Hotels take money in a way no other business does. A deposit at booking, a hold at check in, a final charge at check out, and sometimes a no-show charge for a guest who never arrived. Each step is a separate card transaction with its own rules. When they are handled well, nobody notices. When they are handled badly, the hotel pays for it in complaints, disputes and reviews.
What a hotel pre-authorisation is
A pre-authorisation reserves an amount on the guest’s card without taking it. The money stays in the guest’s account but they cannot spend it. When the guest checks out, the hotel captures the real amount and releases the rest. Simple in theory. In practice, three things go wrong again and again.
Three common hotel pre-authorisation mistakes
Holds that are never released. A guest pays the bill on a different card or in cash, and the original hold sits on their credit card for days. To the guest, it looks like they have been charged twice. That is the start of a complaint, and sometimes a dispute.
Captures for the wrong amount. A hold for one night is captured for three, without an incremental authorisation in between. The capture may still go through, but the hotel has weakened its position if the guest questions it.
Captures that come too late. Holds do not last forever. Capture after the hold has expired and the payment may fail or be treated as a new transaction.
Running a hotel and want a front desk setup that handles holds properly?
How to fix hotel pre-authorisation problems
Use a terminal that handles the full pre-authorisation suite. Hold, increase, decrease, capture and release, all from the desk. The PAX A920 Pro does all of these.
Release holds the moment a bill is settled another way. Make it part of the check out routine, not an afterthought.
Take deposits by link, not by phone. A payment link sent at booking is faster for the guest, safer for the hotel and settles with the rest of your takings.
Keep your terms in front of the guest. Cancellation and no-show terms in the booking confirmation turn a no-show charge into a contract being honoured.
Why pre-authorisations matter more than your card rate
Hotel owners spend hours negotiating a few basis points off their card rate and almost no time on how their holds work. In my experience, the cost of one bad review from a guest who thinks they were double charged outweighs a year of rate savings for most independent hotels. Fix the process first, then talk about price.
Our guide to hotel merchant category codes covers the rest of the hotel payment picture.
Think I have got this wrong? Tell me on LinkedIn.