Hotel Deposits: Advance Deposits, Security Deposits, and Refund Timing

A hotel deposit is money a hotel collects or holds before or at the start of a stay. There are 2 kinds: an advance deposit that secures the reservation and a security deposit that covers incidentals. Both are collected through the hotel payment gateway or the front-desk terminal and stored against the guest folio.

What is the difference between an advance deposit and a security deposit?

An advance deposit is a real charge that pays part of the stay before arrival. A security deposit is usually a card authorization that reserves funds without charging them.

Advance deposit

• Charged at booking or on a set date before arrival
• Usually 1 night’s rate, 50% of the stay, or the full prepaid amount
• Refunded only according to the cancellation policy

Security deposit

• Placed at check-in as an authorization, or taken in cash
• Usually $50 to $200 per night, more at luxury properties
• Released at checkout after charges are captured

Our guide to hotel credit card holds covers security deposit holds in detail.

How much do hotels charge for a deposit?

Hotels charge advance deposits of 1 night’s room and tax for most flexible rates and the full stay for non-refundable rates. Security deposits run $50 to $100 per night at economy properties and $100 to $500 per night at upscale hotels and resorts.

How long does a hotel deposit refund take?

A hotel deposit refund takes 3 to 10 business days to reach the guest. The timing depends on 2 factors:

1. Refund type: a released authorization disappears faster than a refunded charge.
2. Card type: credit card releases post in 3 to 5 business days, debit card releases in 5 to 10.

Hotels can shorten guest complaints by releasing authorizations at checkout instead of letting them expire.

When should a hotel charge the advance deposit?

A hotel should charge the advance deposit at booking for non-refundable rates and on the day the free cancellation window closes for flexible rates. Charging at the deadline avoids refunding deposits for guests who cancel on time. For example, a flexible rate with a 7-day cancellation window charges the 1-night deposit exactly 7 days before arrival, the moment free cancellation ends. A hotel payment automation setup schedules these charges from the stored card token.

What should a hotel deposit policy include?

A hotel deposit policy should include 5 items:

• The deposit amount or formula
• When the deposit is charged
• The cancellation deadline and what is refunded
• The security deposit amount at check-in
• Accepted payment methods for the deposit

The policy must appear in the booking flow and the confirmation email. Hotels that cannot show the policy lose most deposit disputes, as our hotel chargebacks guide explains.

Can guests pay a deposit without a credit card?

Yes. Hotels can accept debit cards, cash, bank transfers, or payment links for deposits. Cash and bank transfers avoid holds on the guest’s card but need manual reconciliation. Our guide to hotel payment methods lists the options and their tradeoffs.

How do deposits work for group bookings?

Group bookings use a deposit schedule instead of a single deposit. A typical schedule charges 10% to 25% at contract signing, a second payment 60 to 90 days before arrival, and the balance after the final rooming list. Each payment should be charged from a token or paid by bank transfer, not keyed from an emailed card.

Do advance deposits affect a hotel’s merchant account?

Advance deposits affect a merchant account because the processor carries the risk until the guest checks out. A hotel that collects 6 months of prepayments has 6 months of exposure. Declaring that exposure during underwriting prevents frozen funds, as our hotel merchant account page explains.

Can a hotel waive the deposit?

A hotel can waive the deposit for loyalty members, corporate accounts, or direct-bill groups. Waivers should be a written rate rule, not a front-desk decision, so every guest is treated the same, staff never improvise, and disputes stay winnable.