Questions about Non-Refundable Payments
Question: We would like to book your home for two weeks next year but are afraid to give such a large deposit with no chance of getting our money back if you do not allow cancellations. Would you consider a smaller deposit because we would be booking almost a year in advance? And why are payments non-refundable generally speaking?
Thanks for your message and your interest in our property.
First of all, please understand that our normal booking deposit is 20% of the value of the rental. However some listing sites, such as HomeAway/VRBO or TripAdvisor do not give us that option. The minimum percentage they will allow is 25%, and unfortunately I can’t do anything about that. In addition, when the booking is made, sites like this charge ALL of the county and state sales taxes up front. PLUS, they then add on their ‘service fee’, which can be often be quite substantial. Strangely, and I believe unfairly, these sites also charge us 3 – 6% for processing your credit card payment for ALL of these funds, even though they don’t remit them to us.
Sales taxes only need to be remitted in the month after the guest has stayed! So why charge them so far in advance? We don’t do this ourselves.
All of this taken together means that if you book our property through one of these sites, you will likely be making an initial payment of more than double than what you would pay to book the property with us directly. We completely disagree with this approach, however these sites use their market dominance and brand recognition to force both property owner-hosts, and traveling guests, to accept these terms. Often, the guests are unaware of just exactly how much they pay is being retained by the site and why, however we are not receiving most of that money, if at all. Yes, some of these sites will accept a booking from a guest, collect a sizable deposit, and forward none of it to the owner, expecting the owner to hold valuable dates in their vacation rental off the market, sometimes for more than a year, without receiving any compensation at all.
Then to make things worse for the owners, the sites often offer to allow the guests to easily cancel the reservation, and without penalty, leaving the owner with nothing, but the site is likely to do just fine with their ‘locked-in’ guest as the guest will simply book another property on the site for their trip in the vast majority of cases, with the money they have already paid, meaning the site loses no income. Meanwhile the owner is left with dates they can’t get booked, because the vast majority of travelers book vacation rental dates relatively far in advance.
And to simply add to the vacation rental owners pain of a cancellation with no revenue, they must then entertain requests from other guests to highly discount the open dates because they are being booked “last minute.”
So, Booking Deposits and Balance Rental Payments are non-refundable to ensure that guests are serious about staying at the property, recognize the big risk an owner is taking in accepting a booking for far off dates, and allow for the fact that if the guest cancels and does not stay the owner has little chance of booking the dates to another party. Doing so listens the owner’s risk by protecting their income, thereby allowing them to offer lower rates to all of their guests.
The purpose of the booking deposit is to hold the dates for you. Essentially, when we receive a booking, we take those dates off the market and commit them to the guest who has booked them. Booking deposits are typically non-refundable, so that guests will not make trivial bookings and take the dates off the market with the expectation that if they change their mind, they can simply cancel and get the deposit back. Making booking deposits simply refundable upon request has lead to guests making bookings for the same dates with multiple properties, and cancelling all but one at the latest possible moment.
In effect, what you are doing with a Booking Deposit and Balance Rental Payment is purchasing an Option to come and stay at the property for the dates indicated. It is up to the guest to exercise that option by showing up at the property on or about their arrival date, and staying in the property. The owner is being paid for holding the property available for the exclusive right of the guest to use that property at that time, and not make it available to others who may even be willing to pay more for the property than the amount the first guest booked it at.
When the guest arrives at the property, all of the money they paid for the Option is credited to their account for payment of the rental charges for their stay. But if the guest chooses to, or for whatever their own reasons, can’t arrive at and stay in the property, the owner has still provided the guest with the Option, and still deserves to be paid for it. The owner has a right to protect their income, and offering an Option to the guest to stay in the property is how this is accomplished.
A guest may mistakenly believe that the money they pay is only for renting the property, so if they don’t stay in the property they shouldn’t have to pay, but in reality, until they arrive the money they are paying is being provided to the owner so that they will guarantee the property is available to those guests for their exclusive use. Even if the guest does not arrive and stay at the property, the owner still held the dates for the guests use, and the owner deserves to be paid for doing this. So the payment must be non-refundable.
Without this arrangement, a vacation rental owner typically can not afford to be in business.
And vacation rentals are not like hotels, which deal in renting out a certain percentage of the rooms they have available each night, and have access to nearby travelers and last-minute guests to replace other guests who may cancel. If a hotel gets a cancellation from a single guest, it may affect their revenue for that evening by 5 or even 10%. A vacation rental owner has one single guest from which to generate all of their revenue for that night. And that guest may only have been looking for that property months earlier. If the property is now left vacant at the last minute, it is completely unlikely to be booked. There are no neon flashing signs along the highway telling potential last minute guests “Vacancy Available – Rooms 30% Off!” A booking for a vacation rental is an all or nothing risk for the owner that they must be compensated for.
For certain periods of the year, our bookings typically come in around nine months ahead of time. Some bookings are made more than a year in advance. The typical booking period for a vacation rental is, in fact, around nine months in advance. This is when many guests are looking to book peak times. If we have accepted a booking for a period like this, and then the guest cancels six months out, we are already three months passed the best time, and the greatest chance that we have, to be able to book the dates with another party.
In a similar vein, we have to recognize that ALL of our guests book our home under the same circumstances. We don’t play favourites, or change our terms… lest we open ourselves up to the possibility of being accused of discrimination. In a way, just like we compete with other vacation rentals for guests, our guests compete with each other to book dates in our home first. It is amazing how often two different guests will attempt to book the same dates, often within hours of each other. Over the years we have seen this happen many times.
Given this situation, are we to accept bookings under different terms for different guests? There is no situation in which that can be considered a fair approach. Having different terms for different guests could open us up to accusations of discrimination, which actually has happened when we have had to inform guests that another guest booked the dates they were after first. We protect ourselves by keeping things the same for everyone.
A vacation rental is unique, in that it IS unique. We only have the one home like it available for any given set of dates. It is unlike a hotel room where there will be multiple copies of the same accommodations available, and if one room is booked, there almost always is another one just like it available to sell to the next customer. Once we accept a booking for a set of dates, in a way, we are now out of business for those dates. It is a one shot deal, and that is why we require what we do of our guests.
Assuming that a guest truly does want to book our vacation home quite far in advance, with a non-refundable deposit for all of the reasons explained above, there is admittedly some risk that is being taken on by the guest which will appear should something unexpected occur and the need to cancel arise. This risk can be mitigated however, relatively inexpensively with trip insurance, and we encourage all guests to take out trip insurance so that they are protected against a multitude of unforeseen circumstances and possible expenses. This really is the proper way to eliminate the risk in booking our home, and indeed, all of the purchases connected with one’s vacation.
An insurance company, spreading the risk of a cancellation out amongst thousands of other travelers who all contribute a small amount to protect all of their vacations is in the proper financial position to protect your trip. A single vacation rental owner is not, and shouldn’t be expected by guests to be a source of trip protection. That is not the owner’s responsibility or purpose.
Finally, while it is our policy that booking deposits are non-refundable, in actual practice we do adjust the enforcement of the policy in order to ensure that we treat people fairly, and in a manner that we would like to see should the positions be reversed. Part of how we evaluate cancellations and deposit refunds is determined by the timing of it.
For example, should a guest cancel a far off booking within a week of making it, we will simply refund the booking deposit completely – no questions asked. The dates haven’t been held off the market for very long, and we think it appropriate to provide anyone with a ‘cooling off’ period upon making a booking with us. We want our guests to enjoy their experience with us, not feel they were taken advantage of.
In some cases, if we can not provide a refund, we will provide the guest with a full or partial credit that they may use against some other dates of our choosing.
There are too many considerations to list here that all go into how we assess refund of a booking deposit, but it is not out of the question. In all cases, we endeavor to be fair, and treat the guest as we ourselves would expect and like to be treated.
The Booking Deposit (20% of the Total Rental Charge) is Non-Refundable. In event of cancellation by the guest, a whole or partial refund of the Booking Deposit MAY be provided at the sole discretion of the owners. Alternatively, the owners MAY provide the guest with a non-refundable credit to use for another booking at another time, again solely at the owner’s discretion.
Any cancellation within 8 weeks prior to the Arrival Date will regrettably result in loss of the whole booking fee (not including the security deposit).
Again, our objective is to be as fair and equitable as we can be, taking into account all of the issues at play.
I hope that this detailed explanation satisfies your questions, and demonstrates our commitment to you as our guest to treat all of your concerns and needs with the utmost care and attention.
I look forward to welcoming you to Breezy or Pleasant Oak Villa soon!