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Hotel charging policy has adverse affect on bank balance


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At the beginning of October I booked a one night stay at the Black Horse Hotel in Otley via Laterooms for the night of 15/10/2016 at a cost of £80. The terms of booking are payment on arrival and if you cancel less than two days before arrival you forfeit the cost of the first night’s stay.

 

On 13/10/2016 a pending transaction of £80 showed up on my account

 

On arrival at the hotel I was asked to pay, which I did.

This resulted in a second pending transaction of £80 appearing on my account, which, when combined with the £80 from two days earlier reduced the available balance by a total of £160.

Effectively, in terms of my available balance, what they’ve done is charged me a cancellation fee two days before I was booked in case I didn't show,

charged me again for accommodation when I checked in

but not refunded me the cancellation fee at the same time.

 

The manager was unavailable at check-in

I was assured they would be around in the morning.

 

 

Unfortunately, in the morning, the manager refused to speak to me directly but said, via a member of staff that; it was just how the Laterooms did things, it wasn’t them that had taken the money, that it was security in case I didn’t turn up and that it didn’t matter because the money hadn’t left my account.

 

Fortunately this hasn’t caused me any problems (at least not yet) because the balance in my account is high enough to cover both payments but I’m annoyed at being deprived of the ability to spend my own money and it certainly would have caused me problems if it had been nearer the end of the month.

 

Leaving aside the dubious morality of the hotel’s behaviour have they actually done anything legally wrong or actionable?

 

 

I suspect not because, when the transactions go through the £80 reserved on 13/10/2016 will be cancelled and I will have made no loss.

 

 

The only thing perhaps is that, although on 13th it was certain that I was going to be liable to pay the hotel £80, either for accommodation if I turned up or cancellation if I didn’t, neither of those events could happen before 15th so it was only on 15th that my card should have been processed

PendingTrans.pdf

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So the cost of the room has now gone through but, despite this, and it being 5 days after they reserved the £80 cancellation fee, it (the cancellation fee) is still showing as a pending transaction on my account, which means that I can't spend it. Unless it disappears soon its going to cause me problems towards the end of the month. Anyone know how long its likely to stay?

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Yes absolutely. Laterooms are the hotel's agents and it is the hotel that is responsible. From the booking confirmation email:

 

The Legal Bits

You have made a booking with LateRooms.com, who act as an agent on behalf of your chosen hotel. The contract for your accommodation is between you (the customer) and the hotel, or other accommodation provider.

 

Payment

LateRooms.com does not take any payment from you. The credit/debit card details supplied are used to guarantee your booking, unless otherwise stated by the hotel. Please see room notes or the hotel cancellation policy for further information

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the answer is dont use laterooms or any of these types of sites for anything other than finding somewhere. Go directly to the hotel web site to book or phone them up.

As for this particular place- if you dont like the service you got you dont go back. Be kind enough to let them know why and they may well decide that they money they lose via these agencies is too much to bear and scrap their relationship with them and pass the savings on. Keep it polite and factual.

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To be fair this isn't anything to do with Laterooms, that's just an attempt by the hotel to deflect their responsibility. The problem is entirely of the hotel's own making in the way that they've set up the Eviivo merchant software. I strongly suspect that this happens with all internet bookings.

 

And I have tried twice to resolve the problem, calmly and politely, with the hotel while I was there but they don't want to know - the manager wouldn't even speak to me. My third attempt is an email that I've just sent, again calm and polite asking them to release the hold that they have on my money and warning them that if I end up incurring bank charges i will hold them responsible. Unfortunately, unless they decide to be reasonable and release the hold that they have on my money, it appears there is little else I can do and it will remain unavailable to me in perpetuity

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My understanding is that pre-authorisations will expire after a couple of days. It won't sit there in perpetuity.

 

It sounds like there is probably a hold on funds from the website and a hold on funds from when you checked in at the hotel. They probably do this to everybody. Its a bit naughty, as if the hotel already has a pre-authorisation from the website it shouldn't need to take another one when you arrive at the hotel. Unfortunately I think a lot of hotels do this.

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It would be interesting to see what their reaction would be if I'd booked for the end of the month with, say, £120 in my account, £80 of which had been reserved by them a couple of days earlier. My card would then be declined at check-in as there would only be £40 available.

 

I still think its dubious legally that they can reserve two lots of £80 then not release one of them for several days (Its now three days since I checked in and the first £80, from 5 days ago, is still showing as a pending transaction).

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It would be interesting to see what their reaction would be if I'd booked for the end of the month with, say, £120 in my account, £80 of which had been reserved by them a couple of days earlier. My card would then be declined at check-in as there would only be £40 available.

 

I still think its dubious legally that they can reserve two lots of £80 then not release one of them for several days (Its now three days since I checked in and the first £80, from 5 days ago, is still showing as a pending transaction).

 

Unfortunately they can't simply release the pending transaction as there is no mechanism by which this can happen. It is your bank that is holding the funds in a pending state and only they can release them. We sometimes have this problem at work with much higher value transactions (our average is c. £1k) and there is no way for us to release the pending hold. If the customer is desperate, we use Faster Payments to make a same-day payment back to their account so they have funds to spend and then put through the card payment as normal to get the money back.

 

The pending hold is released under normal circumstances when the merchant puts through the transaction for settlement. This debits your account and the auth code quoted matches that of the pending transaction, which removes it from your account. If the merchant doesn't put through the transaction for settlement, the pending hold will expire after a number of days. I’m not sure there’s a definitive time period for this, but I think it is typically around a week.

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I booked through booking.com when i found a hotel in Los Angeles in may. It worked out at $89 per night pp for 6 people. I gave the hotel a call and spoke to the manager. He gave me a code and a discount and told me never to use the site due to the commission they get, plus all the fee's that the hotel doesnt charge.

 

learned a good lesson there thanks to a very helpful hotel manager.

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Unfortunately they can't simply release the pending transaction as there is no mechanism by which this can happen. It is your bank that is holding the funds in a pending state and only they can release them. We sometimes have this problem at work with much higher value transactions (our average is c. £1k) and there is no way for us to release the pending hold. If the customer is desperate, we use Faster Payments to make a same-day payment back to their account so they have funds to spend and then put through the card payment as normal to get the money back.

 

The pending hold is released under normal circumstances when the merchant puts through the transaction for settlement. This debits your account and the auth code quoted matches that of the pending transaction, which removes it from your account. If the merchant doesn't put through the transaction for settlement, the pending hold will expire after a number of days. I’m not sure there’s a definitive time period for this, but I think it is typically around a week.

Thanks for this - very interesting. The problem is that the hotel doesn't use the pending transaction for settlement - that would have been fine - but instead insists on another payment. So after check-in there were two pending £80s in my account. The second one debited my account as expected but, presumably because there is no relationship with the first, the first just sits there making the funds unavailable to me. Having said all that it has now disappeared from my account after 6 days (as you suggested).

 

Incidentally, I'm confused as to how your work-around above actually works. You put the £1k back via faster payments then put a card payment through, which surely reserves the funds as a pending transaction thus making them unavailable to the customer

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Incidentally, I'm confused as to how your work-around above actually works. You put the £1k back via faster payments then put a card payment through, which surely reserves the funds as a pending transaction thus making them unavailable to the customer

 

We've already reserved say £1,000 so we just continue to process the payment as normal, even though we won't be fulfilling the customer's order. This debits the customer the next day and the pending value disappears (as we use the original auth code we have). Obviously this leaves the customer £1,000 down with nothing to show for it, so we credit their account via faster payments at the same time to make them whole.

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Never allow a pre auth on a debit card. It can take up to 14 days to release compared to 7 days on a CC.

EVERY merchant has a pre auth release method, not your bank, but the intermediate service like elavon, Barclay's merchant service (BMS), global pay. Some are via email, others via fax.

 

The quickest method to release a held amount is to complete using the pre auth code for a penny. This releases the balance overnight \ 24 hours.

 

Also LR screwed up. They provide to the hotel your card number as a guarantee. They should not have charged. What should have happened is either, the amount was taken as a deposit and applied as a credit on checkin OR charged on arrival. If you no showed it would be charged the day after arrival.

 

I am an accountant for a large international hotel group (top 2). Our policy is to never charge a debit card as a pre auth for precisely these reasons.

 

As pointed out, go direct to the hotel either via mail or call - get the local number, not the call centre. When you consider hotels pay a minimum of 8.33 % commision, to 15% for the likes of LR \ Booking.com \ Expedia, to a massive 22% for Secret Escapes , you can negotiate a better deal, and use the hotel group loyalty scheme.

 

Some agents WILL charge you on booking, and deduct the commission before paying the hotel for your stay.

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Just for clarity, Late rooms didn't charge my card. The hotel pre-authorised it (and therefore reserved the funds)a couple of weeks after booking and two days prior to my arriving, two days before arrival being the point that I became liable for the cost of one nights stay if I hadn't turned up.

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