Damage deposits can be a tricky subject. Especially for a holiday rental. Although there are a lot of pro’s and con’s to it, it is a part of your revenue management. Whether or not you have to implement deposits is completely up to you. This list is just to help you figure out what best fits your needs.
The pros of implementing a damage deposit
Although you probably have decorated your holiday rental for durability, accidents can occur. When you have collected a security deposit you have something to pay for the damages that happened. Although for some bigger repairs the money from the deposit might not be enough, at least you can recover some of the sum.
Implementing a damage deposit strategy also makes you follow up on the state of your touristic apartment. Although you might already check all the apartments after every check-out, this may be an extra push to be serious about it.
Security deposits are standard practice in many cases of renting out touristic apartments. It doesn’t only give you reinsurance that your guest won’t steal anything. It also makes you look more professional. Even though you might be trying to build a friendly relation with your guests, it is always a good idea to keep things related to money as professional as possible.
Finally, a deposit can also trigger a mental note with your guests. They get the feeling that they might lose some money and therefore be more careful with your property in the first place. It empowers your guests to feel more responsible and treat your holiday rental as their own home.
The downsides of deposits
Although there are many upsides to claiming a security deposit, there are also a few downsides. Some naysayers will point to the fact that it is another burden to keep track of the deposits received and which you have returned. Especially when asking for a cash deposit this can be true. You have to be at check-out to return the money, even if the guests leave early in the morning.
In the case of cash deposits, it can cause a bit of stress too. If you keep part of the deposit at the check-out, your guest will argue with you. This can cause some problems and they might leave with a bad note. This can ultimately lead to a lot of stress for you as a property owner. Your guest might also want to get revenge by leaving mean comments. However, when you are honest in the amount you hold back, this shouldn’t be a problem and you shouldn’t worry about it.
And yes, there is also a trust issue. When asking for a damage deposit, you might come across as if you don’t trust your guests with your property and its belongings. At the same time, you are asking them to trust you. On the other hand, as already mentioned, deposits are a common practice. There is nothing personal about it.
Still, asking for a cash deposit?
Some of the downsides of the deposit have to do with cash. But do we still need to deal with cash? Nowadays most of the bookings are made online and paid by card. If you get bookings through Booking.com you can use pre-authorization. Which means you don’t charge the guest, but the amount is blocked from the card. For Airbnb, the amount isn’t charged either. You can set a deposit and you can charge the deposit until 14 days after the check-out through their resolution centre.
Do you always hold back money?
This is the difficult part. Are you going to hold back money for every small damage? Some accidents are common to happen, and you should be prepared for them. Dropping a glass or a plate is an accident that can happen very quickly and to replace the items doesn’t empty your bank account.
Where do you draw the line? It is up to you. When scrolling through owners’ forums, there are different opinions. Some people say they won’t charge their guests for small damages if they owe up to it but would charge them if they tried to hide it. Others will always charge money and some would never. Like said, it is really up to you. What do you feel comfortable with?
Another thing to consider is to what the reason is why something broke. Have you maintained your furniture well? Some loose bolts or screws might be the reason why it broke. Maybe the item was aged and was supposed to be replaced soon anyway. Does your guest have to pay for that?
So whether or not you actually decide to implement damage deposits at your holiday rental is all up to you as an owner. What feels right for you? Also, think about the type of guests you usually get or the value of the inventory. Does it actually make sense for you to ask for a deposit?
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