Avoiding hotel chargebacks over seasonal peaks

November 7, 2017

Tis (nearly) the season, and hoteliers across the globe will be rubbing their hands with delight that the seasonal getaway is nearly upon them. As well as the financial boost that can provide hoteliers though, many are rightfully wary of the rise of ‘friendly fraud’; customers issuing hotel chargebacks whenever they wish to dispute a financial discrepancy.

Hotel chargebacks aren’t too far removed from retail chargebacks, with the rise of a number of financial technology (fintech) providers helping shoppers to issue a chargeback request simply by pressing a button or two on their smartphones.

Where hotel chargebacks do differ though is that the financial impact can be potentially greater than a retail issue. Not only will a hotelier be hit with the chargeback fee, but they can also lose revenue from rooms, develop booking issues and lose certain privileges from their financial providers if they can’t get the situation under control.

How hoteliers can reduce hotel chargebacks right now

Despite the problems facing hoteliers when it comes to hotel chargebacks, there’s plenty for them to look forward to beyond seasonal upturns in fortune. Demand has been on the rise in the hotel industry for seven consecutive years and shows little sign of stopping.

New technology is helping to improve the overall guest experience in certain locations, specific chains are opening new hotels at an astonishing rate and more. The growth in the hotel industry also overspills to other industries and operators such as travel agencies and others.

Still, as it grows so does the spectre of friendly fraud through chargebacks. So, what are the most common reasons that people issue a chargeback against a hotelier?

  • Real fraud: Beyond friendly fraud, people who steal credit cards usually charge to them to test the overall balance, including targeting hotels, resulting in chargebacks
  • Reservation policies: The cardholder fails to cancel a reservation and doesn’t wish to pay the penalty as outlined in the policy, resulting in a chargeback request
  • Dissatisfaction: The customer feels that the quality of the room or hotel didn’t match their expectations so they refuse to pay and issue a chargeback

All of which are very serious and real problems for both customers and hoteliers. What, then, is the solution and how can those in the travel industry work to reduce the rate of chargebacks they receive?

  • Improve customer service: The travel industry is very hands-on and experience-led. Still though, it’s amazing to see how this philosophy doesn’t apply to some chains’ customer service teams. The quicker you acknowledge a complaint and the easier the system to register a dispute, the less likely a chargeback will occur
  • Make policies easy to understand: Updating your website and helping to direct people to your policies and FAQs both inside and outside the hotel will better help people understand the terms and conditions you operate by, and help them to go to the right places and speak to the right people should they ever need assistance
  • Keep all records: Hoteliers don’t have to accept the flood of chargeback requests they may be susceptible to, and by keeping records of each and every visit logged in the correct way can fight contentious charges with the necessary information whether a chargeback is issued immediately or months down the line

There are many other ways those in the travel industry can reduce hotel chargebacks, retain their profits and keep their customers happy. Contact Fibonatix today to find out more.