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Security Deposits are Bad for Business

I didn’t require a deposit for the longest time and except for days that I blocked, was booked up almost constantly. Then, a few weeks ago I added a $200 deposit. I saw my last minute weekday bookings plummet. For the first time I’ve had huge blocks of days with no revenue.

I truly believe that most people think the listed deposit amount is held on their CC even though it really isn’t. This is what I believed until I used AirBnB as a guest just last week.

Because AirBnB doesn’t actually hold those funds, I see no point. It’s hurting my revenue so I removed it this morning.


Also, the way I see it, I probably lost around $1,200 -$1,500 in revenue in just a couple weeks because I had the deposit in place. Short of them setting my house on fire (that’s what our special Insurance is for), there’s really nothing in my rental space that couldn’t be replaced or repaired for under $1,200.

If someone breaks my coffee grinder and doesn’t own up to, the most I’d be out is $30. If they stain my carpet, I can have it cleaned for a few hundred (or do it myself). If they smash my TV, I can buy a brand new one for $400 at Costco…

So it really doesn’t make sense to lose thousands of dollars in revenue just to make sure I get paid for cheap damage. Even with the damage deposit in place, there’s no guarantee you’re going to see it anyway.

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You may have a point. I also don’t like they way they control the disposition of the deposit. However, I do think it gives you a slight psychological edge. In that guests who pay a deposit might be more conscientious.


Interesting, @Colorado - how long have you been on the platform? The timing is interesting but it could also be time of year? I hit ‘dead’ periods every now and again where I hear from no one and begin to despair, then it picks up and I get booked solid. I’ve had the deposit - only $100 - on for about 6 months.

But guests really don’t even know how it works.

I had the opposite experience I have had a deposit for five months and have had all the bookings I want since and have an increase not decrease in bookings.

I think it’s likely to be down to seasonal factors rather than having a deposit (Unless of course you have a huge deposit which would put most guests off).

Why not post a link to your listing and we can see if we have any suggestions on improve traffic and bookings for your listing.

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Please let us know if your bookings immediately take off again now that you’ve removed the deposit. I think this is coincidence but would be fascinated to find out if the deposit is impacting business.


14 months now. We are a bit in between seasons, post-summer, pre-ski season. I expect to slow down a bit, but a sudden drop was strange. We’re close enough to the city that we got lots of last minute one-nighters looking for an easy/quick mountain escape, even in the slow periods.

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If you click on my profile avatar I have it listed there. Always open to suggestions & constructive criticism :wink:

Yup, you are right… Not charged… but it is still not clear whether it is imprinted or shadow charged?? Just reduced mine to $150 from 180.

I might not know because I just installed a new hot-tub that might greatly change my stats. lol

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I am not sure I want to host guests who are not willing to pay a deposit.


But that’s the problem. It really isn’t a deposit if the funds aren’t held.



What is your nightly rate and what is the deposit? Maybe it’s the ratios.

Colorado, I wonder if we are in the same boat. We added a deposit right around the start of the off season, after having some guests who did damage. We were also thinking maybe it was a coincidence that bookings dropped. We just removed the deposit today and are waiting . . . .

Can you make a claim for damages if no deposit is required through Airbnb? Would this work the same way? I haven’t had any claims yet through Airbnb - just VRBO.

In sweden very very few place have a deposit.

Yes you can. Damage is damage regardless if they agreed to a fake damage deposit.

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But even a “fake” deposit may deter guests who might do damage - this is Barth’s point. I want guests who are 100% confident that they aren’t going to destroy anything and are therefore comfortable putting a (fake) deposit down. My deposit is high (500 for apt that is 120/night) and my guests skew much older which is my preference. But now that’s it low season, I’m considering changing it to $150.


Deposits aren’t just for damages.

It’s so they follow house rules too- occupancy limits/inviting guests over, leaving on time, cleaning, etc.

When I do longer-term and don’t have a deposit, guests sometimes overstay by a day-- and I have to report them to Airbnb and hope to get money back. If they had a deposit on file, they would at least be more inclined to leave per the date on their reservation, not overstay or bring in unauthorized guests.

And, yes, the deposits are completely useless if Airbnb doesn’t collect them prior to the guest’s arrival. A guest could easily cancel or freeze a credit card after checking in and trashing the place, never having to pay a deposit.

Still, many decent guests wouldn’t realize that they’re not charged the deposit upfront-- so it’s still a slightly decent deterrent, and better than nothing.

Personally, when I’m a guest, I avoid listings with cleaning fees. I wouldn’t stay at a place with a $85 cleaning fee. I’d rather have a $100 refundable security deposit knowing that if I left the place as I found it, that’s all I pay. Having to pay a cleaning fee is just the same as having higher price/night.

If an Airbnb guest overstays, you can charge then twice the daily rent per extra day, as per Airbnb’s TOS. Although I wonder why you let them stay for an extra day.

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