Last week I criticized a hotel room deposit policy that I had encountered during a recent Wyndham chain (Travelodge) stay. Between various reader comments, and some digging, I believe I now understand why Wyndham and many – but not all – hotels employ similar policies to ensure that they, and the credit card companies never lose money related to any guest stay.
I was wrong in my belief that Wyndham makes a direct financial profit from their ‘3 to 5 business days’ credit card hold policy. The money shown as a credit card ‘pending transaction’ never actually goes to Wyndham. Wyndham makes it plain that this is ‘Wyndham policy’. Absent any other information provided by the hotel, it seemed reasonable to believe that Wyndham must control the money involved – not really the case.
However, I was right in a more important respect. Through this policy, Wyndham gains a crucial economic benefit – what amounts to 100% protection against any guest avoiding responsibility for any costs whatsoever associated with their stay. Hotel housekeeping cannot always check, or clean a room the same day it is vacated. A bar tab, or room charge may not be accounted for, or room damage might not be discovered immediately. Credit cards are not always reconciled right away…. the hotel business is highly dynamic in these respects.
The ‘3 to 5 business days’ is therefore akin to insurance for the hotel. The policy maximises the hotel’s ability to complete all room checks and record keeping, and it virtually guarantees the hotel (and credit card providers) of full guest payment, for all room-related expenses – every time. The actual policy can be distilled to this summary: We consumers are making a small credit card sacrifice (in my case, the temporary loss of $150 credit availability) to give the hotel 100% assurance of payment.
When the policy is explained this way – great! Transparency is a wonderful business virtue – tell people why your policy exists, and consumers can make their fully informed hotel booking decisions (as noted, not all hotels operate this way). No one can reasonably complain about the policy afterwards if they choose to stay under these terms.
However, too many hotels are not transparent in these policy communications. It is wrong to bury the real reason behind a mandatory room deposit (protecting the hotel and any involved credit card companies against loss) behind vague, waffling words, the all too common ‘standard practice’, or ‘company policy’. Tell us! … and all is well. Surely being straightforward is a fair consumer trade-off, when the hotel keeps partial control over a guest’s credit availability for a few days after their stay has ended?
And the punchline for me … my $150 ‘pending transaction’ was reversed – 8 real days after my one night Wyndham stay was over …. hmmm.