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Many people seem to think that they’ll get away without bothering with credit cards at all if they’ve only a small B&B or perhaps an equally small holiday apartment. After all, you wouldn’t lose that many guests by not accepting cards, would you?

That’s not an easy question to answer. You might think that people could just some other method of payment and that therefore you won’t lose any potential guests

Amazingly many B&Bs still don’t accept credit cards and thereby end up losing business as many people prefer to pay directly with a card than to have to pay extra charges to lift cash abroad.

But, how do you do it?

Well, there are basically two ways that a B&B or self-catering complex can operate with a credit card.

1. Accept cards solely for deposits; and
2. Accept cards for all payments.

Naturally, it’s possible to start off just taking card payments for deposits and move onto accepting them for all payments. In fact, it’s useful to do exactly this to try out card payments for your business.

If you’re only taking card payments for deposits then you don’t need to sign up with a bank. The simplest way is to sign up with paypal for a business account. Payments received will cost you 3.4% plus 20p so if you take £10 will cost you about 54p (5.4%), £100 will cost £3.60 (3.6%) and £1000 will cost £34.20 (3.42%). These charges are similar to those that a small business would pay were they to do credit card processing via their bank in the UK but somewhat higher than the typical 0.75% for banks in France.

From these figures you’ll see that it’s best to use paypal for deposits. That way a typical 25% deposit will effectively cost you under 1% of the total bill for paypal processing.

You could use paypal to accept all payments but you would need your bookings to be paid 100% in advance to do that as you can’t easily use the paypal system to make on the spot payments (if you really have to you can do it by having the guest logging in using your Internet access and making the payment). So, if you want to accept all payments by card, then you need to get the little credit card machine.

To get a credit card machine setup you need to have a business bank account and, in most cases, have had it for six months although for B&B and self-catering properties the bank will normally waive the six months requirement. In France, you’ll need to be registered and provide your KBIS.

Costs for this vary a lot. You can buy your own machine but they’re rather expensive (typically £300/£500) and therefore most people rent them from the bank (around £20/£30 per month). In most cases you’re better to opt for a fixed installation as the portable terminals can cost 50% more. Other things to consider are which cards you’ll accept. Normally Visa/Mastercard are sufficient (and will include Visa Electron and Maestro). American Express is becoming more popular but is usually more expensive than other cards. If you get a lot of Japanese then it’s probably worthwhile taking JCB. You can even accept various storecards but unless you’re in a shopping centre it’s probably not going to be worth the extra expense.

How do you do it? Open a business bank account then apply for the credit card facility at your bank.

One thing to watch is that you will need Customer Not Present enabled. This lets you charge cards without having the credit card in your hand. You’ll need this to take deposits.

Is it worthwhile doing though? Yes, it is. Sure it will cost you more but you can take that into account in your pricing. If you assume that a credit card payment will cost you 4% then adding as little as 2% to your prices will pay for it all in that not everyone will pay by card and many of those that do will use a debit card which’ll cost you less. So, if you’re charging £50/night that equates to adding £1 to your charges. Incidently, don’t try adding that £1 only to credit card customers as you’ll just end up driving them away.

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We’ve all seen how bad the global economy is at the moment and unfortunately for us in the travel trade, it’s likely to be one of the sectors that’ll be hardest hit in the year to come.

Why’s that? Basically because holiday expenditure is what economists call “distretionary spending” ie people don’t have to go on holiday. When money is tight, then discretionary spending is the first area to take a hit.

Thus we can expect that people will be taking fewer holidays in the coming year and those that they do take will be cheaper eg shorter, to lower cost destinations or to cheaper properties. How hard it’ll hit you depends a lot on the profile of your property and how you market it but it’ll almost certainly hit you.

On the assumption that it will hit, what can you do about it? First off, forget about increasing prices in the coming year; if anything you should reduce them or at least add additional services at the same cost.

Secondly, you should attempt to diversify your income if possible. For example, if it’s possible to close your place for part of the year and work somewhere else, then look into that possibility. This option is dependant on the profile of your revenue throughout the year eg in our case, we get about 2/3rds of our annual income in July and August therefore it may be more profitable if we were to work somewere else for the remainder of the year.

Thirdly, you should aim to maximise the income from the guests that you do get. You can do this through offering additional chargeable services and encouraging them to make use of the existing chargeable services that you do offer. For example, a B&B can push their evening meals more, others can encourage the use of car rental and the like via their website.

Finally, look to minimise the expenses incurred in running your place. Don’t do this at the expense of quality though as that’ll only serve to damage the reputation of your business. For example, over the winter if you concentrate any guests in a limited number of rooms then you can reduce your heating costs considerably.

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Let’s face it, most people don’t get terribly organised on their holidays and figure that everything will work out fine in the end.

However, ’tis the owners of the various establishments that they come in contact that need to organise that “working out fine” bit and in a lot of cases that falls to the places that they’re staying with. That’s YOU, so what do you do about it?

First off, remember that it’s not your responsibility to sort out everything for them. Yes, you’ll try to help but you need to make clear where your help will run out. This is very important as you’re unlikely to be able to sort out everything.

For example, we had a party of 12 that arrived during a very popular local festival recently who booked about almost two months in advance, quoted an invalid credit card, didn’t book any transport as we advised and didn’t book any meals. The invalid card meant that we cancelled their reservation and they were lucky that we still had enough rooms to accommodate them. They arrived and said they’d like to book a car yet found that because of the festival there was only one four seater car available. No meals booked and the festival falling after the end of the main holiday season meant that we weren’t in a position to provide any. Net effect of this was that they spent nearly six hours per day ove four days ferrying everyone back and forth to the festival in a EUR 200/day Mercedes sportscar.

It’s usually easy to pick out the dis-organised people: they’re the large groups by and large. Yes, there may be a group leader but we’ve found that whilst the leadership skills might be fine (”let’s go there”), the management skills are distinctly lacking (”em, can we get a car without a driving license?”).

That being the case, it’s usually best to add that little bit more to your acknowledgement e-mail for group reservations with a view to highlighting as many of the potential problems that a large group might find. For example, there are usually lots of small cars available but fairly few minibuses (which may need special driving licenses) therefore groups need to book their transport early. Also highlight limitations in the services that you can make available. For example, our group came with 12 separate laptops and our internet connection couldn’t cope with that many at once. Likewise, whilst we offer an airport pickup service we can’t realistically deal with more than 3 or 4 people at once.

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