Can hotels keep my deposit after cancellation in Australia?
Yes, hotels can keep your deposit after a cancellation in Australia, but only if it was clearly stated in the booking terms and conditions. If you booked a non-refundable rate or cancelled outside the allowed window, they can legally retain the fee to cover their reasonable losses.
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How it works in practice
The Role of Booking Terms
When you book a hotel room in Australia, you enter into a legally binding contract with the accommodation provider. The terms and conditions you agree to at the time of booking dictate what happens to your money if you need to cancel.
If you select a cheaper, "non-refundable" room rate, the hotel is generally entitled to keep your entire deposit if you do not stay. This is because they offered a discount in exchange for a guaranteed payment, and the Australian Consumer Law (ACL) allows businesses to enforce these agreed-upon conditions provided they were clearly disclosed upfront.
Unfair Cancellation Fees
However, consumer protection laws also prevent businesses from charging excessive penalties. If you booked a standard, flexible rate but failed to cancel within the required timeframe (such as 24 or 48 hours before check-in), the hotel can charge a cancellation fee.
This fee usually equals the cost of the first night's stay or your initial deposit. The ACCC states that a cancellation fee must be a reasonable estimate of the business's actual loss. If a hotel immediately rebooks your room to another guest at the same price, retaining a massive deposit might be considered an unfair contract term.
Important exceptions
Yes, there are a few important exceptions where a hotel cannot keep your deposit.
If the hotel cancels your booking or cannot provide the accommodation as promised (such as overbooking or closing for emergency maintenance), you are entitled to a full refund under consumer guarantees.
Additionally, if you cancel because government-mandated travel restrictions or sudden public health orders legally prevent you from reaching the accommodation, you may be entitled to a refund or a credit note, as the contract has been frustrated by events beyond your control.
What you should do now
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Review your booking confirmation email to find the specific cancellation policy and terms you agreed to when reserving the room.
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Contact the hotel directly as soon as possible to explain your situation and formally request a cancellation or modification.
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Ask the accommodation provider if they would be willing to offer a credit voucher or allow you to change your dates instead of losing the deposit entirely.
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Gather evidence, such as official travel restriction notices or medical certificates, if you are forced to cancel due to severe, unforeseen emergencies.
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Lodge a formal complaint with your state or territory's consumer protection agency (such as Fair Trading) if you believe the cancellation fee is completely unreasonable or an unfair contract term.
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