No Pay? No Stay. That's the Only Way!
Many new hostels are so focused on their guests that they are willing to accept payment at the guests' convenience. As pleasant as this might be for the guests, this is a major no-no. It is just too risky for the hostel. No matter how convenient it could be for the guests, consider these top reasons why a payment upon arrival policy is best for both you and your guests.
It Makes Everything Easy
With a pay-in-advance policy, you save yourself and your staff the hassle of tracking payments and chasing down guests to secure a payment before they leave. Your guests are busy exploring and entertaining themselves, and they will likely spend more time out of your hostel than in it. Your staff will be focused on normal operations and catering to all the guests. Time-wise, this makes obtaining a payment a logistical nightmare, which can only work in the smallest of hostels. A pay-upon-arrival policy opens up more time for you to focus on what the guest really needs for an amazing stay, such as attraction recommendations and fun events.
There is always some hostel, somewhere, that doesn't mind the hassle... they eventually change their policy after getting burnt by a guest or two...
It Is Safer for All Your Guests
Look at the transaction as the guest investing in their experience rather than paying for a service. When they put the money in, they will then focus on getting the best out of it. Payment up front also filters out many unruly guests who are looking to abuse the system. Guests who haven't paid may not care as much about the experience and can be loud and disrespectful to your staff and other guests. Even worse, they could be targeting hostels with such a policy to take advantage of it. They aren't just looking to steal bed nights from you, but perhaps the possessions of your other guests too. Even if theft isn't on their minds, a guest in a tight financial spot might steal if a good opportunity arises; desperate times can lead to desperate measures. Paying upfront ensures that your guests have money, lowers the chance of theft, and boosts security for all your guests.
Sort Out the Issues Early
If the payment doesn't go through when they arrive, at least you have some time to work with. A lot of times, there can be a hold on the bank card or some issue that takes time to resolve, especially if it requires calling across time zones during business hours. This way, you can get the issue sorted out and paid before they depart. Now, this can only be done if you are willing and able to make exceptions. There should be exceptions for the most extreme circumstances. If they can't pay for the full stay, at least try to get them to pay for their first night and/or hold some kind of collateral.
A pay-upon-arrival policy opens up more time for you to focus on what the guest really needs for an amazing stay.
You Can Sell Extras
When they're about to pay, you can take this opportunity to mention the other services you offer, which may be cheaper if booked in advance. This moment of transfer is a great time to inform them about services such as laundry, pub crawls, upgrades, tours, etc. So use this time wisely, and you can expand your margins while helping all your guests have a great time. Requiring payment at check-in is what is best for both you and all your guests. Even hotels require this, where you pay for the extras at check-out. There is always some hostel, somewhere, that doesn't mind the hassle, and from my experience, they eventually change their policy after getting burnt by a guest or two, or they just don't care about losing money. If that is the case, then I still recommend having a pay-upon-arrival policy and donating your money where it can make a difference rather than throwing it away.