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Booking.com new damage policy discourages hosts from asking for a damage deposit

Booking.Com damage policy

Booking.com has rolled out a new “damage policy” whose goal is to dissuade hosts from taking damage deposits. Instead, hosts can make a claim up until 14 days after guests check out. Booking.com will contact guests to try and retrieve the money. The catch? You can only claim up to €250 ($258) through Booking.com’s “Damage Payment Request Process or DPRP”. Why does Booking.com want to prevent hosts from actually handling damage deposits? In case you’re wondering, Airbnb has the same behavior, as reflected in their updated Security Deposit policy. How is this new Damage Policy different from the “Damage Deposits by Booking.com” pilot we revealed last April? How to enroll? What risks should you be aware of?

What is Booking.com’s new Damage Policy?

The damage policy is optional. Booking.com hosts (or “partners”) can enroll in the Booking Extranet. 

How to opt-in for the new Damage Policy?

how to set a damage policy on Booking.com extranet

In the extranet, under the Property tab, you can find the Policies menu. On this page, you will find a block dedicated to your Damage Deposit. Click “edit”.

Then, hold on, because it is not straightforward:

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  • If you answer “Yes” to the question “Do your guests pay a damage deposit?, then you are shown the option to enroll in the Damage policy (which actually is about guests NOT paying a damage deposit – weird logic)
  • Then, you are given a choice:
    • I want to set a damage policy that Booking.com will facilitate for me. Guests only pay if they cause damage during their stay
    • I want to handle damage deposits myself; Guests pay you a damage deposit directly.
  • If you choose the first option, then you have to “enter the maximum amount a guest could be charged for damage (per stay).

So, guests don’t pay you a damage deposit. If something at your property is damaged, you need to report it to Booking.com, providing full details about the damage. Then, Booking.com will ask the guest to pay. You should receive this amount in your next payout.

What will guests see on my property page?

Booking.com damage policy

Guests will be shown the maximum amount you have set for your damage policy. They will be informed they could be asked to pay up to that amount if they cause damage to your property during their stay.

When a guest books a property that has enrolled in the Damage Policy, then they agree to additional terms:

When you’re booking, you may see that some Service Providers refer to a ‘damage policy’. This means that if anyone in your group loses or damages anything:

  • you should inform the Service Provider
  • instead of charging you for it directly, the Service Provider will have 14 days to submit a damage payment request through our Platform, under your reservation number
  • if they do, we’ll tell you, so you can tell us if you have any comments, and whether or not you agree with the charge – and then:
    • if you agree, we’ll charge you on their behalf
    • if you disagree, we’ll look into it and decide whether or not to discuss it further.

How do I request a damage payment?

In the case of damage to your property, go to the reservation details page and make a damage payment request. Booking.com will follow up with the guest. You should be reimbursed in your next payout from Booking.com. You must submit a damage payment request within 14 days of check-out.

Here, it looks like guests pay Booking.com. However, this is not what we understand from the guest side of the damage policy, which states:

Any payment you (the guest) make would be between the Service Provider and you – we’d just be organising it on the Service Provider’s behalf.

This is confusing, but this is not the only thing to be aware of.

Beware

A few risks to be aware of when agreeing to ​​the Terms and Conditions of Booking.com’s Damage Payment Request Process:

  • Booking.com does not handle any damage deposit here. They only ask for money from the guests if you make a claim about some damage.
  • In the event of alleged damage being caused to your property by a guest, you will be able to submit a damage payment request to the guest via Booking.com, which might result in the guest reimbursing you if they accept that the damage was caused during their stay.
  • There is a €250 damage limit, as per the version of the policy we’ve seen. Guests are responsible for reimbursing Booking.com/the Partner for the damage(s), breakages or loss(es) caused to the Property and its contents (as defined above) by the Guest(s),
    • limited to the amount the partner agreed to when signing up for the damage policy,
    • and in any case to a maximum limit of € 250

So, if you indicate in the Extranet that the maximum amount a guest could be charged for damage is €500, our interpretation of the policy is that the guest will only be asked for up to €250.

How different is it from what Airbnb does?

In the Airbnb Resolution Center, an Airbnb case worker can ultimately make a call and force a guest to pay some damage money to a host. It is possible because guests, even if they have no idea about it, agree to do so when signing Airbnb’s Terms and Conditions

Here’s what the “Damage Claims and Damage Amounts” part of Airbnb’s standard terms and conditions for guest stipulates:

If Airbnb determines that you are responsible for Damage Claim amounts, pursuant to the Terms, you authorize Airbnb via Airbnb Payments to charge the Payment Method used to make the booking in order to collect Damage Claim amounts, up to a maximum amount as set by Airbnb that may vary by country/region.

  • While Airbnb’s has an interface called the Resolution Center where damage claims are made and tracked, it seems that Booking.com does not yet have a similar space.
  • Airbnb does not limit damages to any pre-specified amount.
  • Airbnb’s AirCover for Hosts explicitly includes deep cleaning costs, while Booking.com is vague about it, stating that “Exclusions to Damage Fees may include general cleaning“.

What do Airbnb and Booking.com want hosts NOT to collect a damage deposit?

Damage deposits are messy

Damage deposits are a messy thing. They can be collected online and offline, in cash or by cheque, long before the stay or on check-in day, etc. Guests are never too sure about how things work and when they will be given their money back. Finally, some owners may waive damage deposits for guests like they like (e.g. two old ladies) or enforce it only with some guests of certain nationalities. Not a pretty sight.

This results in a messy guest experience, all the more as hosts sometimes fail to indicate it in their listings or guests do not see it in the fine prints.

Why let hosts display a damage deposit amount if it is not collected?

Airbnb and Booking.com do not collect damage deposits. Yet, they allow hosts to mention a damage deposit amount in their listing. Why? The real benefit of the damage deposit in a listing is to act as a deterrent: Some hosts hope that suspicious guests will not pick their place if they see the words “damage deposit” or “security deposit”.

Note that a lot of Airbnb hosts actually believe that Airbnb is collecting the damage deposit amount that they indicate in their listing. 

Damage deposits lower conversion rates

For online platforms, collecting damage deposition creates additional friction that may lower conversion rates: Guests may not be happy to pay for it at all and they may not be willing to pay a $300 security deposit for a $200 two-night stay. The platform has to create rules around when the money is restituted to the guests, how claims are made, and how to partially restitute a damage deposit amount to the guest and remit the rest to the host if need be.

For platforms, the best thing would be to get hosts not to mention any damage deposits. In a way, this is what Airbnb tries to achieve with its $1,000,000 damage protection: The company says that hosts are protected anyway.

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Rental Scale-Up

Thibault is the founder of Rental Scale-Up. He owns vacation rentals in St. Barths and Bali. He also leads innovative projects for companies within the vacation rental industry. Feel free to reach out to Thibaut Masson on Linkedin.

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