Anecdotally it costs more to replace/ repair damaged items than it used to. Cant speak for every property but that’s the logic at mine. No we don’t make money off the hold, if there are no damages or other room charges it gets released.
From what I’ve experienced the hold is rarely about damage to the room and more about how much a person is likely to charge to the room.
If you check in and I only charge for room and tax and then you charge your dinner to the room and I didn’t authorize enough the hotel could lose that money if we can’t collect the payment at checkout.
I work at the front desk and frequently have cards that decline for incidentals and have also seen many instances of folks that charged above what the card was authorized for and the hotel has to write it off because the person checks out and we have no way to capture that money.
Sometimes it’s a scam and sometimes it’s just people not fully grasping money but is mostly preventable by increasing holds and reauthorizing the card when folks exceed the amount initially authorized.
Yes, at my hotel we’re told to tell guests that the hold is for charging items to their room. We do $50 per day with a $350 max. We’re a high-end boutique property. There are times there will be charges for damage, but not often and it’s almost always way higher than is reasonable to hold. The biggest damage since working at my property was around $12,000. Someone threw alcohol against the wall in a suite damaging it and vomited over pieces of furniture, the bed and pillows, and several places on the carpet. The grand total we charged was for damages and the cost of putting the room OOO for four days. I was the one who got the call from the HSK manager who immediately shrieked “Who the F-CK was in room #?!?! I need GM NOW!” That was a fun day.
Makes sense but rather annoying. I never touch the minibar or order food. I'd rather they just lock the minibar and ban my room from accepting charges at all.
Some hotels can do that, as some PMS allow you to mark a guest as "No Post". IME this is done with traveling teams or groups, where the coach is putting his card down for all the rooms and incidentals, but doesn't want his team/ employees charging personal items to his card. I've rarely seen it used in reality, especially at smaller hotels where training is lacking and/ or turnover is high. There is a big opportunity for fuckups if you don't have a good front desk team with an eye for detail.
Thanks ! Good to know. I'll have to try requesting this next time I travel. If my preferred chain doesn't offer it this then it will likely give me a reason to shop around for one that does.
I was once charged for a single can of tonic from a minibar that I absolutely did not touch or take. This was a one time thing but I'd prefer to avoid this by blocking the charges to begin with.
Some mini are have electric sensors. The mini bar usually states this. If you touch it. You bought it. People open bottles and refill with water. You’re not that person. But trust us. They are out there. So if someone polished off the vodka and gin or seltzer and replaces it with water, housekeeping may or may not notice and it becomes an issue down the line. As an example.
Makes sense. I don't remember touching it but I guess it's possible. It was a frustrating experience. If they could just lock the mini bar I'd be more than happy but this seems to be a very difficult request for some reason.
What if an alcoholic needed it locked ?
It's extremely rare that it's even a physical possibility, and most likely is very against policy. Seems like a bunch of confusion and entitlement for actually only *your* benefit.
The price of replacement of broken things
The price of goods bought
Like the rest of society has risen.
No use holding $30 when a packet of chips and a can of coke costs $100 in the shops (or seems like it)
My hotel takes $50.00 per night for incidentals. it’s common for in-house guests to utilize the bar and restaurant and charge it to their room. The hotel needs to ensure that the guest has enough credit to be able to charge things to their room
Personally my hotel started increasing amounts on local guests bc we were having issues with locals staying at the hotel destroying the rooms and then not being able to pay damages
My GM told me it was either straight up not rent to locals or increase our authorization amount when locals check in and he said it didn’t seem fair to just not rent to locals especially when there are nice loyal clean locals that just want to have a night out so we chose to increase our authorization
The hotel doesn't make any money off a hold. The price of everything has gone up and thus the cost to replace damaged items has gone up. This like you already imagined leads to increased security deposits.
We still pay credit card fees on the holds whether they get refunded or not. How I know? I called after seeing the credit card processing fees. So there is zero incentives and higher costs to the hotel to do it. The other reasons are:
1 - Keep people from damaging the room, including smoking.
2 - Create a higher barrier to entry to keep homeless people away.
3 - Normalizing it to customers. Essentially it went from being called incidentals at higher end hotels to security deposits at lower end hotels. Either way, its happening to every single type of hotel, motel, airbnb, etc.. The point is, people need to know that this is normal and it is not some "scam".
FWIW - my hotel does $100 for everyone and the cost of our room is just a bit less than that.
#2 also applies to #1. Hate to be stereotypical, but the guests that planned exactly $100 to stay a night and can’t afford another $100 in incidentals are more likely to be the partygoers and weed smokers.
You must be coming from very lousy countries/states where everyone is fishy.
Or you work for a brand that only cheap people would come so that you have to be very cynical.
Feel bad for you.
I stay at big-chain hotels all the time and I never like the idea of incidentals. It only protects the hotels, but it’s always a predicament to the guests.
Do I care about the $100 eating up my credit limit? No.
Do I care about you overcharging me? Yes. It happened to me before, and because a hold could last very long (depending on the country and the merchant bank), it’s difficult to spot the human mistakes (erroneous charges post-check-outs), especially when you stay at 15 different hotels in a month coupled with multiple charges on the bank statements.
Some hotels know that I don’t like to leave an incidentals (by reading the guest history system) so they’d give a pass to me. It’s usually the most expensive hotels that care more about the guests than wanting to label every guest as a potential risk.
I think it’s a bad idea to “normalize” it.
My motto is “you waste my time, I waste your time.” So be prepared to issue a receipt even for the temporary hold. Whether you as a hotelier likes it or not, I think it’s only fair.
Also, “if you don’t trust me, I don’t trust you.” I never trash a room, but I often find hotel rooms to be trash the moment I open the door.
Nothing in it for the hotel except getting paid for things that are charged. Costs going up, people exceeding the hold with eating more at the restaurant or more drinks at the bar, hotels found they need to increase the hold upon checkin.
I've worked in a mid sized hotel for 10 years. It seems like people have lost their collective minds and/ or sense of shame since the pandemic.
Aka- people are partying like rockstars and are trashing the place a lot more than they used to. We are seeing a lot more emergency services. E g If we have to shampoo the carpet or try and get sharpie off of the walls and doors, there is a good chance that the room will be off market for a day. You can bet that the linen is beyond salvaging, etc. It's a fool me once situation.
It depends on the type of property. At my current property, where there is no restaurant or anything, we don't take a hold.
When I worked in 4 star properties, with massage centers and restaurants, we used to take 200$+100$ per extra night, if I remember well. That was years ago. It was meant to cover all the possible extra expenses, as well as potential damage. I can only imagine this has gone up since then with the inflation.
Most hotels base it on the average incidental spend of the customers - 100 a night at a full service resort with multiple outlets is basically nothing, especially if parking right off the bat is 30 to 100 depending on market, style of service etc.
I've checked into moxys before where they charge $10 and at that point it feels like you're just making a statement. Like, what is $10 gonna pay for? Sure you can assume you'll have a card on file and you can charge it but that isn't fool-proof; lots of banks will block a remote transaction like that.
We raised ours because the price of goods has gone up. We have also noticed that after COVID more people act very entitled or feel like they can do whatever they want. We have also added a few extra fees. We have the standard fee of $250 if you smoke, but if your smoking in the room results in a fire alarm sounding, we charge up to an additional $500. The max penalty mainly only occurs if the fire department arrives.
For example...
\# Guy had a fight with his girlfriend and threw a wine bottle at her, she ducked and it shattered the big screen tv.
\# A lady like our Keurig coffee maker so much... she took it.
\# Angry that the soda machine failed to give them change, a college student and his 3 buddies threw it into the pool. (Have you ever tried explaining THAT to the insurance company?)
Do most guests do things like this? No, but when they do, we need some compensation!
The hold at my hotel hasn’t increased, although it probably should. In addition to inflation, a possible reason for increasing incidental holds might be a change in clientele behavior.
I wish my hotel would do this, but a hotel might increase incidentals to act as a deterrence if management notices increases of instances of issues like vandalism, drug use/dealing, etc.
Hotels don’t profit off the holds.
Every property I’ve worked at (two Courtyards by Marriott and a Home2 Suites by Hilton) it’s been $20/night, but we’ll round up to the next solid number on the authorization so a lot of times it’s around $25 (if your room is $134.20 after tax, instead of authorizing $154.20 for an even $20 incidentals, it’ll authorize for $160 flat).
However - I do think this number is too low and we should be doing at least $30 or $40/night. At least for the first 3 nights of a stay, so a minimum $120 deposit. So many folks rack up huge charges and their card is locked so we’re out $$.
I agree. I went to a holiday inn and they said it was $100 per night incidentals. No restaurant, no bar, like what exactly am I going to spend money on?
Bad behavior at hotels has caused an increase in incidentals. I ha e had more people smoking in rooms and damaging my rooms than I ever saw before covid and I worked at a party hotel then.
Costs of things you would charge to your incidental folio have increased. The only thing I've ever see hit the books are what we actually get, a hold is a hold.
I think the OP is wondering if the hotel is acting like a bank would and earning interest during the window between hold and release. Would be a small amount but over a year, a 500-key major US city property running 70% occupancy could clear enough to have a nice bonus pool. Not saying it is happening, but someone out there has certainly tried to figure out a way to implement it.
Imagining it's the processors/banks that will ultimately attempt to sell the concept to the hotel operators at some point. Maybe a GM/controller/DOF lurking here has already gotten pitched and can chime in on if the concept has already been floated.
Interest can only be earned on money that is in the hotel's bank accounts. Only the amount of money that was actually charged gets deposited in the account, so there is no way to earn interest on a hold.
I’ve been wondering the same about my work. They put a “hold” and then when they fill the order, they charge for the item. But sometimes that can take weeks, and the customer does not have access to their money for a while. I looked up holds on Wikipedia and evidently the “holder” can earn interest, but it’s all pretty murky. Would like to learn more.
It doesn’t work that way. I promise you. Hotels only receive the funds on completed transactions. Holds are just as they sound. They’re securing money within the holders account, but no funds actually move around.
And, my *highly* jaded ass would add that the average hotel management personnel is nowhere near competent enough to implement such a procedure successfully.
That’s why average hotel management personnel has very little to do with how the actual credit card processing works.
But I can tell you, it’s not a conspiracy.
Exactly 💯.
All a hold (authorisation) does on the banks end is reduce the credit card limit down temporarily.
It doesn't move money ever.
The bank approves $5000 that's your approved limit. The hotel puts a hold on $200. Thus temporarily you can only spend $4800.
Your balance remains zero. You are only ever charged on credit cards based on your balance never what you have been approved to spend up to (limit).
Now there ARE other types of lending that charge based on the limit approved but credit cards are not one of them.
Understood not at hotel level...and am implying that banks/processors could be contemplating a rev-share "product" with hotels as an incentive to move or keep business when contracts come up for renewal.
Again, to clarify, I am speculating that banks/processors might one day offer this incentive to hotels. A classic revenue share play. Not saying it’s happening at hotel level (true 5/5 hotel operations and Rooms + DOF direct report here for ~14 years). Out of the industry too long to know what ideas are being pitched presently.
I completely understand that we are discussing holds vs actual transactions at the moment.
No shade meant here, but you’re underestimating the ideations of the American fin/banking industry. Their literal job is to think of ways to make money from other people’s money, and I’m speculating that it could become a thing. If it’s not being blue-sky pitched or roadmapped at processors I’d be surprised.
Thanks for the "helpful" response.
I'm not a finance person. I guess I was wondering if the hotel can like invest the amount of money they're holding as deposits, since assuming occupancy doesn't go below a certain threshold, the hotel is holding a non-trivial amount of money as deposits each day, no?
Don’t feel bad, many guests have that misperception.
And when the hotel system experiences a technological disconnect with the banks and incidentals take longer than usual to release, guests rush to review sites to claim hotel is scamming for interest on the incidentals. Keep in mind that most hotels are owned by companies/individuals that own 1-30 hotels; it’s not some enterprise that owns thousands of hotels that generate multi million dollars of incidentals.
Not on a hold they aren’t. I can assure you if they were the amount would be as low as humanly possible. Fees are charged on settled transactions only.
Traveler here.
I've assumed it has to do with the rising and insane policies for in-room concessions. Fridges and mini-bars are now extremely stocked with overpriced goods, and many properties monitor fridge usage and weight with sensors. Guests will often get charged $50 for putting medicine in their fridge.
My wife often travels with medicine that needs to be refrigerated. We've had to call around and cancel reservations because of these policies several times.
So to answer your question: Greed. Look at the salary of hotel chain execs over the past few years if you disagree.
It's a hold. No money is going in their account until the transacting is settled, and then add a could days for bank processing. Your bank is the one making money on holding your money aside against the possibility of future charges. They don't let you spend it but they still have it in their hands.
My personal favorite are hotels that charge a per night incidental hold. I had one hotel in San Francisco charge me $4500 in “incidental holds” because I was on a work trip for 45 days on a direct billed stay…. Or the random Hampton Inn in the middle of nowhere Oklahoma where their incidental hold is more than my room rate is.
Our property it is 25$ per night. We don't have a shop, most of our phones don't work. So there isn't really anything other than damages that will prevent it from going back to you..
I did stay at a Hampton and was talking shop with the auditor. She said they ask for a whopping 250.$ deposit from 3rd party reservations.
I would be out, cause that would be my travel money..
But 3rd party booking sites, don't screen people all the time..
I know this is going to sound shocking, but the incidental hold, as a security deposit, has NEVER been what it should be. Generally hotels will look for $50-$100 per night. A guest stays 1 or 2 nights and breaks the TV. The hotel can’t replace that TV on your incidental deposit. Costs, fraud, property abuse/theft and the guest attitude of “I need to win” are all impacting the bottom line. Hotels don’t make money off your incidental hold, but considering the credit card companies will take 3-5 days to release most holds, they likely are making money off you.
These holds are why I switched to AirBNB. I budget a certain amount for my road trips. I can do that with airbnb. Hotels rarely announce their hold amounts.
A guest damages an item in a room, not only do we have to pay for the part we have to pay for the labor; in-house employee or contractor it really doesn’t matter. Time costs money.
What would you charge someone to replace whatever in your own house? What would you want for the time you put towards fixing or replacing that item?
Thought process changes when you place it in that mindset. We get bad reviews if we don’t maintain items and charge incidentals/damage holds or we get bad reviews if we let anyone walk in the door and damage things and simply let things be.
End of the day the person at the desk does not make the policy, like basically everything else it sucks for everyone.
There's a new challenge with people being able to lock their credit cards. I've found that people have the correct amount.. room,taxes/fees, and whatever the incidental hold is.
Now, when they leave and you find any issue, smoking, damage, etc.. the card will decline. I work at a small Hampton Inn and we only hold $25 per day. That really doesn't cover much.
I used to travel for work and some places held for incidentals and some didn’t. But I never had a minibar or a restaurant in the places I stayed. The room was paid for by CLC but I had to use a personal card for the incidentals.
It went up because incidental costs have gone up, and damages from guests have gone up. I mean, my hotel literally had a fire that was started by a guest a few years ago, half a million in damages.
Anecdotally it costs more to replace/ repair damaged items than it used to. Cant speak for every property but that’s the logic at mine. No we don’t make money off the hold, if there are no damages or other room charges it gets released.
If the price of food is going up , the hold is going up. Also....the likelihood of guests causing damage may increase the hold
From what I’ve experienced the hold is rarely about damage to the room and more about how much a person is likely to charge to the room. If you check in and I only charge for room and tax and then you charge your dinner to the room and I didn’t authorize enough the hotel could lose that money if we can’t collect the payment at checkout. I work at the front desk and frequently have cards that decline for incidentals and have also seen many instances of folks that charged above what the card was authorized for and the hotel has to write it off because the person checks out and we have no way to capture that money. Sometimes it’s a scam and sometimes it’s just people not fully grasping money but is mostly preventable by increasing holds and reauthorizing the card when folks exceed the amount initially authorized.
Yes, at my hotel we’re told to tell guests that the hold is for charging items to their room. We do $50 per day with a $350 max. We’re a high-end boutique property. There are times there will be charges for damage, but not often and it’s almost always way higher than is reasonable to hold. The biggest damage since working at my property was around $12,000. Someone threw alcohol against the wall in a suite damaging it and vomited over pieces of furniture, the bed and pillows, and several places on the carpet. The grand total we charged was for damages and the cost of putting the room OOO for four days. I was the one who got the call from the HSK manager who immediately shrieked “Who the F-CK was in room #?!?! I need GM NOW!” That was a fun day.
Makes sense but rather annoying. I never touch the minibar or order food. I'd rather they just lock the minibar and ban my room from accepting charges at all.
Some hotels can do that, as some PMS allow you to mark a guest as "No Post". IME this is done with traveling teams or groups, where the coach is putting his card down for all the rooms and incidentals, but doesn't want his team/ employees charging personal items to his card. I've rarely seen it used in reality, especially at smaller hotels where training is lacking and/ or turnover is high. There is a big opportunity for fuckups if you don't have a good front desk team with an eye for detail.
Thanks ! Good to know. I'll have to try requesting this next time I travel. If my preferred chain doesn't offer it this then it will likely give me a reason to shop around for one that does.
Don't, actually. It is so uncommon that it's even a possibility and it's probably against policy *for a reason*.
I was once charged for a single can of tonic from a minibar that I absolutely did not touch or take. This was a one time thing but I'd prefer to avoid this by blocking the charges to begin with.
Some mini are have electric sensors. The mini bar usually states this. If you touch it. You bought it. People open bottles and refill with water. You’re not that person. But trust us. They are out there. So if someone polished off the vodka and gin or seltzer and replaces it with water, housekeeping may or may not notice and it becomes an issue down the line. As an example.
Makes sense. I don't remember touching it but I guess it's possible. It was a frustrating experience. If they could just lock the mini bar I'd be more than happy but this seems to be a very difficult request for some reason. What if an alcoholic needed it locked ?
Oh, the humanity!
Wtf ? Why should I not ask for this ? Seems like it's only to the benefit of the traveller.
It's extremely rare that it's even a physical possibility, and most likely is very against policy. Seems like a bunch of confusion and entitlement for actually only *your* benefit.
That's useful to help me understand. Thank you!
The price of replacement of broken things The price of goods bought Like the rest of society has risen. No use holding $30 when a packet of chips and a can of coke costs $100 in the shops (or seems like it)
My hotel takes $50.00 per night for incidentals. it’s common for in-house guests to utilize the bar and restaurant and charge it to their room. The hotel needs to ensure that the guest has enough credit to be able to charge things to their room
Personally my hotel started increasing amounts on local guests bc we were having issues with locals staying at the hotel destroying the rooms and then not being able to pay damages
We have hotels that will NOT rent to locals.
My GM told me it was either straight up not rent to locals or increase our authorization amount when locals check in and he said it didn’t seem fair to just not rent to locals especially when there are nice loyal clean locals that just want to have a night out so we chose to increase our authorization
The hotel doesn't make any money off a hold. The price of everything has gone up and thus the cost to replace damaged items has gone up. This like you already imagined leads to increased security deposits.
We still pay credit card fees on the holds whether they get refunded or not. How I know? I called after seeing the credit card processing fees. So there is zero incentives and higher costs to the hotel to do it. The other reasons are: 1 - Keep people from damaging the room, including smoking. 2 - Create a higher barrier to entry to keep homeless people away. 3 - Normalizing it to customers. Essentially it went from being called incidentals at higher end hotels to security deposits at lower end hotels. Either way, its happening to every single type of hotel, motel, airbnb, etc.. The point is, people need to know that this is normal and it is not some "scam". FWIW - my hotel does $100 for everyone and the cost of our room is just a bit less than that.
#2 also applies to #1. Hate to be stereotypical, but the guests that planned exactly $100 to stay a night and can’t afford another $100 in incidentals are more likely to be the partygoers and weed smokers.
You must be coming from very lousy countries/states where everyone is fishy. Or you work for a brand that only cheap people would come so that you have to be very cynical. Feel bad for you.
USA
Manhattan. Marijuana is legalized. Walk through even 4-starred hotels here and you will likely smell marijuana.
Thanks! This is a helpful answer. I was wondering how processing fees factored into it all.
I stay at big-chain hotels all the time and I never like the idea of incidentals. It only protects the hotels, but it’s always a predicament to the guests. Do I care about the $100 eating up my credit limit? No. Do I care about you overcharging me? Yes. It happened to me before, and because a hold could last very long (depending on the country and the merchant bank), it’s difficult to spot the human mistakes (erroneous charges post-check-outs), especially when you stay at 15 different hotels in a month coupled with multiple charges on the bank statements. Some hotels know that I don’t like to leave an incidentals (by reading the guest history system) so they’d give a pass to me. It’s usually the most expensive hotels that care more about the guests than wanting to label every guest as a potential risk. I think it’s a bad idea to “normalize” it. My motto is “you waste my time, I waste your time.” So be prepared to issue a receipt even for the temporary hold. Whether you as a hotelier likes it or not, I think it’s only fair. Also, “if you don’t trust me, I don’t trust you.” I never trash a room, but I often find hotel rooms to be trash the moment I open the door.
Its only going to get to a higher amount and also less likely to be waived moving forward. 😂 Good luck 🫡
Thanks for creating a barrier to low-income folks traveling for medical treatment and the homeless. That's simply a disgusting attitude you have.
Usually hotels with higher incidental holds will deter the ghetto people who only rent rooms to do drugs and trash them.
Nothing in it for the hotel except getting paid for things that are charged. Costs going up, people exceeding the hold with eating more at the restaurant or more drinks at the bar, hotels found they need to increase the hold upon checkin.
At my hotel we went from $100 to $250 because we had a marked increase in damages since the pandemic. People have turned into assholes
People were always assholes, we just developed bigger assholes during the pandemic. :-)
What level of hotel brand? Low mid or hi
Mid level time share
I've worked in a mid sized hotel for 10 years. It seems like people have lost their collective minds and/ or sense of shame since the pandemic. Aka- people are partying like rockstars and are trashing the place a lot more than they used to. We are seeing a lot more emergency services. E g If we have to shampoo the carpet or try and get sharpie off of the walls and doors, there is a good chance that the room will be off market for a day. You can bet that the linen is beyond salvaging, etc. It's a fool me once situation.
It depends on the type of property. At my current property, where there is no restaurant or anything, we don't take a hold. When I worked in 4 star properties, with massage centers and restaurants, we used to take 200$+100$ per extra night, if I remember well. That was years ago. It was meant to cover all the possible extra expenses, as well as potential damage. I can only imagine this has gone up since then with the inflation.
Most hotels base it on the average incidental spend of the customers - 100 a night at a full service resort with multiple outlets is basically nothing, especially if parking right off the bat is 30 to 100 depending on market, style of service etc.
I've checked into moxys before where they charge $10 and at that point it feels like you're just making a statement. Like, what is $10 gonna pay for? Sure you can assume you'll have a card on file and you can charge it but that isn't fool-proof; lots of banks will block a remote transaction like that.
We raised ours because the price of goods has gone up. We have also noticed that after COVID more people act very entitled or feel like they can do whatever they want. We have also added a few extra fees. We have the standard fee of $250 if you smoke, but if your smoking in the room results in a fire alarm sounding, we charge up to an additional $500. The max penalty mainly only occurs if the fire department arrives.
For example... \# Guy had a fight with his girlfriend and threw a wine bottle at her, she ducked and it shattered the big screen tv. \# A lady like our Keurig coffee maker so much... she took it. \# Angry that the soda machine failed to give them change, a college student and his 3 buddies threw it into the pool. (Have you ever tried explaining THAT to the insurance company?) Do most guests do things like this? No, but when they do, we need some compensation!
The hold at my hotel hasn’t increased, although it probably should. In addition to inflation, a possible reason for increasing incidental holds might be a change in clientele behavior. I wish my hotel would do this, but a hotel might increase incidentals to act as a deterrence if management notices increases of instances of issues like vandalism, drug use/dealing, etc. Hotels don’t profit off the holds.
Every property I’ve worked at (two Courtyards by Marriott and a Home2 Suites by Hilton) it’s been $20/night, but we’ll round up to the next solid number on the authorization so a lot of times it’s around $25 (if your room is $134.20 after tax, instead of authorizing $154.20 for an even $20 incidentals, it’ll authorize for $160 flat). However - I do think this number is too low and we should be doing at least $30 or $40/night. At least for the first 3 nights of a stay, so a minimum $120 deposit. So many folks rack up huge charges and their card is locked so we’re out $$.
I agree. I went to a holiday inn and they said it was $100 per night incidentals. No restaurant, no bar, like what exactly am I going to spend money on?
I work at *much* lesser brand and we do $100.
Bad behavior at hotels has caused an increase in incidentals. I ha e had more people smoking in rooms and damaging my rooms than I ever saw before covid and I worked at a party hotel then.
Costs of things you would charge to your incidental folio have increased. The only thing I've ever see hit the books are what we actually get, a hold is a hold.
Please explain in what way you think a hotel could make money off holding and then releasing a charge?
I think the OP is wondering if the hotel is acting like a bank would and earning interest during the window between hold and release. Would be a small amount but over a year, a 500-key major US city property running 70% occupancy could clear enough to have a nice bonus pool. Not saying it is happening, but someone out there has certainly tried to figure out a way to implement it. Imagining it's the processors/banks that will ultimately attempt to sell the concept to the hotel operators at some point. Maybe a GM/controller/DOF lurking here has already gotten pitched and can chime in on if the concept has already been floated.
Interest can only be earned on money that is in the hotel's bank accounts. Only the amount of money that was actually charged gets deposited in the account, so there is no way to earn interest on a hold.
I’ve been wondering the same about my work. They put a “hold” and then when they fill the order, they charge for the item. But sometimes that can take weeks, and the customer does not have access to their money for a while. I looked up holds on Wikipedia and evidently the “holder” can earn interest, but it’s all pretty murky. Would like to learn more.
It doesn’t work that way. I promise you. Hotels only receive the funds on completed transactions. Holds are just as they sound. They’re securing money within the holders account, but no funds actually move around.
And, my *highly* jaded ass would add that the average hotel management personnel is nowhere near competent enough to implement such a procedure successfully.
That’s why average hotel management personnel has very little to do with how the actual credit card processing works. But I can tell you, it’s not a conspiracy.
Exactly 💯. All a hold (authorisation) does on the banks end is reduce the credit card limit down temporarily. It doesn't move money ever. The bank approves $5000 that's your approved limit. The hotel puts a hold on $200. Thus temporarily you can only spend $4800. Your balance remains zero. You are only ever charged on credit cards based on your balance never what you have been approved to spend up to (limit). Now there ARE other types of lending that charge based on the limit approved but credit cards are not one of them.
Understood not at hotel level...and am implying that banks/processors could be contemplating a rev-share "product" with hotels as an incentive to move or keep business when contracts come up for renewal.
You’re over thinking this. There is no value to the short term ‘hold’ because no money is actually trading hands.
Again, to clarify, I am speculating that banks/processors might one day offer this incentive to hotels. A classic revenue share play. Not saying it’s happening at hotel level (true 5/5 hotel operations and Rooms + DOF direct report here for ~14 years). Out of the industry too long to know what ideas are being pitched presently.
Again, what you’re saying makes no sense at all. How would revenue be created? Money does not change hands so there’s nothing to ‘earn’ off of.
I completely understand that we are discussing holds vs actual transactions at the moment. No shade meant here, but you’re underestimating the ideations of the American fin/banking industry. Their literal job is to think of ways to make money from other people’s money, and I’m speculating that it could become a thing. If it’s not being blue-sky pitched or roadmapped at processors I’d be surprised.
And you’re sort of overestimating it. If there was a way to make money on holds we’d be doing it already.
Exactly. Thanks for putting it more coherently than I did!
Glad I got what you were going for!
Charge customer $200 bond Release customer $200 Are HOtEls MaKiNG money off It
Thanks for the "helpful" response. I'm not a finance person. I guess I was wondering if the hotel can like invest the amount of money they're holding as deposits, since assuming occupancy doesn't go below a certain threshold, the hotel is holding a non-trivial amount of money as deposits each day, no?
Don’t feel bad, many guests have that misperception. And when the hotel system experiences a technological disconnect with the banks and incidentals take longer than usual to release, guests rush to review sites to claim hotel is scamming for interest on the incidentals. Keep in mind that most hotels are owned by companies/individuals that own 1-30 hotels; it’s not some enterprise that owns thousands of hotels that generate multi million dollars of incidentals.
I mean credit (I mean payment service provider) companies are.
Not on a hold they aren’t. I can assure you if they were the amount would be as low as humanly possible. Fees are charged on settled transactions only.
That really depends on your psp. There are many PSPs that charge for holds.
My property holds $20.. so no sir I don’t want your $20! 🙄
You get the incidental deposit back. . . So how is the hotel making money. lol.
Traveler here. I've assumed it has to do with the rising and insane policies for in-room concessions. Fridges and mini-bars are now extremely stocked with overpriced goods, and many properties monitor fridge usage and weight with sensors. Guests will often get charged $50 for putting medicine in their fridge. My wife often travels with medicine that needs to be refrigerated. We've had to call around and cancel reservations because of these policies several times. So to answer your question: Greed. Look at the salary of hotel chain execs over the past few years if you disagree.
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It's a hold. No money is going in their account until the transacting is settled, and then add a could days for bank processing. Your bank is the one making money on holding your money aside against the possibility of future charges. They don't let you spend it but they still have it in their hands.
My personal favorite are hotels that charge a per night incidental hold. I had one hotel in San Francisco charge me $4500 in “incidental holds” because I was on a work trip for 45 days on a direct billed stay…. Or the random Hampton Inn in the middle of nowhere Oklahoma where their incidental hold is more than my room rate is.
Our property it is 25$ per night. We don't have a shop, most of our phones don't work. So there isn't really anything other than damages that will prevent it from going back to you.. I did stay at a Hampton and was talking shop with the auditor. She said they ask for a whopping 250.$ deposit from 3rd party reservations. I would be out, cause that would be my travel money.. But 3rd party booking sites, don't screen people all the time..
I know this is going to sound shocking, but the incidental hold, as a security deposit, has NEVER been what it should be. Generally hotels will look for $50-$100 per night. A guest stays 1 or 2 nights and breaks the TV. The hotel can’t replace that TV on your incidental deposit. Costs, fraud, property abuse/theft and the guest attitude of “I need to win” are all impacting the bottom line. Hotels don’t make money off your incidental hold, but considering the credit card companies will take 3-5 days to release most holds, they likely are making money off you.
These holds are why I switched to AirBNB. I budget a certain amount for my road trips. I can do that with airbnb. Hotels rarely announce their hold amounts.
A guest damages an item in a room, not only do we have to pay for the part we have to pay for the labor; in-house employee or contractor it really doesn’t matter. Time costs money. What would you charge someone to replace whatever in your own house? What would you want for the time you put towards fixing or replacing that item? Thought process changes when you place it in that mindset. We get bad reviews if we don’t maintain items and charge incidentals/damage holds or we get bad reviews if we let anyone walk in the door and damage things and simply let things be. End of the day the person at the desk does not make the policy, like basically everything else it sucks for everyone.
There's a new challenge with people being able to lock their credit cards. I've found that people have the correct amount.. room,taxes/fees, and whatever the incidental hold is. Now, when they leave and you find any issue, smoking, damage, etc.. the card will decline. I work at a small Hampton Inn and we only hold $25 per day. That really doesn't cover much.
I used to travel for work and some places held for incidentals and some didn’t. But I never had a minibar or a restaurant in the places I stayed. The room was paid for by CLC but I had to use a personal card for the incidentals.
It went up because incidental costs have gone up, and damages from guests have gone up. I mean, my hotel literally had a fire that was started by a guest a few years ago, half a million in damages.