might even have to copy it

(with a few changes...)
 

Penelope

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I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that..
josh said:
I always take 20% upfront, I also offer 15% off if the entire Reservation is paid upfront, 40% of the people this year have taken advantage of that.
Would you mind sharing what the reasoning is behind the 15% off for upfront payment?
.
Well if someone is viewing your web site and sees that your rates are $150 a night for a room, Lets say that 2 other Hotels or B&Bs they are comparing with are the same price?
Now lets say they want 5 nights at $150.00 = $750.00 before tax.
Now , lets say they call around and say so and so offers it for the same price,,,Right.
Instead of offering a discount, say take $15 off a night. You might want to say I will give you
Blank% off if you reserve and pay entire reservation upfront, Let them also know if they cancel the money is 100% non refundable. Based on 15% off. You get paid up front $637.50 + Tax and they get $112.50 off. They feel they got a savings and there happy! You now have money to pay your bills forward and so on. Also I only offer discounts for a "Limited time"
I had 25% off for a week, got 5 reservations, then did 20% off for 2 weeks and got 11 reservations, did 15% off and got 9 reservations, Now I am at 10% off and so far got 5.
I am 35% booked for the summer now. A lot just paid 20% down (Non refundable) Regular rates, But still booked as they did not have all the funds upfront!
Raise your rates if you need to, to get people in. -:)
It's Just like buying on sale at stores, There really are no good deals until it's 35% off or more!! It's Just good Marketing.
Just remember to have the money for your mortgage if you presale all of July in advance.. -:)
.
Based on prior years, could you have filled those rooms without the discount? Or, are you looking at this as a way to have money in hand NOW? I worry about having too much in advance and not enough on hand when the biggest bills come in!
.
Bree, that is exactly what I was thinking. I would be worried that I'd be shooting myself in the foot for taking a discount on rooms that could be filled ANYWAY. It's a catch-22. Take a discounted amount of money and run, or hold out and maybe not get the money.
Josh, do you have a "season" when you could sell 100 rooms no matter how many you have? For example, college graduations or sport event weekends. Does your discounted rate include that as well?
 

muirford

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There are many variations in taking deposits or to guarantee a reservation. I have tried the following in my 10 years:
1) taking a deposit of 1st night at time of booking
2) taking the credit card number & checking only to see if it was good, charging on arrival
3) taking CC# at time of booking, taking deposit at cancel cut off date, balance on arrival
1- I found that it mattered not whether a deposit was taken or not, if they want to cancel they will and I will have to refund the deposit. It was costly in the cost of credit card fees and that money must be 'ready to refund' at any given time, prior to cancel cut off date.
2 - Not good in the case of a no show. I did charge a couple for no shows and 1 tried a charge back. I won but do not like to fight for it.
3 - My current policy. My cancelation cut off date is 2 weeks prior to check in, for regular reservations. My confirmation letter states that cancelations must be made by 5pm on X day, at which time the deposit equal to .... will be taken. Cancelations after this date forfeit the deposit unless we are able to re fill the room for the entire reservation period. If a refund is due, it will be credited back to the card on file, minus a $10 fee. No shows are charged for their entire stay.
So far this has worked out the best for me. I am assured the money I take in is MINE. If a refund is given, the $ have been replenished by a replacement booking. The fee I charge takes the bite off of the credit card charges too..
I don't take a deposit now, but if I were going to I would follow your current policy. Take the deposit at the start of the cancellation period. So far I have not really had any issues with lots of cancellations so I have not done it, but that seems like the cleanest way to handle it.
.
muirford said:
I don't take a deposit now, but if I were going to I would follow your current policy. Take the deposit at the start of the cancellation period. So far I have not really had any issues with lots of cancellations so I have not done it, but that seems like the cleanest way to handle it.
I'm considering it. Probably will start it next year, tho, not this year.We DO get a lot of cancellations.
.
Do you get a lot of cancellations within your notice period? That is where this policy would help - although I'm sure someone will come along when they see the charge on their bill and claim to have already cancelled, or some such thing. Most of our cancellations when we have them happen before the notice period. I am watching it now, though - I imagine it might increase in a bad economy. That's what would make me institute that policy.
 

Morticia

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There are many variations in taking deposits or to guarantee a reservation. I have tried the following in my 10 years:
1) taking a deposit of 1st night at time of booking
2) taking the credit card number & checking only to see if it was good, charging on arrival
3) taking CC# at time of booking, taking deposit at cancel cut off date, balance on arrival
1- I found that it mattered not whether a deposit was taken or not, if they want to cancel they will and I will have to refund the deposit. It was costly in the cost of credit card fees and that money must be 'ready to refund' at any given time, prior to cancel cut off date.
2 - Not good in the case of a no show. I did charge a couple for no shows and 1 tried a charge back. I won but do not like to fight for it.
3 - My current policy. My cancelation cut off date is 2 weeks prior to check in, for regular reservations. My confirmation letter states that cancelations must be made by 5pm on X day, at which time the deposit equal to .... will be taken. Cancelations after this date forfeit the deposit unless we are able to re fill the room for the entire reservation period. If a refund is due, it will be credited back to the card on file, minus a $10 fee. No shows are charged for their entire stay.
So far this has worked out the best for me. I am assured the money I take in is MINE. If a refund is given, the $ have been replenished by a replacement booking. The fee I charge takes the bite off of the credit card charges too..
I don't take a deposit now, but if I were going to I would follow your current policy. Take the deposit at the start of the cancellation period. So far I have not really had any issues with lots of cancellations so I have not done it, but that seems like the cleanest way to handle it.
.
muirford said:
I don't take a deposit now, but if I were going to I would follow your current policy. Take the deposit at the start of the cancellation period. So far I have not really had any issues with lots of cancellations so I have not done it, but that seems like the cleanest way to handle it.
I'm considering it. Probably will start it next year, tho, not this year.We DO get a lot of cancellations.
.
Do you get a lot of cancellations within your notice period? That is where this policy would help - although I'm sure someone will come along when they see the charge on their bill and claim to have already cancelled, or some such thing. Most of our cancellations when we have them happen before the notice period. I am watching it now, though - I imagine it might increase in a bad economy. That's what would make me institute that policy.
.
muirford said:
Do you get a lot of cancellations within your notice period? That is where this policy would help - although I'm sure someone will come along when they see the charge on their bill and claim to have already cancelled, or some such thing. Most of our cancellations when we have them happen before the notice period. I am watching it now, though - I imagine it might increase in a bad economy. That's what would make me institute that policy.
Almost all of the cancellations are outside the cancel period, not within, so nothing would have happened anyway, except having to refund them. (Of course, if I do the deposit, there will have to be a processing fee attached, as much as I hate "fees".) When we have in-season cancels at the last minute, they usually get filled pretty quickly. But not always.
It's hard on smaller properties that can't say, 'I can't help you with that, it's a management decision,' because all the decisions are mine to make! It's one thing to be yelled at when you get to go home and laugh about your day at work. It's a whole other thing to be screamed at on the phone because of cancellation policies when you've got nowhere to 'go home' to- you're already HOME.
 

mrbill

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Greetings,
I have always posted 50% day reservation is made." 1 nighter full payment 2 or more 50%" It is nice in the winter months posting for summer months. And rather than guest being charged a cancellation fee I offer them a credit to rebook another time. I very seldom give refunds on cancellations unless they are from out of state. Texas is big and that is much of my business and Gruene area is a tourist spot. I would say you should have started yesterday. I know we all post 50% in my area. Guest expect it. Go for it!
 

seashanty

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i took deposits - always.
for one to three nites, $100 or one night's stay (during the slow season, the low rates were around $100 a nite ... so ...)
for four or more nites, $100 etc., then remainder of 1/2 was due 30 days before checkin, balance at checkin.
i also eventually put in an administrative fee for cancellations and refunds to cover the cc charges and also the time to take the reservation out of the system and out of the bookkeeping. (hopefully we'd get a new booking.)
i did not have a lot of cancellations. those that did cancel, it was usually when it was 'too late' to get a refund. i mostly offered to apply the deposit to a later stay - and this usually was acceptable. and they did come. unless they were just coming to the area for a wedding or something. then they wanted the refund.
i did NOT accept checks as the deposit, only credit cards. when i first opened i tried accepting checks. but then a check wouldn't come in the mail, i wouldn't know if the person was going to show up or not, didn't know if they'd mailed it or not, once i reached them by phone to say the deposit hadn't come they'd say they sent it ... or maybe they'd say they forgot to send it and maybe didn't know if they were coming, or well, they weren't coming. oops forgot to tell you. nightmare!
like bree, i would catch all the flack when not refunding a deposit, but unlike bree i would say 'i will have to check with the owner' or 'with my business partner', in order to deflect the heat away from me ... i did have a business partner/boss, but she was not ever involved in any decisions like this. i would use the time to decide what i wanted to do.
 
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