Prepayment is when you pay for something in advance. When booking a hotel, this means paying for the room at the time of booking instead of on departure or arrival.
The benefit of paying upfront means that all costs are accounted for at the time of reservation. Travellers therefore, do not need to part with their own money and submit an expense claim. However, it’s important to review the terms and conditions of the booking. More often than not, a prepaid booking will be non refundable if you cancel.
To learn more about hotel booking and prepayment check out our FAQ below:
What is Hotel Booking Prepayment?
When you’re booking travel accommodation you can often find yourself face to face with a number of terms that may not be entirely clear as to what they mean. For Hotel bookings one of the most common culprits of this is the term “Prepayment”. Put simply, prepayment refers to the process of paying for your hotel accommodation up front, either in full or in part. This is often done as a way to secure your reservation, and ensure that a customer is serious about renting a room.
What hotels use prepayment?
Hotels are free to use prepayment as they deem necessary, so there isn’t really a way to break down which ones do or do not use prepayment. When booking your hotel accommodation it’s advisable to check the terms and conditions or do a dummy run through of their booking process to find out exactly how & when payments will be made.
What does this mean if I have to cancel my booking?
Your standard consumer rights will apply to any hotel booking that’s made, whether for personal or business reasons. If you have to cancel your booking you should be able to get a refund, but it will be entirely dependent on the terms and conditions of the hotel you’re booked with. Normally hotels operate to a point where you can cancel your booking one or two days before, but this can vary and it’s important that you look into what the deadline for cancelling your booking is before you book your room so you can avoid any problems if a cancellation is needed.
Are there any alternatives to pre-payment?
Yes there are, again this will depend on what the hotel you’re looking to book is set up for, but there are normally two alternatives to prepayment:
A guarantee is often the simplest system in place that hotels can use to secure bookings. The customer will provide card details which will be held against the booking and used for securing the reservation. No money is charged at this time. The card is only charged after your stay is complete and you’ve checked out of the hotel OR you’ve cancelled the booking outside of the acceptable limit for the hotels terms and conditions. In the latter case the card held against your room will be charged in line with the terms and conditions you agreed to when booking the room originally.
Deposits function as a part payment for the booking. A charge will be made to the card provided to the hotel ( this is usually for one nights stay, but may be more depending on the hotels terms and conditions). Once the card is charged the room will be held in reservation for the customer. Should the booking be cancelled though the deposit is forfeited to the hotel as a way to recoup their costs.