Skip navigation

Join the Vacation Rentals Conversation!

Get answers to all of your questions from fellow owners and travelers.

Join the CommunityX

CommunitySeek, Ask, and Share in the Vacation Rentals Community

No Vacancy: Maximizing ROI

1 Post tagged with the deposits tag
1

“You got to know when to hold ‘em, know when to fold ‘em,
know when to walk away, and know when to RUN!”

Kenny Rogers - The Gambler


You may be thinking “What does Kenny know about the Vacation Home Business?”  Well, maybe not much.  But those lyrics above are very appropriate when it comes to dealing with security deposits.  Humor me for another 660 words and I’ll explain.

 

Why Have Security Deposits? 


We like security deposits for two reasons:

  1. They constitute an agreement between the vacation home owner/operator (O/O) and the guests.
  2. They provide a great opportunity to create incremental bookings and maximize ROI.

 

Think of it like this: 

deposit1.jpg

 

“Look, I realize unforeseen accidents can happen while you are in my home.  In the event that they do, I just want to know you are good for it if it was your fault.

 

deposit2.jpg

 

“If I damage something I’ll pay for it so I don’t mind the deposit…as long as you don’t look for reasons not to give it back to me.”

 

 

 

 

Therein lies the problem: how to establish a clear line on when to keep deposit funds or when not to.  Ultimately you hold the money so it’s you that determines the line.  We break ‘em into four categories.

 

Take it away Kenny!

 

Know When To Hold ‘em – O/O and guest both agree that deposit money should be kept.

Guest’s kid climbs the pool umbrella and breaks it.  Dad calls, apologies profusely and along with insisting to pay for a new umbrella assures you that his kid “never acts that way at home.”

 

Know When To Fold ‘em – O/O wants to keep deposit but the guest doesn’t openly agree.

This is the biggest opportunity of the four because it will likely have a direct impact on your future business with that guest, specifically their likelihood to:

  • Consider your home for their next trip
  • Give you a positive review
  • Recommend your home to others

 

You may be able to turn these lemons into lemonade if you can find middle ground.  Let your guest know the costs you will incur and explain that prior to their check-in the damage did not exist.  Ask them what they think should be done about it, and then use that as a starting point to find an agreeable solution for both sides.

 

**Possible Best Practice:  On two occasions we have offered guests a credit toward their next stay in the amount of the withheld deposit funds.  Full disclosure: Neither has taken us up on the offer…yet.  But, we recovered our loss, planted a seed for future business and the conversations ended on a positive note.

 

Know When To Walk Away – Keeping the deposit is expected by the guest, but you choose not to keep it.

Here’s where we can make a customer for life.  For three years in a row Rick and Raul have stayed two weeks with us while attending an annual convention.  This year one of them accidentally walked through our screen door and destroyed it.  At checkout they apologized and asked us to take it out of their security deposit. 

 

Valuing their business we elected to eat the $150 and use the opportunity to tell them just how much we appreciate their business.  We jump at every opportunity to show some Love to our high value guests.

 

Know When To RUN! – Flagrant damage happened and the O/O doesn’t ever want the guest back again.

This has happened with us three times out of 500+ bookings.  Gross negligence resulting in excessive damage to our home gave us no option but to withhold deposit funds.  As Lovingly as possible we informed our guests that there was substantial damage at checkout and provided an itemized detail of the expenses incurred, including our time to repair them.

 

**Best Practice:  The Loving approach meant we recovered our loss AND avoided a nasty guest review.  

 

The Bottom Line:  How we handle deposits when damage occurs in our homes provides us with an opportunity for incremental business in the form of Repeat Business, Strong Guest Reviews (our next topic) and Referrals.  If we can utilize the Fold ‘em or Walk Away approach effectively we turn a negative experience into a positive experience, all but obligating our guests to reward us with more business.   

 

Here’s to customers who take care of our homes and won’t stay anywhere else!

 

Cheers!

 

Michael