04 Jul Walkouts – Avoiding the Bad Debtor!
Well, it has been a while since I last posted due to taking a bit of a hiatus from online activity and using my down time to relax (and binge watch seasons of 24!); but now I am back and wanted to write about an all-too-common scenario in hotels; the walkout guest. This, in it’s simplest terns, is a guest who leaves the hotel or restaurant without paying their bill, be it £10 or £1000. They are the bane of the lives of many a hotelier and can have a major impact on your hotel revenue.
Walkouts happen in almost every hotel at some point, I have seen them happen several times in my career and have often been left wondering who is actually responsible for paying the bill? Many hotels will have a caveat in their employment contracts that allow them to deduct money from staff wages to ‘indemnify any losses suffered by the company that are a direct result of the conduct of the employee’. Basically, if the employee doesn’t demonstrate they followed all relevant processes, then they are liable to pay the bill from the walkout. This can cause a host of problems, not least the absolute dismay your employee will feel and the extensive investigation that would need to be put together to analyse every aspect of the guests stay and every process involved – not least there is the tricky case whereby the person taking the booking forgets to process the deposit, the person then processing deposits forgets to chase up the deposit payment, the receptionist on arrival who fails to get a pre-authorisation and the receptionist on departure who fails to obtain payment (potentially as the guest just left without contacting reception). Who is liable to pay for the bill in this case?
When it comes to accommodation, there are some pretty easy ways to avoid walkouts and the easiest being pre-payment of the accommodation cost and a restricted account to prevent charges being applied to their bill. The most common however is a pre-authorisation process. This is where a credit or debit card is ‘swiped’ on arrival and a pre-authorisation taken. This simply ‘holds’ the money on the card until such a time as a ‘completion’ is done on the card, which actually debits the money. It’s akin to holding a deposit on the card. If the guest pre-authorises £100 and only £75 is due, the completion for £75 will also release the unused £25 back on to their card. But pre-authorisation has a down side in that it is fairly useless for long-term guests. This is because a pre-authorisation is not an ‘infinite hold on funds’ – it basically lapses after a period of time (usually 3-5 working days) at which time the pre-authorisation is technically no longer valid. The completion can still be put through after this point and is usually honoured, but sometimes it can fail because of a variety of factors.
Restaurants are a trickier matter. Taking a pre-authorisation on arrival is almost unheard of and no doubt you would alienate many guests by doing this. So here are my top tips for reducing walkouts and unpaid bills across hotels and restaurants.
- Know your Guests. It seems obvious, but after many years in the industry, you begin to get a bit ‘wise’ to potential walkout guests and can spot them easily. But they can still take you by surprise. If intuition tells you something is wrong, then listen to your instinct and act on it! One key thing in restaurants that are integrated to hotels, is to gain the room number of the guest when seating them (always of course seeing their registration slip or room key for confirmation); this way, if they do walk out, you know exactly where they can be found. With guests in restaurants, obtaining a deposit or card number as guarantee, obtaining phone numbers, email addresses and postal addresses are now fairly commonplace and are generally acceptable – remember that having some contact information is better than having none at all as at leafs then you have a chance of getting hold of them to pay their bill!
- No-one is exempt. It may seem harsh, but treat no guest as different to any other when it comes to your money. If you would not offer unlimited credit without payment guarantee to a guest walking in off the street, why should you do this for a regular guest? I understand the arguments of loyalty etc, but creating a divide of who gets credit and who doesn’t, actually causes more problems than it’s worth – a regular guest may just assume you have their details and then walk out without paying, thinking you will just take payment automatically; what if their payment then fails and they changed their mobile number or address or if they dispute some of the charges? In bars or lounges, have a simple rule – no credit at all! This may annoy regular guests, but they often understand why this is happening. Quite simply, pay at the point of ordering. This rule can be applied to restaurants but is often unnecessary.
- Bill them early. A simple step but one that does work well – for bedrooms, simply put a copy of the bill under the door ready for their departure. This makes them aware they have monies owed and morally obliges them to vivid the desk; similarly this streamlines the checkout by ensuring that the guest has any queries ready for reception rather than standing for 5 minutes scrutinising and querying every detail on the bill whilst a queue builds up. In restaurants, always present the bill at the same time as the coffee or when serving their final course. This way you are implanting an awareness in to the guest – by having the bill, they know they owe money and they know that you also expect the money from them. This makes it much more difficult for them to simply get up and leave.
- Be a Barrier. This applies mainly to restaurants and is a fairly simple strategy – the host should be aware of who is at each table, and who has paid their bill. By the host being the person who takes payment, you actually create a physical barrier at the point of exit for that guest, meaning that they have to get passed the person who gave them the bill, before exiting the building. This way, the host will know if the guest has paid and can ask for payment prior to their final exit.
- Challenge where necessary. If a guest is preparing to leave and hasn’t settled their bill, simply challenge them – usually this is done by simply visiting the table and asking if they are ready to settle the bill. I have (believe it or not), followed someone to their car due to an underpayment on the bill – in this case a simple apology and fully payment was obtained. This approach should never be aggressive, and should simply be an apologetic ‘I believe there may have been a misunderstanding on the final bill, can I just confirm the amount paid’ – if they paid cash, always take their cash with you to show how much they paid as sometimes people miscount their money (as happened in my case). If necessary, take the guest to a separate area when doing this.
Remember that a walkout is different to a refusal to pay – walkouts generally have little intention to pay or simply forgot to do so because of other things taking their attention, but refusal to pay is because of a genuine issue or problem that needs resolving.
Do you have any other tips or advice? Let me know in the comments!
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