Cancellation is a huge problem for many hotels, especially a last-minute cancellation when you won’t find a new guest for the room. So it often means a real loss of income. All the hotels in the world acknowledge the problem and most of them also know the answer: at least partial prepayment that you can keep in case of cancellation. But it’s not so easy as that, let’s discuss the details.
How much to ask?
To answer the question, we’ll have to first understand, what we are asking money for! In fact, the money is NOT for this customers’ services who cancelled, you did not get to provide any services to him yet! The money is rather to cover the business you had to turn back because of this booking. This is how you also explain prepayments to your clients, right? Having said that, it’s easier to set your prepayment rules.
- The closer the arrival date is, the lower are the chances to find a new customer. That’s why many hotels have set their payments rules so that one has to pay penalty for cancelling only if there’s less than a week left until the arrival date.
- In a hotel with many rooms, a cancellation normally is not a cost at all, as there’s always some vacancy. Except the periods when even those hotels are fully sold out.
International payments
Many small hotels don’t ask for prepayments if their clientele is from abroad, because they just don’t know how to teal with international payments. Well, the international bank transfers have quite expensive fees and they are not easy to wire for customers. The best solution is credit card processing. Check out services like Google Checkout, 2Checkout, etc.
How to get payments?
Wouldn’t it be nice to set such payment rules, that non-refundable 1/3 of the bill has to be paid a month ahead and another 1/3 a week before arrival? The problem is that a customer would not be happy to make several payments. He often would happily pay it fully at once but only in case if only a part of it is non-refundable. Of course, the answer here is: refund.
Most credit card processors do support partial refund.
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