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any hostel that doesn't take deposit from guests?

Front Desk Operations

zomac started this discussion 10 years 11 months ago

Hi,

Taking deposit from guests seems to be quite common. I'm thinking of abolishing this practice now because we find it very difficult to build a proper deposit system.

In fact, guests often owe us money. Some prefer to pay when checking out. A small amount of deposit can't cover almost the potential loss if they really walk away without properly checking out.

So I'm just wondering if anyone doesn't take deposit from the guests? Do you see any troubles with it?

Thank you for any advice.

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Rucksack Brian

10 years

We take a small key deposit from everyone to remind the guests to bring the keys back to us. In all honesty it’s just symbolic because it doesn’t even cover the cost of cutting a new key.

For groups we ask for a 25EUR security deposit for each person to ensure that they all hold each other accountable for their behavior. For individual guests we don’t ask for this.

As for the room payments, we prefer payment upon arrival. We will allow day-by-day payments as well if someone doesn’t have enough money for their whole stay when they arrive. Anyone extending their stay is asked to pay at the time they decide to extend. All payments have to be made before the day receptionist finishes their shift so that all money due for the current night has been collected before they leave.

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zomac

10 years

Hi Brian, thanks for your sharing. I'm wondering how you manage the deposit especially the deposit paid is different for different people (group vs individual guest).

In my hostel we standardize the deposit to EUR5 only and hope our guests can return bed linens, padlock and card key to us. This deposit doesn't cover anything, but we need our guests to notify us about their check-out instead of just leaving straight.

We collect this deposit with a supermarket POS system. When they check out, the staff takes money from the cash machine and process with a "refund" command.

This is a very obvious loophole because the staff can take away money from the cash machine. The ideal approach is that a cash machine can only take money, and any refund must be authorised by a manager.

Without a better way to manage the deposit, i'm thinking about abolishing this deposit system, but not quite sure if it will cause a trouble.

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Rucksack Brian

10 years

Your system is already more complex than mine. We can’t legally put the deposit with the rest of the money because it’s not a purchase and no tax is being paid. Instead, we put all the deposits in a separate envelope in our safe. We make a note for each guest indicating how much they left as a deposit and what they need to return to us, and it is attached to their deposit. When they check out we just have to find their name in the envelope and hand them back their cash.

We tried abolishing the deposit, and suddenly more keys went missing. Apparently even a symbolic amount helps people to be more responsible.

Groups are harder. We tell them about the security deposit before they confirm their booking. We explain that it’s NOT a charge, but rather a precaution that they will get back as long as there is no damage to the hostel. Most people accept it without too much fuss.

Even though we’re clear about it, the organizer frequently forgets to tell the rest of the group that they need to bring extra cash. We ask the group leader to collect the money from everyone, so it puts the responsibility on them to produce the full amount from the group.

On the rare occasion that we have school groups they sometimes complain, saying that the kids don’t have that much money. In this case we can offer to take a signed imprint of the teacher’s credit card, and they can take the full financial responsibility for the children’s behavior.

The whole process is a giant pain in the butt, but I do think that it prevents a lot of damage.

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zomac

10 years

it seems to me that your system is better because deposit isn’t a sale, it shouldn’t be counted together with all other incomes.

I’m thinking about doing this separately as what you do and store those deposit separately.

Do you need to count all deposit every time when there's a change of shift?

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Rucksack Brian

10 years

We do count up all the deposits at each shift change. All of the information for each guest (amount of deposit, and which keys or cards have been given out) is also recorded on a spreadsheet, so at a quick glance we know how many deposits there are supposed to be in the safe.

It’s not a perfect system, but it’s the best one we’ve come up with so far.

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slushysnow

10 years

Hi guys,

I thought I'd replied to this before but I guess not!

We do 2 types of deposit:

Key Deposit

Cutlery and Crockery Deposit (Set of plate, bowl, mug, knife, fork, spoon)

All of this goes into our PMS, roomMaster.

The way we have worked out the tax thing, as we have the same problem here that Rucksack Brian has, is that in roomMaster there's a box that you can untick to choose to not apply tax to a certain transaction code.

Everything goes through our system which makes it so much easier to account for all cash.

To be honest I've stopped doing key deposits unless I get a bad feeling about someone. If someone loses their key I charge them for a new one.

With groups, I tend to not bother charging deposits, it's just not worth the hassle. I charge groups higher rates than individuals anyway so I consider the risk of lost keys etc to be rolled up in the rate. (We charge groups higher rates because we usually experience occupancy drops either side of group blocks).

All guests pay when they arrive or extend - if they only want to pay for 2 nights or whatever, we just change their booking to 2 nights and they can extend as they go. When I first took over as manager about 50% of the guests owed money and I got sick of chasing people for payment.

If you take payment up front as well you have no risk of people doing a runner!

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Rucksack Brian

10 years

With groups, I tend to not bother charging deposits, it's just not worth the hassle. I charge groups higher rates than individuals anyway so I consider the risk of lost keys etc to be rolled up in the rate. (We charge groups higher rates because we usually experience occupancy drops either side of group blocks).

Do you have issues convincing the groups that they should pay more to you for a big booking rather than just making a bunch of smaller bookings on their own at a lower price? How do you handle it if they book separately instead?

I’ve always wanted to charge more for groups for all the reasons that you mentioned, but I worried about chasing potential business right over to my competition. Of course my big security deposit is probably just as likely to scare them off anyway…

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slushysnow

10 years

I've run into this quite a lot where the question the price I quote them, as they obviously can just jump on our website and easily see that I am charging them more.

If they ask, I am just totally honest with them and tell them about occupancy rates and how I have to take this into account when giving the quote. I never inflate the price hugely, maybe 10-20% depending on the size of the group, which I think is fair enough.

For example I have a group of 17 students from New Caledonia coming in a few months time who are only paying $36 rather than my usual $32 for that time of year. The organiser asked why they were paying a higher price, I explained and she was perfectly happy.

For my next group which is coming in (53 female uni students in town for a Women's Guild conference) I'm charging $38 rather than the usual $32 as it is a bigger group.

So far I've never had anyone go elsewhere because of this, but maybe that's due to the market in Perth, there are possibly less choices than in other cities.

I did have one group book online after I gave them a quote, they booked 2 beds at a time under separate names. However I recognised one of the names as the person I had been in contact with. They were probably expecting to all end up in the same rooms (I only have 4 bed dorms) and were disappointed when they ended up all over the place (I kept the bookings together, but 2 people in each 4 bed room). When they complained I just explained to them that as they booked separately I had no idea they were together...

Possibly a bit harsh but we're quite clear on our policy for groups...

If, at the end of they day, they didn't want to pay the higher price, then I would just accept it to be honest. Groups tend to be very demanding and hard work and most of the time the extra amount I charge only covers some of the cost of the occupancy drops.

One other thing we do with groups is that we charge a 50% deposit at tiem of booking and ensure we receive the balance before check-in. Does anyone else do anything like this? How do you guys handle payments for large groups?

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Rucksack Brian

10 years

We take a deposit of about 25% (usually by bank transfer) to confirm the group reservation. The remaining balance is due 7 days before their arrival. If they need to add someone after this payment is made, then we can charge that person when they arrive.

We used to have a lot of issues with groups turning up with fewer people than they contracted, and they couldn’t understand why they still had to pay the full amount for the beds that we held. Collecting that money was nearly impossible. Now it’s clear that if they want to reduce the number of people after we receive the final payment, then they will still pay for those beds. We have less groups changing their plans at the last minute this way.

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slushysnow

10 years

Yeah that makes sense, I think sometimes guests don't understand that when you hold a bed for them, that's a bed that you can no longer sell.

I get this with groups all the time, they want exclusive use of the rooms, but don't want to pay for the empty beds in rooms that they aren't filling completely...

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