17 years
As a guest, I think it is a very bad idea to leave your passport at the hostel desk, and I feel angry when I am forced to, as in Croatia and Greece. One hotel kept a battery of passports on the counter, within reach of any guest if no one was watching.
At Zadar YH (Croatia) I had a few things to ask when checking out and forgot to take my passport. To the hostel's credit, the clerk phoned the Bus Station who managed to contact me, and the clerk then drove to the bus station to give me it back! I did miss my bus though (there was another 1 hr later).
As my experience of the last couple of years, we've introduced no deposit requested from our guests... and it really works! Most of the people come to the reception anyway to check out, and the ones who are leaving with backpacks are often asked: "Did you give us your keys?" and if not, then they will... This is our experience since and even if we lose about 20 sets of keys a year, worth of about 100EUR total, it saved us a lot of hassle (getting deposits, administrate, secure them from the till, giving them back by check out, etc.)
In Hungary, it is obligated to have your ID/Passport with you at all times. Therefore we don't take passports or any IDs, as: 1.) We don't wan't anyone arrested ;) 2.) The postal costs were more than the annual losses on keys...
If you have a good front desk policy, the guest will always come to you first...
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