Pre-authorisations at Hotels: What are They?

What is a hotel pre-authorisation? Many ask this when booking a hotel direct and whether they are paying at the time of booking or at arrival or check-out at the hotel.

First let’s explain what an pre-authorisation is. A hotel pre-authorisation is a temporary authorisation hold placed on a guest’s credit or debit card to confirm the card is valid and has sufficient funds to cover room charges and potential incidental expenses. It’s not a final charge but a temporary hold on funds, typically processed at check-in on arrival at the establishment, that is then released or adjusted to the final bill upon checkout. This process helps hotels prevent fraud and ensures payment for the stay.

How it works

At check-in or booking the hotel requests your credit or debit card details to place a hold on a predetermined amount of funds. These funds are set aside. The hotel issuer reserves a specific amount of your available balance, but the money isn’t actually transferred to the hotel. The funds cover potential costs; the hold acts as a guarantee for the room and extras like room service, minibar usage, or other incidental fees.

The transaction is finalised during check-out. The hotel will “capture” the funds from the pre-authorisation hold for the actual costs of your stay. Any remaining amount from the pre-authorised hold is then released back to your account. If your final charges exceed the pre-authorised amount, you will be billed for the difference. At check-out make sure to get an invoice or statement showing what you have been charged for. If not ask.

Why hotels do pre-authorisations? Basically to prevent fraud. They want to verify the card’s validity and to confirm the guest has sufficient funds for the stay and gives the hotel a payment guarantee and protects the hotel against costs for no-shows or guests who incur charges without paying. It also allows the hotel to cover unexpected incidental charges without needing further approval from the guest.

Debit vs Credit Cards

What card should I use at time of booking? This is an important consideration, so which is best, debit or credit? It’s generally safer to use a credit card for a pre-authorisation, as it only reduces your available credit limit. A debit card hold can tie up your actual cash funds, making them unavailable for other spending. The time it takes for the hold to be released varies by card issuer but can take several business days or even up to 10 days after checkout.

Another consideration to take into account is how transparent is the hotel about the pre-authorisation process and the expected amount being held? A question guests should ask on arrival.