Six Reasons You Cannot Charge Your Noshow!
There was a contract, a promise, a moment of camaraderie between us and our future guests. We set aside a bed or more, maybe even a private room, and they blew it all by neglecting to show up without even a 'heads up.' We tried to ignore the disappointment of the desperate walk-ins we had to turn away, hoping that they would arrive, but it just did not happen. Let's face it: "We hate no-shows." They suck, no doubt about it. For the most part, we're just upset they missed out on 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 of the matter is what we really fear; the no-shows we cannot charge. It has happened to us all. Many of us believe it to be a rite of passage into the hostel management/ownership role. Here is what could have happened that affects 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 tackle them head-on. Just note, these are for informational purposes, and we do not advise anyone to implement these practices at establishments that are not their own. Here they are, listed in an estimated frequency of occurrence:
Insufficient Funds
The problem of being on the budget side of accommodation is that guests often go outside their budget, and the money runs dry. When this happens, they switch to emergency mode—returning home or staying somewhere free or cheap, such as couchsurfing or with 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 too well because pretty much all of us have canceled a card with our financial institution in the past. Somewhere along the way, they could have lost their card or had it stolen (think Barcelona), but that's 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 technology becomes more sophisticated, so do the criminals. There is nothing worse than finding out your bank account has been violated while you are traveling. There is also a very, very, very small chance the card was canceled to avoid the no-show fees. This usually happens with 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 has found a way around no-shows 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 no-show, you might want to start authorizing the card for the amount of a first night's 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 canceling the card to avoid fees, they usually 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 or cancel the reservation.
More Card Info Needed
The OTAs are all about conversion. They realize that with each step a visitor has 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 even the 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 to require 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. It is also 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 likely 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 at 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 OTAs. It cannot just be any numbers, but there is an almost infinite number of combinations 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 also be useful for 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 upfront).
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 revenue from no-shows be null. If you have any tips and techniques that help you minimize the damage done by no-shows, leave them in the comments below.