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Should I charge by the buy rate or sell rate ?

General Hostel Operations

Peter started this discussion 15 years 7 months ago

For example ;
The tourists must pay 100 euros

But there is a country law , that it is not allowed to take euros but only in the local currency ( actually it is an important information for the hostels runners )

If they change euros , they will pay me by the '' sell rate ''

and if later I want to buy euro , the bank charge me '' buy rate ''

So , I am loosing.

Do I have a right to charge the tourists by the '' buy rate '' or must I charge them by the ''sell rate'' ?

I mean , I loose about 10% if I am forced to buy euro afterwards.

Thank you.

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LatestViking

15 years

I think this problem can be solved in 3 different ways:

1. Try to add this issue as a request on your micro site on HW, so the customers will now that they have to change currency before their arrival, otherwise a credit card fee of ''?''% will apply.
*they have to change anyway, just because of the Country Low they will need money to live...
2. Put up your prices 10%(not preferable)
3.If they don't have money changed at check-in try to charge them with your credit card machine...(most of the east European Banks accept an euro account, so they will provide a credit card machine).

Good luck !

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crhostel

15 years

Well, actually you don't need to raise your rates, or use a credit card machine (you'll lose on the fees). In every country I've traveled in, you usually get the best exchange rates at banks, and then from there they usually get worse.

All you have to do is set your own exchange rate. The Buy and Sell rate are designed to be different so people can make money when changing between currencies, and you should do the same.

Quick example, in Costa Rica the exchange Buy Rate is C.565 and the Sell Rate is C.575, we charge $12 a night for a dorm bed. If our guests wish to pay in Colones (the national currency) they pay $12 x our sell rate, because I am "selling" them Dollars for, lets say C.590 each. Offsetting the rate from the bank can cover you until the currency devalues, and you can change your money and actually make a small profit. If the dollar, or Euro in your case falls, and you are holding local currency, then you are in a slightly better position.

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LatestViking

15 years

Well, actually you don't need to raise your rates, or use a credit card machine (you'll lose on the fees). In every country I've traveled in, you usually get the best exchange rates at banks, and then from there they usually get worse.

All you have to do is set your own exchange rate. The Buy and Sell rate are designed to be different so people can make money when changing between currencies, and you should do the same.

Quick example, in Costa Rica the exchange Buy Rate is C.565 and the Sell Rate is C.575, we charge $12 a night for a dorm bed. If our guests wish to pay in Colones (the national currency) they pay $12 x our sell rate, because I am "selling" them Dollars for, lets say C.590 each. Offsetting the rate from the bank can cover you until the currency devalues, and you can change your money and actually make a small profit. If the dollar, or Euro in your case falls, and you are holding local currency, then you are in a slightly better position.

I think is very complicated for a tourist or backpacker... Lets have a look from the moment when they book.
They choose, most of them, HW.com just beacuse is easy, clear and very fast in the booking process.
They don't wish to see any extra charges without notice.
I recommend to use your credit card in the hostel, and to apply the fee of 3% for the payment witch is the commission for the Bank(make sure you make a note in your Terms&Conditions on HW.com microsite and your email confirmation.)
If this is not possible than change your Terms&Condition and advice them to change the currency using a Bank or an ATM as they convert currency, before arrival.
Once you make this public, you won't have any problems and you wont lose your 10% for exchange.

Cheers.
Easy and no extra work for you.

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crhostel

15 years

Well, I guess we agree to disagree then. In four years, we haven't had a single complaint about the exchange rate we use, the way I described it.

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LatestViking

15 years

Consider that I am a guest, I paid the 10% deposit for the booking and I have to pay when I check in the remaining balance of €32.50. This is what I have in my email confirmation, €32.50.
When I check in I have to pay extra charges for the exchange ? NO! I am not paying and is not fair that I haven't been noticed!
Do you have this information provided in my confirmation? No!
As I said, once you make it public and the guest is informed, a charge shouldn't be a problem when is legal. Beside that to have an exchange office in Europe you will need a license !

Peter, if you wish to do it professionally, with no extra risky stuff.
If you are a big hostel, than you can have an exchange office. For the moment you need to focus on the yield management, occupancy and prices for your beds as you are a hostel not an exchange office.
You lose 10% the booking fee anyway so, don't try to complicate things...
Please see one of my friends hostel in Europe and you will see how simple it is to avoid extra rules and risks:
http://www.aboriginalhostel.com/guidelines

More close to hostel concept !!!

Greetings from the north !:)

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crhostel

15 years

Well, with my experience in dealing in three currencies at once, Euros, dollars and Colones, it's not a problem at all. You just have the days exchange rates listed next to the reception. Does that sound so complicated? Maybe we have more savvy backpackers in Central America, although I doubt it. The difference is almost nothing, and any hostelier with experience in multiple currencies knows this.

Also, we didn't get the highest rated hostel in Costa Rica on HW by making things too complicated or screwing our guests.

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