A hotel deposit can be a key tool in protecting your business from last-minute cancellations, no-shows, and accidental damage—but understanding how to manage them properly is just as important as deciding to charge one. In this comprehensive guide, we’ll explain what hotel deposits are, how they work, the different types of deposits, and how you can create a deposit policy that works for both your property and your guests.
What is a Hotel Deposit?
A hotel deposit is a form of upfront payment collected from guests to confirm a booking or to safeguard against potential issues during their stay. Depending on your property’s policy, this can either be a refundable or non-refundable amount, collected before arrival or at check-in.
Deposits are most commonly used to:
- Secure a reservation
- Protect against damage or theft
- Cover incidentals such as mini-bar use or room service
- Deter no-shows and last-minute cancellations
The way you charge and refund these deposits can have a direct impact on the guest experience—which is why it’s important to get it right.
Why Do Hotels Charge Deposits?
There are several reasons why hotels choose to charge deposits:
1. Guest commitment: A deposit confirms the guest’s intent to stay, making them less likely to cancel or not show up.
2. Property protection: Whether it’s a broken lamp or stained sheets, damage happens. A security deposit helps ensure you’re not left covering the cost.
3. Incidentals: If your property offers chargeable extras, such as in-room dining, spa treatments, or late check-out, a deposit can cover these expenses if guests don’t settle them directly.
4. Flexible booking policies: Deposits allow you to offer more guest-friendly cancellation windows while protecting your revenue.
While some small properties skip deposits to streamline check-in, having a deposit policy in place can protect your business and maintain professional standards.
Types of Hotel Deposits: Quick Comparison
| Type of Deposit | When Collected | Purpose | Refundable? |
|---|---|---|---|
| Security Deposit | At check-in | Covers damages or missing items | Yes |
| Incidental Deposit | At check-in (pre-authorisation) | Covers extras like minibar or room service | Yes |
| Advance Deposit | At time of booking | Confirms reservation | Often, based on cancellation policy |
| Damage Deposit | At check-in or booking | Specifically for property damage | Yes |
| Early/Late Check-In Deposit | At request time | Covers early/late check convenience | Sometimes |
Do All Hotels Require a Deposit?
No—not all hotels require deposits. In general:
- Large chains and upscale hotels almost always require a deposit.
- Boutique hotels and B&Bs may choose not to require one to simplify operations or improve guest satisfaction.
- Vacation rentals often have stricter deposit policies due to the risk of long stays or unattended use.
Examples of Hotels That Don’t Always Require Deposits
While policies vary by location, here are some well-known brands that are more flexible with deposits:
- Hilton: Many Hilton hotels waive deposits for direct bookings, only charging for no-shows or late cancellations.
- Motel 6: Typically doesn’t require a traditional deposit, though the first night’s payment is often collected upfront.
- Extended Stay America Select Suites: No deposit or lease required, catering to long-term guests with simple payment options.
Checking with each individual property is still recommended, as local franchise policies may differ.
How Much Should You Charge?
There’s no industry standard, but here are some common deposit ranges:
- Security/incidental deposits: $50 – $300, depending on room type and amenities
- Advance deposits: One night’s stay or a percentage (e.g. 50%) of the total booking value
- Damage deposits (for long stays): $200 – $1000
When determining your deposit amount, consider:
- The value of items in your rooms
- The length of stay
- The risk profile of your guest (e.g. event bookings vs corporate stays)
When and How to Collect Deposits
Deposits can be collected in a few ways:
1. At the time of booking: This is typically an advance deposit. Common for direct bookings and high-demand seasons.
2. On arrival: A credit card pre-authorisation or cash deposit taken at check-in. This is the most common method for security and incidental deposits.
3. In stages: For long-stay guests or large group bookings, deposits can be collected in instalments.
Preferred methods:
- Credit card pre-authorisation (most secure and automated)
- Debit card
- Cash (requires manual refund and greater admin effort)
Are Deposits Refundable?
Yes, in most cases. Refunds depend on the type of deposit and the terms of your policy:
- Advance deposit: Often refundable if cancellation occurs within the allowed window.
- Security/incidental deposit: Refunded after check-out, assuming no damage or charges.
- Pre-authorisation: Automatically released by the bank within 3-10 business days, depending on the card provider.
Always be transparent about refund timelines and conditions—unclear policies can lead to chargebacks and poor reviews.
How to Create a Clear Hotel Deposit Policy
A well-defined deposit policy can reduce misunderstandings and build guest trust. Here’s how to build one:
1. Decide which deposits you require
Think about your risks. Do you need protection from cancellations, damages, or incidentals?
2. Set a fair amount
Don’t overcharge. Use typical industry ranges and consider adjusting for seasonality or room type.
3. Offer multiple payment options
Make it easy for guests to pay via credit, debit, or digital wallet.
4. Communicate upfront
Include your policy during the booking process, in confirmation emails, and at check-in.
5. Train your team
Ensure front desk staff understand how to explain the policy and process refunds efficiently.
6. Automate where possible
Use a hotel management system (like Preno) that lets you automate payment collection, deposit holds, and refunds.
Simplify Deposits with Preno
Preno’s hotel management software makes it easy to manage deposits from start to finish. Whether you’re collecting an advance deposit for a peak-season stay or releasing a credit card hold after a smooth check-out, Preno gives you the tools to streamline the process.
- Automated payments and refunds: Collect deposits securely and refund them with a click.
- Clear guest communication: Customise messages to outline your deposit policy and minimise confusion.
- Mobile access: View deposit records and issue refunds on the go via Preno’s mobile app.
Running a small hotel shouldn’t mean more admin. With Preno, managing your hotel deposit policy becomes simple, consistent, and guest-friendly.
Final Hotel Deposit Fees Tips
- Keep your policy consistent, but leave room for discretion when needed.
- Use PMS reports to review deposit trends and adjust policies over time.
- Always prioritise clarity—from how much is charged to how long refunds take.
A transparent and well-managed deposit process helps ensure you protect your business while maintaining excellent guest satisfaction. And with the right tools in place, like Preno, you can do both without the hassle.
Frequently Asked Questions: Hotel Deposit Fees
How long does it take to get a hotel deposit refund? Most credit card holds are released within 3–10 business days after check-out. Exact timing depends on the guest’s card provider or bank.
Can I charge different deposits for different seasons? Yes. Many properties adjust deposit amounts during peak seasons to reduce risk and secure higher-value bookings.
What happens if a guest refuses to pay a deposit? If your deposit policy is clearly communicated in advance, you may be within your rights to cancel the reservation. However, flexibility and clear communication are key to avoiding negative experiences.
Is it better to use pre-authorisation or take full payment? Pre-authorisations are less intrusive for the guest and easier to refund, while full payments offer more immediate protection. Choose based on your risk profile and booking channel.
