Frequently asked questions about pre-authorizations

A few days ago we saw how important pre-authorizations are for Revenue Management , today we will look at the frequently asked questions about pre-authorizations.

First of all, many people wonder what a pre-authorization is. We can answer this question by saying that it is a temporary hold on a specific amount on a credit card.

This transaction does not generate any type of transaction on the customer's bank account because it is not recorded in the account, therefore, it is not a debit . Authorization is issued by the relevant bank or the credit card company.

This way, you can "reserve" an amount to verify the validity and financial coverage of the credit card provided by the customer at the time of booking. This ensures the availability of the amount for final booking confirmation.

Another question concerns the pre-authorization amount. The amount is at the discretion of the hotelier and ranges from €0,01 up to the total penalty amount shown in the cancellation policy.

Many hoteliers wonder when to pre-authorize. It's generally recommended to pre-authorize from about twenty days before guests' arrival, up until the day of their arrival . It's a good idea to adjust the pre-authorization to each hotel's specific cancellation policies.

Another question that arises is what to do at checkout. Typically, the full amount of the stay is collected using the payment method agreed upon with the guest.

This procedure can be performed without a chargeback or chargeback only if the customer pays with the same preauthorized card issued during confirmation. To do so, simply collect the preauthorization if it equals the final amount of the stay or modify it using the "Additional Authorization" procedure if the amount is higher than the preauthorized amount.

If the customer's preferred payment method is different, for example cash, check, or another credit or debit card, the pre-authorization amount will be reversed by providing the customer with copies of the pre-authorization, closing, and reversal receipts.

Pre-authorization FAQs: Tips and answers

The chargeback is automatic , and the processing time depends on the credit card provider and can vary from 20 to 40 days. For this reason, we recommend performing a manual chargeback.

For the customer to regain access to the blocked amount, it takes 72 hours if the refund is done manually, but these times are approximate. Sometimes, reminders to the various circuits are required.

It happens very often that the customer may call annoyed , because many have an SMS alert that has a wording similar to that of a withdrawal authorization.

To avoid these problems, we recommend sending an email to the customer at the time of pre-authorization to notify them of the operation and to reassure them.

In any case, OLTA will inform you of any possible blockage ; this information is included in the booking notes.

If the pre-authorization is denied , you must immediately notify us via the extranet or by telephone that your credit card does not allow us to block the amount to guarantee the reservation.

You then have to wait for the customer to provide a new credit card number or top up the card in question. The time allowed is usually 24 hours.

Many portals offer credit card-free solutions, which is generally advantageous for the guest, who can cancel the reservation up until moments before arrival. It's also advantageous for the portal offering it, as it increases sales potential. It's disadvantageous for the hotelier , who must offer guarantees without receiving any in return.

Soon we will see in detail how to carry out pre-authorisations and how to collect them.