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Refunds for rooms/beds already paid for

General Hostel Operations

rmzhao82 started this discussion 13 years 6 months ago

I was under the understanding that once you pay for your room (or bed) at a hotel or hostel, you don't get the money back even if you check out earlier than expected.

We are newly opened and had an incident today with someone wanting a refund for her room. She had paid for two nights stay and later asked for her money back for tomorrow night because she found cheaper accommodation somewhere else and wanted to move there after check-out tomorrow. We initially refused. She then berated us. In the end we gave her her money back for tomorrow night and she checked out immediately.

How do you handle this? Do you normally refund the money? Or does it depend on the circumstance? I'd love to hear your policy on the matter!

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soi1david

13 years

We always give refund for Unused nights that were paid for in advance. I don't feel good charging for something I don't provide.

We don't but, You can charge for a booking that was not cancelled- But only for the 1st day and only if they booked using a credit card. If they booked for 10 days and did not show up you could not charge them for the 10 days. It's kind of the same situation except your guest did show up.

As an owner, yes it's a bummer to have to do- loss of expected revenue, bit more paperwork.

It happens 4-5 times a month with us it's mostly because they have arrived met up with other travelers here and decide to go onward with them. when they depart they remember and come back.

If it was " a cheaper hostel" I'd do one of two things, "Cut a deal quietly" or
realize that the Dollar difference in rent to them is crucial enough to have to get all their gear together and move down the block. Voice of experience say's "let them go."

If your rent is excessively uncompetitive, You will see this a lot.

I believe you would be liable by law to refund them in most places the full unused amount if paying daily rates. EVEN if you have a "No refunds" sign up you most likely would still be liable, but the sign does work for some.

Monthly or weekly rates. you could pro-rate to the daily rate. so say a deal like "stay 3weeks get one week free" and they leave after 3 weeks, I don't think a refund is justified.

Just to touch on this a bit.... If they booked trough a 3rd party Booker (ie..HW) you would not be liable for the 10% that they received. example.. bunks cost 10$ -guest book 10 days- guest pays you fully on arrival (90$)+ HW deposit (10$) they leave after 5 days the refund should be 45$ not 50$.

Finally, the word of mouth is favorable to you by refunding. Reviews - '" I stayed 2 days less than I had booked and the fully refunded me" looks much better than, " I left 2 days early and they wouldn't refund my money!!"

So next time Do it with a smile. It will pay unexpected dividends.

soi1guesthouse

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rmzhao82

13 years

Thanks for your reply David!

We are actually the only hostel in our city and the only place under 3 stars that can legally accept foreign guests. Competition is rarely an issue. The guests who actually wanted to check out early were Chinese locals. We have only guests want to check out early once before and we actually offered to refund the guests' money but they wouldn't take it! This in itself lead me to believe that most places don't give refunds. I myself would not expect a refund if I decided to check out early from a hostel and had already paid, at least in China, but I've never tried it so what do I know!

As far as legalities, that's not really what I'm worried about. I'm more concerned about good word of mouth and follow standard hostel procedures. It's challenging, because some standard hostel/hotel policies in China are quite different than other places (especially when compared to guesthouses and hostels I've stayed at in SE Asia). For example, everything must be paid for upfront and most hostels and hotels require a $15 deposit, even for dorm beds. Well, I still have a lot to learn!

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soi1david

13 years

I can imagine how "Interesting" it is to have a Hostel in China.
If you have any questions or inquiries We are here for you.
Good-Luck with it all!

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jonL

13 years

My advice is to ensure that you first have a set of Cancellation and Refund Policies. This sets out under what terms you will refund monies etc.

The second is for every booking, you confirm it by email with the Cancellation and Refund Policies attached in the email. In that way everyone is aware what the policy is.

Then when guests do kick up a fuss, you can refer to your refund policy. However, if the guest does kick up a fuss, sometimes it is better to cut your losses and refund them the amount owing.

There are also other methods such as offering them a credit on their next stay.

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SkWd

11 years

Yep, you definitely should have a cancellation & refund policy posted at reception and maybe in the rooms too. A strict 24hrs notice in advance policy is generally the norm for cancellations so usually it is accepted by guests without debate.

The only thing i would recommend is - clearly state what time you must cancel 24hrs in advance of! Is it 24hrs before first check-in time of the hostel or 24hrs before the guests arrival time (especially an issue for cancelled online bookings)!.

But as most people have said, each situation is different and sometimes need to be played by ear to a certain extent.

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SkWd

9 years

In a similar vein we have noticed that local organisations are a little too relaxed about reserving groups.

For example what used to happen was, someone comes to view the property because they are trying to accommodate groups for a sports event. We tell them we have group discounts that start at groups larger than 8 people and the rates get better obviously if there are more people staying for a longer period. This is all well and good and they like the price for booking the whole property etc, etc. and they make a reservation for the whole property.

It comes to the day when the group arrives and it turns out its was actually a group made up of 2 separate groups and one of the groups have not shown up, but yet the group who did show up still expect the same rate per bed per person. At this point i explain to them that we were under the impression that the whole property would be rented for the weekend (yes, it was a weekend too) as reserved by the organiser and i suggest they contact him to discuss the difference in the rate because we have removed our property availability for 3 weeks and in addition refused email bookings AND we have a 24hr cancellation policy so there are 2 options: 1. the full price of the first night should be paid in full and the remaining nights rate will be recalculated according to the amount of people who showed up and the remaining beds we will be up for sale. 2.The full price of the original reservation should be paid and the group will have the whole hostel to themselves.

Basically it was going to cost this group almost 30% more. They chose option 1. As far as we know the organiser left them out to dry and didn't even refund them the difference. It is my opinion that this should have been on him and that it was his responsibility to ORGANISE things better and to communicate the terms to the groups.

After this happened we decided we were going to make a "group rates/brochure" pdf outlining our facilities, what we are about, group rates and terms and conditions for booking groups etc. everything would be clear and it would wash our hands of any confusion in the future to an extent...we thought...

BUT, a similar thing occurred earlier in this month. The organiser gave us the wrong dates for the weekend (he needed the whole property again). Didnt pay a deposit and responded to our "check-in" email a few days in advance (we just ask is everything on schedule and repeat check-in times etc.) with: "well one group might come Friday and might stay until Sunday, but might leave Saturday..." etc, lots of "might's" and "maybes". We told him first of all: the dates he reserved are not what he is talking about now and second, we cannot run a hostel seriously on "mights and maybes", particularly when we are removing availability for a weekend (saturday & sunday). So we are cancelling the original reservation and making a new one for these new days (friday & saturday) BUT there is no option for renting the whole property because we already have reservations on the first night (now the Friday) AND you will be charged the non-refundable deposit which should have been paid in the first place. We have to put the needs of the guests that know they are staying before the ones that "might" stay. Also we referred him to the group booking pdf we sent to him.

His argument was he didnt pay the deposit because his word is good enough in the city, but because we are a new business, we did not know him well enough. We told him, the deposit wasn't the main issue (we didn't end up charging him in the interest of good co-operation), the real issue was the wrong dates we were provided with which effectively cancelled his original reservation and resulted in us losing other bookings for the weekend, and that we have these terms and conditions for a reason.

What is your opinion on handling these kinds of situations? Was i too harsh? Should I have been more lenient considering these were local organisations? Could i have jeopardised future co-operation?

My opinion and theory is: Yes, we should have good relationships with local businesses and organisations, but not to the point where we are taken advantage of. I guarantee you, if this happened to any of the 3 or 4 star hotels in the city they would not allow it either. We are not "playing hostel"!
The other theory i have is that locals are not aware that people visit the city for recreation all year round, even in February, and that we receive reservations other than theirs! So they have the arrogance to assume that their group reservation is the only one we will have for months and that just mentioning they might need the whole property in the future months is enough to secure a concrete reservation! (yes this happens! They call and ask do we have availability 3 months from now, we say yes, they say ok thanks and hang up! No name, no email...) My guess is one day a bus is going to arrive with a group stating their organiser called 6 months ago to make a reservation!

What to do!

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Rucksack Brian

9 years

What is your opinion on handling these kinds of situations? Was i too harsh? Should I have been more lenient considering these were local organisations?

Perhaps just the opposite. You may have been too lenient. Now if he wants to bring you business in the future he may think he can make up his own rules as he goes.

We used to have similar problems until we started requiring a deposit in order to confirm the group booking. We ask for the first night or 25% of the total booking (whichever is bigger) in order to hold the beds. Generally we’ll give them one week, with a specific deadline, to process this payment in case they need to collect money from the travelers. If we don’t receive the payment by the deadline we send them a polite email letting them know that we have released the beds.

We require the remaining balance to be paid in full 7 days before arrival.

Everything is very clear, and as a result we stopped playing games with organizers who can’t seem to get organized. We have also seen far fewer cancellations at the last minute since everyone has already paid us for the beds.

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John Moriarty

9 years

I agree with Brian here.

You have to be extra strict with groups and the majority understand this.

Firstly I think it is best to deal with one person and get the money from them.

Like the first issue you had I think part of the fault was with you not specifically dealing with the organiser and making him pay.

For groups I think the following policy is best.

Take a large deposit as Brian as advised around the 25% of the whole booking.

They have a certain amount of time to pay this deposit if not then you release the rooms.

They can cancel up until 1 or 2 weeks before arrival getting their deposit back.

The full amount should be paid a week before arrival.

I would also be taking a security deposit.

I think airbnb is a very good tool for handling groups.

As the money is held in their system and you can also hold on to the security deposit up to 48 hours after departure so if you find anything damaged you can request this money.

You really have to be tough with groups and as well as advising them the per person rate advise the full rate and that this must be paid if there is less than the agreed number of people.

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SkWd

9 years

Thank you folks for the input.

Yes, we have a much firmer stance with groups since the first incident but so far we have been lucky and gotten our full payments....after lengthy painful exchanges! Believe me, they do think they can make up their own rules! It happens with individual "local" guests all the time! Its just the mentality of self importance i mentioned - they feel their reservation will be the only one we will receive all year!

As i said we made the info brochure outlining payment procedure, what a hostel is, our facilities, what you as "the organiser" must do etc.

Within the payment procedure we do tell them to pay a 25% deposit within 7 days of making the reservation and we stress that only after this payment will the beds be reserved.
We tell them the deposit is non-refundable and non-transferable to reservations of a lesser amount. i.e if people cancel and you want to make a smaller booking, the deposit is lost and a new booking must be made and secured.
Payment of the balance must be made upon check-in or if they are paying by bank transfer it must be on our account 24hrs before arrival or we sell the beds. We also send them a reminder email 1 week in advance. If we dont hear from anyone to confirm arrival times etc - we sell the beds too.

Security deposit is a great idea. How much do you charge? Per person? We will add that in.

We would love to be able to get the organiser to pay a full week in advance but these guys come in with the "poor mouth" every time, also they dont even know who they will put in the hostel at the point they are making the reservation (usually there is a big sports event with lots of groups scattered around the city in hotels and apartments etc.) We know we will just not receive the money in full in advance, so charging the 25% deposit seems to be a more realistic option!

I hope in future, we will toughen up these terms and conditions, but right now, we are new and are massaging the locals a little, but educating them as we go along :)

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