Even if you’ve furnished your vacation rental with durability in mind, accidents can still happen. Having a damage deposit in place gives you the ability to cover costs associated with any damage. Even if the deposit doesn’t cover the entire amount, you’ll still recover part of the expense.
Using a damage deposit strategy also helps you keep better track of the condition of your rental. While you may already have a solid check-out process, deposits add an extra layer of accountability.
Security deposits are a standard practice in many vacation rentals. They don’t just give you peace of mind against theft — they also make your operation look more professional. While you may strive to build a friendly relationship with guests, it’s always smart to have safeguards in place.
Finally, a deposit acts as a mental reminder for your guests. Knowing they could lose part of their money makes them more careful with your property from the start. In the end, it encourages guests to take more responsibility for your home.
The disadvantages of deposits
As helpful as they can be, deposits also come with downsides. One common issue is the lack of clarity around which deposits have been refunded and which are still pending — especially when cash is involved.
Cash deposits, in particular, can be stressful. If you hold back part of the deposit at check-out, a guest might argue with you. This can lead to conflict, poor reviews, and unnecessary stress. Some guests may even retaliate with negative feedback. That said, if you’re transparent and fair about what you’re withholding, this risk is reduced.
There’s also the matter of trust. Asking for a deposit can make it seem like you don’t fully trust your guests to respect your property and belongings, while at the same time asking them to trust you. Still, as mentioned, damage deposits are a common industry standard and shouldn’t be taken personally.
Are cash deposits still relevant?
Many of the challenges with deposits come from using cash. But do we really need to deal with cash anymore? Most reservations today are made online and paid with a card.
On Booking.com, for example, you can use pre-authorization. This doesn’t charge the guest but blocks the deposit amount on their card. On Airbnb, the deposit isn’t charged either, but you can request payment through their Resolution Center up to 14 days after check-out.
Do you always withhold money?
This is the tricky part: should you really charge for every little thing? Small accidents happen, and you should be prepared for them. Dropping a glass or a plate is something that can be replaced easily and won’t break the bank.
So where do you draw the line? That’s up to you. If you browse owner forums, you’ll find all kinds of opinions: some never charge, some always do, and others decide case by case. Ultimately, it depends on what you’re comfortable with.
It’s also worth considering why something broke. Was the furniture well maintained? Sometimes a loose screw or old wear and tear is the real cause. Maybe the item was already due for replacement. Should the guest really pay for that?
At the end of the day, whether or not you implement a deposit system for your vacation rental comes down to you as the property owner. Think about what feels right, the type of guests you usually receive, and the value of your inventory. Does asking for a deposit truly make sense in your case?