Pros & Cons to Pre-Charging Credit Cards for Reservations

This article covers some of the pros and cons to pre-charging reservations ahead of a guest's arrival.

As experiences became more and more elevated and sophisticated, the risk of guests failing to show up for their reservation (no show) significantly increases your costs due to spoilage, labor and above all lost opportunity to introduce them to your product portfolio. CellarPass introduced pre-charging (charge upon booking) over ten years ago as a method to cover your costs should a guest no show.

With many benefits, there are also adverse effects, which we'll refer to as Pros and Cons to pre-charging reservations. And just to be clear, we're going to specifically cite pre-charging as charging a guest at least 48 hours (or more) ahead of their arrival. We strongly recommend consulting with your accounting team BEFORE you make any changes or commit to your initial deposit policy and integration configuration.

PRO
-You'll have the money up front, so if the guest no shows, you can at least recover the event fees.
-There's data that shows a guest is more likely to honor their reservation.
-There's data that shows a better quality guest will have no hesitation with a pre-charge scenario.
-When the guest arrives, their no collecting of credit cards (from a single guest or multiple within the party).
-A card on file with a reservation can be automatically added* to the guest's record in your CRM, eCom or POS.

Note that if a card is pre-charged and guest is allowed to make a modification which changes the amount due (or refund) this will be handled property until the reservation is synchronized to your eCom/POS.

CON
- Not all guests will want to agree to their card being pre-charged. The reservation holder maybe booking for a group and they don't want to be responsible should any one in their party (or the entire party) fails to honor the reservation.
- Your accountant will need to determine how the pre-charged funds will be tracked and managed.
- We do not recommend upserting (syncing) a copy of the reservation as an order into your 3rd party system until the day after the guest's visit. This is due to CellarPass does not support any reservation modifications once synchronized to your system. This is do to most integrated systems do not support GAAP compliant transactions.

Due note that there's 3 dates related to a reservation.

1. Date Reservation is Booked
2. Date Credit Card is Charged
3. Date the Reservation is Sent to 3rd Party eCom or POS

Lastly, there are two date fields that are also used when upserting a reservation as an order from CellarPass to your eCom or Point of Sale:

1. Date Booked (date reservation was booked) This is usually mapped as the Order Date in your eCom/POS.
2. Event Date (date guest is scheduled to be on property) This is usually mapped as the Pickup Date in your eCom/POS.

*see account manager for details