Getting Started in Holiday Rentals: Chapter 4a

Welcome to Chapter 4A which will introduce you to the rental periods, terms and conditions and payment processes which are involved in setting up a Bed and Breakfast. This chapter takes you step-by-step through deciding on rental periods, putting together terms and conditions, and the payment process, such as deposits.

Terms and Conditions

Discover how a Terms and Conditions document should be set up, and what should be included.

Here’s an example of how you might set up the document:

https://docs.google.com/document/d/132lKJldnlDUBJBVRjV-ijNZ2Z-rNIhCl7qYx4BPaJM8/

You should include the following sections within your terms and conditions document:

1. Disclaimer: A statement that denies something, such as responsibility

2. Cancellation Policy

  • Outlines the cancellation terms
  • Outlines the amount of money the booker will or will not be refunded if the booking is cancelled up to a certain time.

3. Responsibilities of the tenant

  • This will include what the tenant is responsible for during their stay
4. Liability of manager / owner
  • This should mention what they are legally responsible for.

5. Payment terms and deposits

  • Outlines payment schedules and how much deposit is needed when.

6. Complaint process

  • Outlines the process through which a tenant may make a complaint.

7. Pet, child and any other policy

  • Outlines the policies on above (e.g. guidelines, requirements, bans)
  • Whether there will be any fines for breaking policies.

8. Your contact information

  • How the tenant should contact you if they run into issues or have any queries, for example.

Other things to consider:

  • If you are planning to use OTAs (Online Travel Agencies) to find bookings, consider how their T’s&C’s align with yours.
  • Some OTAs offer fantastic cancellation policies but that might leave you with little time to fill the cancellation.
  • Consider sending out a welcome email with each booking highlighting the key terms and conditions.

Rental periods

This section will introduce rental periods and explain how to decide on the minimum lengths your guests should stay for, changeover days, the prices of each stay and which booking engine to use. You should consider the following questions:

1. What type of property are you running and how likely are guests wanting to stay on average?

  • You might be a stop-over location on a famous walk, which means that one night stays could be essential
  • Alternatively, you might, ideally, prefer week-long guests but decide to off split- weeks.

2. Which days can your changeover work?

  • The cost of the changeover needs to be factored in.
  • You might have a different set of rules for school holidays, or summer and winter

3. Do you adopt one or more changeover days, e.g. Mondays and Fridays?

  • If you don’t allow people to book part weeks, you might find odd days are free and be unable to sell them.

4. What should the price of each day be?

  • Weekend rates are generally more expensive than weekdays.
  • You might need to charge a discount of 7 x per-night rate for a whole week.
5. Which booking engine should you use?
  • Some booking engines struggle with set changeover days.
  • This is not necessarily a consideration when setting the rules but it is important when you are choosing a suitable booking engine.

Payments

Discover payment processes, how you should handle deposits, why you should set up credit card booking systems and more.

Consider a staged payment:

  • The initial deposit needs to be small enough to not put people off booking but large enough so they complete the booking.

Deposits and cancellations:

  • An initial deposit of 30% – 40% refundable if they cancel within 60 days of the booking is typical, with the balance to pay within 60 days.

Should you provide full refunds for cancellations?

  • Be fair and refund all money if you manage to re-sell those dates. This is fair to both parties

Setting up credit card processing systems:

  • It’s easy to set-up a credit card processing system like Stripe and PayPal.

Consider the benefits and drawbacks of each processing system:

  • Stripe charges 20p + 2.9%, so a £1,000 booking would incur a credit card processing fee of £29.2
  • Advantages: people like to use their credit card for security, which will help with booking

Charging a damage deposit:

  • Very common – set it at the same level as the excess on your insurance policy. £500 is typical but can be a problem for some, as a result, I would not charge more than £500.

How will you send the money back to the guest?

  • Credit card processing systems make it easy to cancel and return the money. But some credit card processing companies will not refund the fees (e.g. Stripe), so you’ll lose £7.60 on each deposit refund.

Other options:

  • Ask guests to pay by Bacs but you will need the guests’ bank details, (an extra admin step)

What is going to trigger the deposit refund and how will you manage it?

  • Deposits can be a lot of cash and it belongs to your guest. Get their money back to them asap

Consider selling extra services:

  • Including late checkout or additional services.

What accounts package will you use?

  • Plenty of online systems can be rented monthly. Alternatively, use a manual process of spreadsheets and word documents.

What should you communicate and when?

  • Email confirmations can be templated to help automation. Clear communication is vital

SUMMARY OF CHAPTER 4A

That brings this chapter to an end, which introduced you to the rental periods, terms and conditions and payment processes involved with running a B&B. We hope you have found it useful.

The next Chapter (4B) will take you through the jobs and responsibilities you should assign your staff with, whether you should go for an agency or self-management, as well as what is involved with emergency planning.