Deposits: On booking, what percentage?

[claudie]

Hello everybody. We need information about deposits. We have absolutely no idea about them, what to ask for upfront, refunds and cancellation timescale etc. I've found some advice from TripAdvisor and it's very confusing. I would be very grateful for any information that you can give us, before we go mad

[PW in Polemi]

We're self catering and ask for 30% on booking to confirm the reservation. Balance plus damages deposit to be paid on or before 8 weeks prior to arrival. After a spate of cancellations in our first year or so, we now call the deposit a Non-Refundable Deposit - and since then have had no cancellations.

If they cancel before the balance is due, so be it. Hopefully we can find a replacement booking. If they cancel after they've paid the deposit, we return the damages deposit straight away and any monies left over from the balance payment AFTER we've secured a replacement booking, minus any extra costs we've incurred, e.g. extra advertising, reduction in price.

They should, after all, have travel/holiday insurance to cover their losses if they need to cancel.

Whether you're prepared to accept some or all paid on arrival is up to you and how you want to run your business - and never forget it is a business, being run to make a profit. If you don't make a profit, how can you afford to repair, renovate, replace as necessary? But you also have to temper your business-like attitude with hospitality and take each case on its own merits - just don't get taken for a ride!

[anya752000]

Same as above, 30% to confirm the booking and the rest 8 weeks before arrival. Seems to work ok.

[Joanna]

Have a look at what others in your area with similar properties are doing. That's what your guests will be comparing with.

We decided that we wanted to spread the income throughout the year so having a 50% deposit and balance due 8 weeks before arrival seemed to do that best.

Some owners have a fixed amount deposit rather than a percentage.

Whatever you decide to do I think it needs to be high enough to make the deposit a serious commitment. If it's too low people may cancel just before the balance is due if they find somewhere cheaper.

Which leads me to the other issue - think carefully about when the balance is due. Give yourself enough time to chase it, allow for people being away, etc. and have a realistic chance to find another booking if they don't pay the balance. We tried 4 weeks, then 6 and found both were too tight so we've settled on 8 weeks. It will vary according to your market - some places are easier to let at short notice. You might have to just try something for a season and then adapt the timings to suit.

Hope that helps

[Essar]

Here in Bournemouth the standard seems to be:-

More than 6-weeks to arrival date:
25% of Rental on booking (Minimum £100).
Balance & security Deposit 6-weeks prior to arrival.

6-weeks or less to arrival date:
In-Full Rental & Security Deposit payable on booking.

Security Deposit is refunded 7-days after departure.

[Nemo]

25% or £100 whichever is higher, deposit on booking. The balance payable two calendar months before. Gives me plenty of time to relet if someone cancels before the balance payment is made.

[greenbarn]

- think carefully about when the balance is due. Give yourself enough time to chase it, allow for people being away, etc. and have a realistic chance to find another booking if they don't pay the balance.

That's key. Less than 8 weeks creates problems for yourself if you need to re-let. More than 8 weeks is outside the norm and may not go down well with guests (but I don't think that's been tested).

We're in the UK and take 25% with booking which is fairly typical give or take 5%; for some short breaks that's less than £100 but it fits our management system better. If we were getting a lot of cancellations I'd change how we work and set a deposit of 25% or minimum say £100.

As for cancellation terms, the bottom line is that at the point of agreed booking you're establishing a contract in law; what you put as your cancellation terms are irrelevant if they are outside contract law and would remove the rights of your guest under the law.
In essence, if the guest cancels you are obliged to try and re-let to mitigate your losses; if successful the original guest is due a full refund of whatever they've paid less any losses you've made (eg additional advertising, selling at a reduced last minute rate) and less any reasonable admin charges. If you can't re-let, you're entitled to the full amount - even if only the deposit has been paid (but good luck in suing for it) - less any costs that you haven't incurred such as energy and cleaning costs. As has already been said, a guest should take out insurance against having to cancel for a valid reason; it's not up to you to underwrite that and make a loss as payment for their sob story. A loss is the profit you would otherwise have reasonably expected to make.
We own our businesses, we can choose not always to be hard-nosed, and to make our own decisions depending on circumstances, but while still being caring we also owe it to everyone else in this business not to set the expectation of being a soft touch.

The flip side of the contract is that if you decide to cancel, you're in breach of contract and the guest could try and sue for reasonable losses beyond a simple refund of the costs they've paid. Fair's fair.

Keep all that in mind, then state your terms as you'd like them to be - if you use terms such as "non-refundable deposit" it may concentrate the mind of the guest even if it's unenforceable if challenged in the courts.

Final point - with a drop dead date for the balance as part of the contract, if the guest doesn't pay by the due date (again, with reasonable provisos, such as reminders and a grace period) then they are in breach of contract and you can regard them and not yourself as having cancelled; that's an important point if the need arises.

There you go, worst case "what if?" scenarios which we hope don't affect us and that's generally the case; but just occasionally...........

[SandyBeaches]

We charge 30% deposit payable to secure the booking, with the remainder due 8 weeks before. Has worked OK for the past 5 years.

[Joanna]

when you're comparing with other owners check how their rates compare to yours - we went for 50% because we get lots of short stays and our peak week rate isn't that high so we judged 50% to be manageable for most people. If you have higher rates or more 1 & 2 week bookings then a lower percentage could give you about the same amount of deposit.

[HoneypotCottages]

We ask for 30% on week long lets and 50% for short breaks with the balance due 8 weeks before the start date.

[jenboyle1959]

when you're comparing with other owners check how their rates compare to yours - we went for 50% because we get lots of short stays and our peak week rate isn't that high so we judged 50% to be manageable for most people. If you have higher rates or more 1 & 2 week bookings then a lower percentage could give you about the same amount of deposit.

+1.
Something else to think about is how long to give people to pay the deposit- we say on our website that once dates are asked for, the guest has a week to pay the deposit- however I'm considering shortening this to 3 days, now that so few use cheques, and Paypal /bank transfer is so much more popular. This saves you holding dates, and fending off enquiries for the same dates, while waiting for the money to arrive. I've lost bookings from interested parties while waiting for someone to cough up, and then they changed their mind ...

[greenbarn]

I state that the booking is held for 48 hours pending return of the booking form and deposit payment; after that the dates become available again. We can take online card payments and bank transfer, so 48 hours is plenty of time - if the guest hasn't already made their mind up to stay they shouldn't be booking!

As the local branch of our bank is about to close and the "nearest" will now be 20 miles away (an interesting definition of "nearest" that only a total banker would consider) I'm even less inclined to accept cheque payments, even for the balance.

[kg1]

We take £150.00 per week and part of - therefore 10 days would be £300.00.

But our rates are fairly low - ranges from £400.00 per week in January to £800.00 in high summer. If your rates are higher you would want to increase the deposit.

Find it simpler to have a set deposit instead of having to do percentages.

Refundable only if we can relet without discounting (and then only when we have the full payment in from the replacement guests, not just their deposit). Any amount discounted or needed for additional advertising deducted from the deposit.

Payment of balance in full must be in bank, cleared funds 6 weeks before arrival.

[pambon]

We charge 30% deposit payable to secure the booking, with the remainder due 8 weeks before. Has worked OK for the past 5 years.

+1

[Mouse]

50% upfront and 8 weeks for final balance.

We do a special early bird booking where I except 10% deposit if it's booked before xmas. That always proves popular. They then pay another 40% in January to get them back on track

Mouse
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