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Six Reasons You Cannot Charge Your Noshow!

losingmoney
Dennis Pitcock
Written by Dennis Pitcock

losingmoney

There was a contract, a promise, a moment of comradery between us and our future guest. We set aside a bed or more, maybe even a private room, and they blew it all by neglecting to show up with not even a ‘heads up.’ We tried to ignore the disappointment of the desperate walk-ins we had to turn away, in hopes that they would arrive, and it just did not happen. Let’s face it: “We hate noshows.” They suck, no doubt about it. For the most part, we’re just upset they missed out at staying at our awesome establishment, and weren’t there to contribute to the atmosphere. But that’s about all, we understand things can happen and it is they who are missing out the most. The truth in the manner is what we really fear; the noshows we cannot charge.

It has happened to us all. Many of us believe it to be a right of passage into the hostels management/ownership role. Here is what could have happened that sets forward our inability to charge and a brief way to control it. By better understanding how and why they occur you will be more equipped to take them head on. Just note, these are for informational purposes and we do not advise anyone to do any of these practices to any establishments that are not their own.

Here they are, listed in an estimated frequency of occurrence:

Insufficient Funds

The problem of being in the budget side of accommodation, is guests often go outside their budget and the money runs dry. When this happens they move to a emergency mode, returning home, or staying somewhere free or cheap such as couchsurfing or friends of friends. They simply do not have the funds in their account for you to charge their card.

What to do:

  • Try charging a smaller amount. Little revenue is better than no revenue.
  • Try charging at a later date. Often they will find money, and when they do, you should get your share. Try a week later or a month later. Just be sure to look into the legality of how much later you can charge.

The Card has been Cancelled

We’re familiar with this all to well because pretty must all of us have cancelled a card with our financial institution in the past. Somewhere on their way, they could have lost their card, had it stolen (think Barcelona), but that is not all. Card information can be skimmed by shady ATM machines, and even hacked from NFC devices while the card sits in its wallet. As the technology becomes sophisticated, so do the criminals. And there is nothing worse, than finding out your bank account has been violated when you are traveling.

There is also a very, very, very small chance the card was cancelled in the purpose of avoiding the noshow fees. This usually happens by tourists who need a visa and you send them auto-confirmations that they use to prove where they will stay. It could also be a sadistic mastermind who found a way around noshows despite it being illegal in most countries.

What to do:

  • Try contacting the guest. Perhaps they will give you the updated information and they still want to arrive at your destination. If they have travel insurance, they usually can recover this fee with a claim depending on the nature of the cancellation.
  • If you notice a pattern and can pretty much predict the noshow, you might want to start authorizing the card for the amount of a first nights stay ahead of time. In the US, you can authorize a card that will keep a hold for 2 weeks, so authorize it 12 days before their arrival. If they are maliciously cancelling the card to avoid fees, they do it right before departure. You can then force down the authorization and receive some revenue. If the authorization does not work, contact the guest and get a new card of cancel the reservation.

More Card Info Needed

The OTAs are all about conversion. They realize that each step a visitor will have to make to complete their reservation, the less likely the reservation will be made. This is especially true for OTAs that invoice you rather than process a payment of the deposit themselves.  Here they might not ask for their address, the CCV number, or event he credit card in its entirety, and without that information, you might not be able to charge their card depending on your local laws.

What to do:

  • Make sure your policies on the OTAs are up to date, and you require the info unless you are willing to take the risk (then set a threshold to minimize the risk).
  • If there is no way to get the info you need, perhaps update your policy as to where you need the guest to supply it within a certain time frame to hold the reservation.
  • If you have multiple hotels in other countries, perhaps charging them in another country can complete the transaction. Please check the legality before doing that though.

The Card is Geo-Locked

Before we travel, we have to inform our financial institution where we will be going so the card will work there. Also, it is quite common for people today to have more than one card. Usually when this happens, the guest forgets to tell their institution about their travels for the card they used for the reservations, and they use another. This could be even more possible for groups and couples where only one person handles the transaction.

What to do:

  • Try contacting the guest. Perhaps they will give you the updated information and they still want to arrive at your destination. If they have travel insurance, they usually can recover this fee with a claim depending on the nature of the cancellation.
  • If you have multiple hotels in other countries, perhaps charging them in another country can complete the transaction. Please check the legality before doing that though.

The Card has Expired

Somewhere between the time a potential guest makes a reservation and arrives to your hostel their bank issues them a new card. No fraud, no scams, no damage, just the systematic card re-issuance. The larger the booking window, the more likely this could happen.

What to do:

  • Have a system in place to double check upcoming reservations 2 weeks or a month out. Catch the errors before they become problems.
  • Most basic PMS systems (where the CC info gets passed along) will pick up on the discrepancy and alert you.
  • In both cases, contact the guest and tell them they must give you the updated info when they get their new card to hold the reservation. Perhaps set a reminder to follow up when the time comes.

The Numbers are Bogus

This is what we think, right off the bat. It is possible for people to use fake numbers and make reservations on some OTA’s. It cannot just be any numbers but there is an almost infinite amount of numbers that can meet  ISO/IEC 7812 validation without being real. Also, they might not even run the expiration date or CCV at all (try changing yours when making your next reservation and see).

There are many credit card number generators out there that can be valuable tools for eCommerce developers. However, they can aid making false reservations through many booking sites that exist on legacy systems. Typically, it costs money to authorize the numbers and some of these OTAs think it is not their job to do so.

What to do:

  • Determine your trouble OTAs and:
    • Set advance deposit non-refundable rates and charge them as the reservations come in,
    • Authorize the card for a small amount at the time of booking.
  • Push your account managers for reform. There are many changes in the pipeline as many of the OTAs are starting to understand our pain.
  • Don’t work with OTAs that cause you too much of a hassle (stick to those that charge the reservation a percentage up front).

Still in disbelief? Watch the video we found below. It might not be an OTA you use, but it could be a sister company to one you do.

 

There you have it. Good luck and may your lost of revenues from noshows be null. If you have any tips and techniques that help you minimize the damage done by noshows, leave them in the comments below.

About the author

Dennis Pitcock

Dennis Pitcock

Dennis jumped into the hostel industry after a summer backpacking Europe in 2008. He went from being a guest to a manager within weeks, and currently does consulting for large and small hostels alike in 3 continents. Prior, he worked in eCommerce, so he has passion for the tech side of the industry and is now deeply entrenched in the hostel and activities industry.

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