The Subtle Art of the Deposit - Head Honcho Journal

Over the many years that I have been helping campground managers and owners set up their reservation software, one topic is certain to come up for debate; the deposit policy. Generally speaking, there is no right or wrong answer to what your reservation deposit policy SHOULD BE. Every night that your spots are not rented and/or every time a camper is a no-show, you are losing time and money. A reservation deposit can deter campers from not showing up but it could also hinder those from booking a site. The balance can be hard. So, here are the three deposit policies I see most often, with pros and cons for each example.

One-Night Stay:  Campers should pay SOMETHING upon reservation.

Camping is a relatively inexpensive vacation option. You don’t want your guests to break the bank right off the bat, but you DO want them to commit to showing up for their reservations. So, we suggest you mandate that they pay a small fixed amount when reserving their site. Usually this deposit comes in the form of a $30 to $40 charge.

PROS: You get a little bit of cash upfront for their reservation. This shows they are committed. Plus, your future camping guests won’t have to break the bank when reserving. Everyone feels good and everyone comes away a winner.

CONS: This is odd for some people to comprehend, but $30 to $40 is actually an easy amount of money to walk away from. Meaning, some people are ok just not showing up for their reservation and losing that deposit. You may get to keep that deposit, but what you have really lost is the time needed to remarket that site to another would-be camper. Now that this guest didn’t show up, you have only a day to find another camper to take that spot. Otherwise, you risk losing that potential revenue that spot represents.    

Payment Plan:  Using a payment plan requires setting a schedule for your guest to make payments on their reservation stay. This is exactly like lay-away. Your guest books a site online for a long-term stay. You require that they make an initial deposit of a fixed amount at the time of booking. No one else can book that site for those dates. Then you set a % of the reservation charges that has to be paid by a certain date before their reservation arrival date. From there, they either have to pay the remaining balance 2 weeks before their arrival date OR the balance is due upon arrival.

PRO:  Payment plans entice your guests to book long stays, especially when you have the amenities, activities, and local attractions to keep them entertained all summer long. A four person family can take up a spot for a whole month totalling at least a grand in revenue. This creates additional opportunities to upsell them with services, equipment rentals, or some unique adventure activities. Paying for that whole reservation fee up front can be tough for a regular middle income family. A payment plan allows them to pay a little up front, then a bit more next paycheck, and then a final in-full payment a few weeks before their trip.

CONS:  The payment plan creates additional work for your reservation operations and even for your bookkeeper. Someone has to keep track of the payment schedules for EACH INDIVIDUAL RESERVATION. Imagine having to bill each of your long term guests for their monthly stay, each on their own respective dates based on their arrival date. Updating the payment schedule is going to be a DAILY task for you. And that isn’t the hard part. Have you ever tried making a phone call and getting someone to hand over credit card information when YOU deem it to be convenient? Asking for the credit card is hard enough. But the timing is the rough part. After a few times of hearing, “I’m driving right now. Can I call you back later?” and never hearing from them, you may rethink this deposit policy.

100% of the Reservation Fee Upfront:  The rest of the tourism and lodging industry has been doing this for a decade or more. There is no secret sauce to this one. The guest pays for 100% of their reservation charge up front and in full the moment they make their reservation. It doesn’t matter if they book via a phone call or through an online booking page like Bonfire. You get all the money right up front.

PROS: There are lots of pros to this one and this form has my highest recommendation. First and foremost, your guests are already used to this policy. Your guests have stayed at a hotel before. They have gone through the process of making a reservation at a major hotel chain and had to give their credit card information, after which the reservation clerk asks for verbal confirmation that they accept the charges. Trust me, this won’t surprise them or make them run from your offering. Another plus is that YOU GET ALL OF YOUR MONEY NOW. Your accountant will confirm this. Being paid up front and in full is a fantastic thing for your business. Your guests have given you money that you can now use for needed improvements, payroll or payouts, debt payments, etc. Your guest also has all the incentive in the world to SHOW UP. Remember, you are offering an expirable product. Every night that one of those spots goes unreserved, that's a night that you cannot sell ever again. If you couple this deposit policy with a cancellation and refund policy that gives you time to rent that spot to another person, should the original renter actually cancel, you have a win-win scenario. You get all the money and the spot is rented. And if you need to refund a cancellation, you have time to resell that newly available spot.

CONS:  You need to deliver on your promise to deliver a spot for them to stay. I know, duh! But we have all heard horror stories where someone is using some manual reservation system (reservation book/excel file) and information is missing due to human error or smudged ink. Now, you have a family of four that has paid you a grand for a month long family camping experience, and they have no spot. Now, that refund is gonna be a sour spot for all parties. If this scenario gives you the chills, I expect you are still using pen and paper for your reservation management. Check out Bonfire. We can help calm those fears.