Guide · Booking rules
Down payment & cancellation policy for your holiday rental: fair rules that protect you
Without a down payment guests book quickly, and cancel just as quickly. With rules that are too strict they do not book at all. The art lies in between: rules that protect you from no-shows without scaring off guests who want to book. Here are the practical values that have proven themselves in direct bookings, and how to communicate them so there are no arguments.
The down payment: how much, when, on what?
Amount: 20 to 30 per cent of the booking value is common. Below that a cancellation does not hurt the guest; above that it feels risky. In the Alpine region 30 per cent is the most widespread value.
Deadline: the down payment should arrive within 5 to 7 days of the booking. Only then is the booking firm. That protects you from “parkers” who reserve three properties at once. The balance is due either before arrival (e.g. 14 days beforehand) or on arrival, as you prefer.
Calculation basis, the underrated detail: 30 per cent of what? Only of the accommodation price? Including final cleaning? Including tourist tax? There is no right or wrong, but your booking flow, your confirmation email and your invoice should give the same answer. Common in practice: down payment on accommodation plus fees, but excluding the tourist tax, which many hosts treat as a pass-through item, and the pet fee. How the tourist tax is to be classified for tax purposes in your case is worth clarifying once with your tax adviser; how to show it in the booking is in the guide on showing tourist tax correctly in a booking.
One word, two meanings: in English the down payment and the refundable security deposit are both called a deposit, and guests mix them up constantly. The down payment is part of the price and is offset against the total. The security deposit is a separate amount you hold and pay back after departure. Name both of them explicitly in the booking step, then nobody has to guess which one the number belongs to.
The cancellation tiers: a proven pattern
Tiers are fairer than “down payment gone, full stop”, and guests understand them immediately if they are visible before booking:
| Cancellation | Cancellation fee |
|---|---|
| up to 31 days before arrival | free of charge |
| 30 to 7 days before arrival | 70% of the booking value |
| from 6 days before arrival | 90% of the booking value |
| no-show | 95% of the booking value |
You can adapt the exact thresholds to your season (longer deadlines in high season, because replacement guests are harder to find). Watch the edge between the first two rows: one day makes the difference between nothing and 70 per cent. If that feels too abrupt, add an intermediate step, for example 50 per cent between 30 and 15 days. More important than the exact percentages is transparency: someone who saw and accepted the tiers when booking will rarely argue later.
Three points to settle before the legal review
- Visible before booking: cancellation terms and down payment rules are what the guest is agreeing to. Common practice is therefore to show them before the booking is completed, not only in the confirmation email.
- Unambiguously worded: “70% of the booking value” instead of “an appropriate fee”. In practice hardly anyone argues about a number, while almost everyone argues about a word like “appropriate”.
- Consistent everywhere: website, booking flow, confirmation and invoice should state the same rules. Contradictions are the most common reason a rule no longer holds up in the conversation with the guest.
These are observations from practice, not legal advice. Have your final terms reviewed once by a lawyer, especially if you also rent to consumers outside your own country.
Checklist: can your booking engine handle this?
- Down payment as a percentage with a selectable calculation basis (with/without fees, tourist tax, pet fee)?
- Freely definable cancellation tiers with several steps and a no-show rule?
- Are the tiers and the down payment shown to the guest in the booking step, not just in the small print?
- Does the booking confirmation automatically contain the same breakdown including the payment deadline and bank details?
If your current setup fails two or more of these points, the limit is usually the booking engine rather than the rules. Our comparison of booking engines goes through what the usual options can and cannot represent here.
Frequently asked questions
How much deposit should a holiday let ask for?
Between 20 and 30 per cent of the booking value is the usual range, and in the Alpine region 30 per cent is the most widespread value. Below 20 per cent a cancellation is too cheap for the guest to think twice about. Above 30 per cent many guests hesitate, because they are transferring a large sum months ahead to someone they have never met.
Is a vacation rental deposit the same as a security deposit?
No, and because English uses the word deposit for both, this is where most of the confusion starts. The down payment is part of the price and is offset against the total. The security deposit is a separate amount that you hold as cover for damage and pay back after departure, and it never belongs in the price the guest compares.
When is the down payment due, and what happens if it does not arrive?
Five to seven days after the booking is the common window. Write down that deadline and, just as important, write down what happens when it passes: the booking is released and the dates go back on sale. Without that second sentence you are stuck with every guest who reserves three properties at once and decides later.
What is a fair cancellation policy for a vacation rental?
One with several steps rather than one all-or-nothing rule, and one the guest could read before booking rather than after cancelling. The tiers in the table above are a common starting point. What separates a fair policy from a harsh one is less the percentage than three details: the free window is long enough for a genuine change of plans, the jump into the first fee tier is not so steep that a single day decides everything, and you write down what happens if you can re-let the dates. Guests rarely argue about a percentage they accepted themselves.
Should the down payment include the tourist tax?
Most hosts leave it out, and the two follow-up cases show why. If the municipality raises the rate between booking and stay, the amount the guest owes changes, and a down payment calculated on the old rate no longer matches. And if the guest cancels, the nights never happen: hosts commonly hand the tourist tax portion back in full, even where a cancellation fee applies to the rest. Keeping it out of the calculation basis saves you both corrections. How it should be classified for tax purposes in your case is worth clarifying once with your tax adviser.
Can I use different cancellation rules in high season?
Yes, and it is usually worth it, because a replacement guest is much harder to find at short notice in the busy weeks. Longer deadlines and higher tiers are easy to justify there. Keep it to two variants at most: every further rule is another sentence you have to explain to a guest on the phone.
Your rules, represented exactly
In BineBoost you configure the down payment (percentage plus calculation basis via tick boxes), the cancellation tiers and the payment deadline freely. Guests see the down payment and the cancellation tiers before they book, and the booking itself lands straight in your Smoobu calendar.
Try it free for 7 days See the live demoNo credit card required. The trial ends automatically.
Note: this article is for general information and does not replace legal advice.