Refundable Damage Deposit

This feature allows you to withhold a specified amount from a guest’s credit card during the reservation process. This is commonly used to set up a refundable damage or security deposit.

An authorization hold (also called a pre-authorization) is a temporary hold placed on a customer’s credit or debit card for a specific amount. This hold reduces the available balance but does not actually charge the card unless the transaction is completed. When the reservation is finalized, you can capture the full amount or just part of the held funds, depending on the final charges. If the transaction is canceled or not completed, the hold will either be released by the merchant or will automatically expire, returning the funds to the guest’s available balance.

You have two options when setting the Damage Deposit on Hostaway:

1. Exclude Damage Deposit Collection from the total reservation price. You should create an Auto-payment with two lines, one for the charge and one for the Pre-authorization

2. Include Damage Deposit Collection from the total reservation price. Not excluding the damage deposit from the reservation total price. The created Auto-payments must only include charges covering 100% of the reservation amount (the "rest of pay" type of charge can be used). Please remember that you will most likely pay a commission for processing and refunding.

Since the first option is the one we consider the most convenient for our customers, as it will be exempt from commissions from the payment processor, in this article, you will find all the steps you have to take on the Hostaway Dashboard to set up the damage deposit.

Important

• This feature is only available for Stripe-connected accounts and Authorize.net. Braintree is not supported

  • For Stripe. The pre-authorization expires 7 days after it is created. This timeframe is set by Stripe. You can set up an Auto-renewal schedule that allows HW to auto-renew Pre-authorization after its expiration. Automatic renewal is only available for Stripe.

  • For Authorize.net . The Pre-authorization expires after 30 days of the pre-auth creation. This timeframe is set by Authorize.net.

  • The above-mentioned time frame cannot be changed from Hostaway. Once the pre-auth expires, the amount held will be released, and the guest will have that amount available on their credit/debit card

• Captured amounts are not reported in the Financial Reporting

• Captured amounts are not reported in the Reservation Financial Breakdown

• Captured amounts are not reported in the Guest Portal under "Invoices & Receipts."

• Pre-Auths can be created both manually by adding a transaction - Charge Type: Pre-authorization or through Auto-Payments and Auto-Charges. You can also manually create them in Stripe.

• Pre-Auths can be created through Auto-payments without the need to create an Auto-Charge

Learn more with the Pre-Authorisation FAQ

How to Create an Automated Pre-Authorization

1. Set Refundable Damage Deposit

1. Go to your Hostaway Dashboard > Listings > Select the listing > Click on "Edit"

2. Go to Price & Fees > Refundable damage deposit fee > Add the amount
   
   
    

3. Click on the gear icon next to the value to

   • "Exclude the damage deposit from the total reservation sum". Mark this option if you want to exclude the damage deposit fee from the total amount in Vrbo, Booking Engine, WordPress, and direct reservations. In this case, it is expected that the guest will pay the damage deposit at your place. This checkbox is unselected by default

   • "Send to Airbnb". Mark this option if you want the refundable damage deposit to be sent to Airbnb. This checkbox is selected by default, so Hostaway will continue to sync the offline security fee with Airbnb and all other channels

     • If you uncheck the box and

       • Update the damage deposit on Hostaway > select “Save & Export“. Hostaway will sync the listing content with Airbnb, but will skip the damage deposit. The damage deposit will not be removed from Airbnb by unchecking this box

       • Update the damage deposit on Hostaway > select “Save & Export“. The damage deposit will be synced with other channels normally, except for Airbnb

     • If you want to remove the damage deposit from Airbnb:

       • With the checkbox checked, set the damage deposit to 0, select “Save & Export“ (this will update the damage deposit to 0 on all channels); uncheck the checkbox, set the damage deposit to whatever you like, select “Save & Export“ (this will set the damage deposit back on all channels except for Airbnb)

       • With the checkbox unchecked, select “Save“, and remove the damage deposit from the listing manually (directly from Airbnb). On further listing syncs, Hostaway will not send the damage deposit to Airbnb

2. Create an Automated Pre-authorization

1. Go to your Hostaway Dashboard > Guest Payments > Auto-payments

2. Click on "Add auto-payments" or select an existing one > "Add auto charge"

3. Select "Pre-authorization" from the dropdown

4. Choose a title, method, amount, and scheduled time

5. Save
   
   
    

Notes

• If you want to add a new listing automatically to the Auto-payment created, make sure to select the check box "Apply to new listings automatically"
• If you have different damage deposits for specific listings, make sure to create a separate Auto-payment
• Please read this article about Auto-payments
• Make sure you only have one Auto-payment for the same channel for each listing

Suggestion for "Scheduled by" 

• Stripe Pre-Authorizations expire after 7 days of the pre-auth creation, so the scheduled Pre-Auth should be "x days/hours before checkout"
• Authorize.net Pre-authorizations expire after 30 days of the pre-auth creation, so the scheduled Pre-auth should be "x days/hours before checkout"

3. Create an Automated Pre-authorization Renewal Schedule

The pre-Authorization renewal schedule can be created in two ways on the Hostaway Dashboard: 

Option A: Setting up a new Auto-payment template or editing an existing one.

1. Go to the Guest Payment Tab > Select Auto-Payment > Add Payment
   
   
    

2. Fill the Add Auto-payment form 

   • Note: Payment method is defaulted to Credit Card (Online).
     
     

3. Toggle the “Enable Renewal of Pre-Auth” to the right and fill in the renewal schedule

   • Note: Pre-Auth renewal can only be scheduled for a maximum of 2 days after Check-out

4. Click Save to save the Pre-Auth Renewal Schedule
   
   
    

5. Click Save to save the Auto-Payment template

   • Note: The Existing Auto-Payment template can also be edited by clicking on the name of the Auto-Payment and following all the steps listed above.
     
     
      

Option B: Manually adding a Pre-Authorization through the Guest Charge Table or to a Reservation directly

1. Click on the Guest Tab > Charges
   
   
    
2. Or Click the Reservation Tab > Scroll to the Payment Section > Add Transaction 
   Note: Manually pre-Auths are only available via the “Payment Link” payment method. Hosts are required to use this Payment link with the Guest to collect payments and card details for subsequent transactions.
   
   

How to Capture Fully or Partially the Damage Deposit

From Guest Payments

1. Go to your Hostaway Dashboard > Guest Payments > Charges
2. Select the relevant hold success > Click on the three dots and click on “Capture now” > Pop up will appear > Enter the amount > Click on Update
   
   
    

From Reservations

1. Go to your Hostaway Dashboard > Reservations > Go to Invoices and Charges > Go to Pre-auths > Click on the three dots and click on “Capture now” > A pop-up will appear > Enter the amount > Click on Update
   
   
   
    

Capturing can only happen once. If a partial capture is done, Stripe will immediately refund the rest of the held amount to the guest’s credit card. This is a behavior of Stripe and cannot be changed.

Capture Refundable Damage Deposit from Stripe

Once the hold is a success > go to Stripe > search for the guest > and capture the required amount. Once the amount is captured, Stripe will immediately refund the rest of the held amount to the guest’s credit card.

Workaround to capture the Damage deposit if the Pre-Authorization was not set or it was not captured

If the credit card details are available in Hostaway > Go to Stripe to create a pre-auth because Hostaway does not allow creating manual pre-auths (only automated ones, If you charge it manually when you try to refund, you will be charged a commission on the refund) this is not possible.

You can do this, however, directly in Stripe by searching for the customer and creating a payment only as pre-auth:



If the guest's credit card is not available please send the Guest portal link to collect the credit card details - For more information on Guest Portal > once the Credit card details are updated > Please navigate to Stripe >create a pre-auth via Stripe