Hotel ChargebacksWhat’s the Fastest Way to Get a Refund for a Bad Booking?

May 6, 2024 | 12 min read

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Hotel Chargebacks

In a Nutshell

When is it appropriate to file a chargeback following a hotel booking? And, from the merchant’s perspective, what can be done to prevent a chargeback from happening? In this article, we’re taking a look at hotel chargebacks from both perspectives, focusing on what they are, why they happen, how to file one, and when one shouldn’t be filed. We’ll also explore what merchants can do to resolve disputes before they escalate to a chargeback.

What Consumers & Merchants Need to Know About Hotel Chargebacks

There are some verticals that are more susceptible to chargebacks than others. High-dollar items like camera equipment, computers, and designer fashion are at risk. That said, dispute-to-transaction ratios in the hospitality space tend to be among the highest in all verticals.

The epidemic of hotel booking chargebacks isn’t slowing down, either. In fact, it's gaining even more steam over time. In this piece, we’re going over chargebacks in the hotel industry, providing advice to help both cardholders and merchants.

Chargebacks in the Hotel Industry: At a Glance

With chargebacks in the hospitality space, the cardholder makes a booking, either through the merchant or a third-party like Expedia or The cardholder later contacts their bank, claiming that the booking was not satisfactory, and requesting a return of funds.

The hotel industry's chargeback challenges are unique due to the service-based nature of its business, where the product is the experience itself. In retail, a chargeback might be resolved by returning a physical item. In lodging and hospitality, though, services rendered cannot be returned. This inherent difference complicates the resolution process, as hotels must provide compelling evidence that the service was delivered as agreed upon to fight the chargeback successfully. 

Furthermore, hotels must deal with the high costs of vacancy when a room is booked and unused due to a last-minute cancellation or no-show, which can also lead to disputes. The combination of high-value transactions, advance bookings, and the subjective quality of service makes hotel chargebacks particularly challenging to manage.

Common Causes of Hotel Chargebacks

Cardholders file chargebacks in the hotel industry for several reasons, each stemming from different experiences and expectations. Here are some of the most common claims that lead to disputes:

Service Did Not Meet Expectations

Guests might file chargebacks if they believe the hotel operator did not meet the promised standard of service. This could be due to unclean rooms, facilities not working properly, or any aspect of the stay that significantly deviates from what was advertised.

Unauthorized or Fraudulent Charges

This includes situations in which a guest disputes a charge because they did not authorize. In other words, the card appears to have been used fraudulently. For example, if a booking was made without their knowledge or a third party unlawfully used their credit card details.

Billing Discrepancies

Mistakes such as double-charging a guest’s credit card, incorrect room rates applied, or erroneous charges for minibar or dining expenses often result in chargebacks. Guests will seek reversals if they notice any discrepancies in their bills.

Cancellation & Reservation Disputes

Hotels often have strict cancellation policies. Disputes can arise when guests are charged despite believing they canceled in time to avoid any fees. Alternatively, disputes can occur if the hotel fails to honor a reservation due to overbooking or other operational issues.

“No-Show” Charges

If a guest fails to arrive for their booking without canceling, hotels may charge a no-show fee. Guests sometimes dispute these charges, particularly if the guest believes they had valid reasons for missing the booking, or there was a misunderstanding about the cancellation policy.

There are valid reasons to file a hotel booking chargeback. This does not imply that cardholders should file a chargeback as a first recourse, though. Customers should always try to resolve the issue with the hotelier before calling the bank to dispute a charge. They should also be aware that the bank may request evidence to substantiate any claims made.


When cardholders file chargebacks without a valid reason to do so, they’re engaging in a practice known as friendly fraud. If a cardholder believes they have a valid claim, they should always try to contact the merchant first. Resolving the issue with the hotelier will likely get the money back faster and with little incident, whereas filing a dispute with the bank could take weeks, or even months to finally resolve.

Breaking Down Criminal Fraud in Hotels & Hospitality

Fraud tends to impact the travel and leisure industries even more heavily than other sectors like retail or digital goods. We can attribute this to five specific factors:


Last-minute booking changes create more opportunities for fraud and mistakes.


Fraudsters tie up space that cannot be used for legitimate bookings.


Higher ticket values for hotel bookings mean a greater impact on the bottom line.

Revenue Loss

Excessive false positives mean merchants end up declining valid bookings.

Higher OPEX

More manual reviews for costly transactions mean increased operating expenses.

The American Hotel and Lodging Association asserts that as much as 55% of all card fraud in the US takes place within the hospitality industry. Of course, that only takes criminal fraud into consideration. When you factor in other loss sources like friendly fraud, the real figure is much higher.

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So, why is hospitality a target for fraudsters? Well, hotel stays are often a very personal experience. As such, they can constitute an uncomfortable gray area.

From the bank’s perspective, it can be difficult to ask a customer to relay the personal details of a recent visit or ask what made that visit uncomfortable. By the same token, a hotelier might mistake a polite response for approval of an unsatisfactory service. You can see how a fraudster might view this as an opportunity to capitalize on miscommunication.

How to Dispute a Hotel Charge

When disputing a hotel charge, cardholders should follow a structured process to ensure their concerns are addressed appropriately and efficiently. Here’s some practical advice on how to handle this situation:

Step #1 | Review Your Bill Carefully

Before filing a dispute, thoroughly review your bill and reservation details to confirm the accuracy of the charges. Ensure you understand each item listed and cross-check it with your receipts and booking confirmation.

Step #2 | Gather Documentation

Compile all relevant documentation, including detailed notes of your stay, communication with the hotel, receipts, and booking confirmations. This evidence will be crucial whether you resolve the dispute with the hotel directly or escalate to your card issuer.

Step #3 | Contact the Hotel Directly

Often, issues can be resolved quickly by directly contacting the hotel. Explain the problem clearly and provide any supporting documents such as receipts, reservation confirmations, or photographs that justify your dispute. Hotels often prefer to resolve these issues amicably to maintain customer satisfaction and avoid chargebacks.

Step #4 | Call the Bank

If the merchant does not resolve the issue to your satisfaction, you can formally dispute the charge with your credit card issuer. This typically involves filling out a dispute form and providing your collected evidence. Be clear and concise in explaining why you believe the charge is incorrect or invalid.

Step #5 | Follow Up Regularly

Keep track of your dispute’s progress by regularly communicating with your credit card issuer. Ask for updates and provide any additional information they may require to process your dispute.

Step #6 | Know Your Rights

Familiarize yourself with your credit card’s policies on disputes and chargebacks and any consumer protection laws in your jurisdiction that may apply to your situation. This knowledge can empower you to make informed decisions and understand the timelines and outcomes possible.

What Are Hotels Doing to Fight Chargebacks?

New technologies may help hotel operators cut down on chargeback issuances. Take digital check-in and keyless entry systems, for example, that match the cardholder to their mobile device may help verify users’ identities. They offer better insight into a guest’s specific activities on the property than paper records held by hotel staff.

These systems may not capture every detail of a guest's stay, but they can confirm that the guest was present at the hotel and used their room. This confirmation is critical during disputes where a guest claims they never visited the property. In the event of a chargeback, these systems can provide a comprehensive audit trail and immediately communicate this information to the vendor handling the dispute. The automated system quickly informs both vendors and clients, allowing for proactive management of the situation, which is more efficient than waiting for multiple parties to respond. 

Moreover, this approach keeps the hotel updated with regular reports and records, which are valuable for future reference. This automation strategy can help resolve disputes effectively and boost labor productivity. It shifts the burden of managing chargebacks away from accounting and finance teams. This strategy can be particularly advantageous if it helps preserve even a few bookings each month.

What Else Can Hotel Operators Do To Prevent Chargebacks?

You can reduce your chargeback ratio and prevent hotel chargebacks with a few simple steps. We’ve identified some basic steps you can take today that will help you avoid disputes and retain more revenue:

Emphasize Customer Service Best Practices

The first step is in your approach to customer service. It’s important to keep lines of communication open to allow customers to work through your service channels. This will dissuade cardholders from skipping straight to a chargeback without attempting to contact you first. Be sure that you adhere closely to these best practices:

  • Provide live phone support 24 hours a day.
  • Answer phone calls in three rings or less.
  • Use overflow customer service centers for peak times and outside regular hours.
  • Respond to emails and social media inquiries within 60 minutes.
  • Ensure that all phone numbers listed online are properly connected.
  • Make sure all social media and email links on your site are live and clickable.

Guest Verification Processes

Always verify the guests' identity at check-in time to ensure that the person checking in matches the booking details. This verification can help prevent fraud and disputes related to identity mismatches. There are many ways to do this, including:

These are just a handful of the fraud detection tools available. Use advanced fraud detection tools that monitor suspicious activity and flag unusual transactions, such as machine learning and fraud scoring systems. These systems can detect and isolate suspicious consumer activity before a transaction is processed. This can ultimately help prevent chargebacks related to fraud.

Secure Payment Processing

Implement secure payment processing solutions to protect cardholder data. Use technologies like encryption, tokenization, and secure sockets layer (SSL) certificates to reduce the risk of fraudulent transactions and associated chargebacks. Also, adhere to PCI-DSS standards, and store and dispose of all customer records appropriately.

Transparent Cancellation & Refund Policies

Ask the cardholder to agree to your terms of service before charging the customer’s card and finalizing the reservation. Remember to verify consent to that reservation.

Also, keep a copy of the signed registration form on file. That individual may still request a chargeback several months later, but having good records on hand will help you fight an invalid claim. Your records are the primary evidence you will need to demonstrate to the issuer and card network that the charge was valid.

Staff Training

You’ll want to ensure a capable chargeback response team is ready to serve your needs.

The fast-changing, complex payments landscape makes it hard to maintain an effective in-house chargeback team. That said, you can gain an edge by regularly training your staff on best chargeback prevention practices. Spotting potential fraud, maintaining proper documentation, and handling disputes effectively are all key topics here.

Regular Audits & Soliciting of Reviews

Conduct regular audits of your transactions and chargeback incidents to identify trends, operational vulnerabilities, and areas for improvement in your chargeback prevention strategies.

Establish a feedback process with customers post-stay to gather insights into their experiences. This can help you address potential dissatisfaction proactively and make improvements that could prevent future chargebacks.

Have Additional Questions About Stopping Hotel Chargebacks?

You shouldn’t be worrying about fighting hotel chargebacks or keeping up with industry regulations. You should be focused on running your business.

Chargebacks911® offers the industry’s most innovative solutions for chargebacks. Our technologies enable merchants to identify the source of disputes and then deploy the right solution to deliver immediate results.

Friendly fraud in the hospitality industry isn’t slowing down. That’s why you need to kick chargeback mitigation into high gear. Contact us today to learn more.


How do you win a hotel dispute?

To win a hotel dispute, you need to gather and present clear, comprehensive documentation that substantiates your case, including communication records, receipts, and policies. Respond promptly and effectively to the dispute through your payment processor, adhering strictly to their guidelines and timelines.

Can a hotel reverse a payment?

Yes, a hotel can reverse a payment, typically by issuing a refund directly to the guest's payment card. This process is managed through the hotel's payment processing system and is often used to resolve billing errors or guest disputes amicably.

What solutions would you suggest for reducing chargebacks within a hotel?

Hotels should communicate policies and charges clearly, ensure accurate billing, and provide exceptional customer service to address issues proactively. Additionally, using secure payment processing technologies and maintaining thorough records of transactions and guest interactions can significantly reduce the incidence of chargebacks.

Can you demand a refund from a hotel?

Yes, you can demand a refund from a hotel if the services provided did not meet the advertised standards or if there were billing errors. It's best to initially request the refund directly from the hotel, providing any relevant evidence to support your claim.

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