Bookings That Cannot Go Ahead Due to Coronavirus Restrictions: Refunds and Transfers FAQs
What is the legal position in terms of cancellations/refunds?
The legal position is dependent on the reason for the cancellation. Simply put, if a guest is legally prohibited from taking their holiday, they are entitled to a refund.
We shall do everything we can, within the parameters of our role as agents, to protect your income and retain as many bookings for your property as possible by persuading guests to transfer their bookings to an alternative date or accept a voucher.
To date, we have seen a number of scenarios whereby the government have imposed legal restrictions meaning a guest cannot legally take their booked holiday:
- Legal restriction meaning the holiday property is not available
- Legal restriction meaning guests are unable to travel to their booked property
- Legal restriction prohibiting certain groups of people (e.g. from multiple households) mixing together indoors
It’s difficult to envisage circumstances not covered by the above, but the principle applies to any legal restrictions which mean guests are not allowed to take the holiday they have paid for.
Based on the legal advice we have received, the legal prohibitions (preventing guests from taking their holidays) has the effect of frustrating* the contract of hire which results in the guest being entitled to a refund.
(*a contract will be frustrated as a matter of law if, due to no fault of the parties, something happens after the contract was entered into which means it can no longer be performed at all or performance would be radically different to what was agreed).
The Competition and Market Authority (CMA) have set out their view on the application of both the doctrine of frustration and consumer protection law in relation to holidays that cannot take place due to the Covid-19 pandemic and can be summarised as follows:
Where a contract is not performed as agreed, the CMA considers that consumer protection law will generally allow consumers to obtain a refund.
In particular, for most consumer contracts the CMA would expect a consumer to be offered a full refund where:
- a business has cancelled a contract without providing any of the promised goods or services;
- no service is provided by a business, for example because this is prevented by Government public health measures;
- a consumer cancels, or is prevented from receiving any services, because Government public health measures mean they are not allowed to use the services.
The CMA statement notes that their statement “sets out the CMA’s views on the law, but only the courts can decide what the law is.” The CMA statement itself does not automatically override the terms of the contract but it puts the focus very much on consumer protection legislation which can have the effect of invalidating a term of the contract that is deemed to be unfair.
What is the position in terms of government guidance which is not law?
The government has issued guidance about what people should do in place of or in addition to some lockdown laws. Unlike lockdown laws, compliance with government guidance is not legally binding. As such, because the property is legally available and because the guest is not legally restricted from travelling, then normal cancellation terms and conditions apply, i.e. the guest is not automatically entitled to a refund.
We may contact you and enquire whether you would be willing to offer the guest an alternative date or even a refund. This is entirely at your discretion.
What options must be given to guests with bookings that cannot take place due to legal restrictions?
Any guests with bookings that are legally prevented from taking place will be offered the choice of the following options:
- Amending their booking by either reducing the number of people travelling or changing the composition of their party such that the booking can still go ahead under the new rules.
- Alternative dates for a holiday at your property.
- Alternative dates for a holiday at another property.
- A credit/voucher to their customer account for use against a future holiday.
- A cash refund of monies paid.
What period does this relate to?
Guests are entitled to a refund where they are legally prevented from taking their booked holiday and it is clear that the laws containing the legal restrictions will still be in place at the time their booking was due to start.
At what point it is ‘clear’ is a legally grey area, especially as the new legislative restrictions do not have an end date, are subject to government review and could therefore be changed/lifted at any moment.
In line with the underlying legal principles of acting reasonably and treating consumers fairly, we consider that, in the absence of a formal legislative end date, a rolling 4 week period is the most appropriate approach. That is, we will only facilitate refund requests (assuming we have your authority to do so) for impacted bookings that are due to start in the coming 4 week period. We will encourage guests outside of this period to ‘wait and see’ what the position is nearer the time before deciding whether they wish to cancel their booking.
This approach will be revised as appropriate depending on the circumstances, for example, if the government instigated a new 3 month national lockdown, we would facilitate refund requests (assuming we have your authority to do so) for that 3 month period, in order of arrival date.
If requested by the guest, we may contact you in relation to bookings outside of the “look forward period” and enquire whether you would be willing to offer the guest an alternative date or even a refund. This is entirely at your discretion.
If guests choose to transfer their bookings, can they subsequently change their minds and ask for a refund?
If a guest has chosen to transfer their booking, then the agreed new date will be final and subject to normal terms and conditions, that is, the guest would only be entitled to a refund if they were unable to take that booking due to legal restrictions in place at that time.
What if a guest wants to transfer to a different property?
We shall do everything we can, within the parameters of our role as agents, to protect your income and retain as many bookings for your property as possible by persuading guests to transfer their bookings to an alternative date.
However, if a guest wishes to transfer to another property or accept an e-voucher for use against a future holiday (potentially at another property) then they would be entitled to do so.
How/when will any refunds be facilitated?
If you have already received payment from us for the booking to be refunded, then please can you refund the payment to us by way of bank transfer. We will not be able to refund the guest until we have received the money back from you. Our bank details are:
Bank – HSBC
Account name – The Original Cottage Company
Account Number – 90017175
Sort Code – 40-20-85
Please quote your owner reference and the booking reference (as per your statements).
We shall then issue a refund to the guest to their original payment method (i.e. debit/credit card).
We shall not refund any guests until we have authority from you to do so, but please note the section below, which applies if you choose not to authorise refund requests.
What if I do not want to refund/I receive different legal advice?
As the contract of hire is between yourself and the guest we cannot and would not agree to any refund without your authority to do so.
We asked all of our owners to confirm their position on this and we shall continue to use the authority given previously unless you instruct us otherwise.
For those owners who did not provide us with authority to issue refunds on their behalf, we will continue to operate as a liaison between you and the guest, but ultimately this would become an issue for you to resolve with the guest.
Contractually, we would be bound to provide your contact details to the guest to enable them to pursue the matter with you. We would not do so without informing you of this first.
What impact does this have on the Cancellation Protection Scheme (CPS)?
Regrettably, as was the case with the national lockdown, the CPS scheme only guarantees payments to owners in relation to cancelled bookings (so long as the property is available to (re)let during the period of the original (cancelled) booking) and does not cover bookings which have been legally frustrated. Consequently, no CPS payments shall be made in respect of any bookings that were cancelled due to legal restrictions preventing guests from taking the holiday booked.
So, will I receive any payments for bookings that may be affected by legal restrictions?
We will continue to pay you as per your normal payment terms, however, if it is reasonably likely that future bookings cannot go ahead due to legal restrictions and guests would therefore be entitled to a refund we will not pay you for those bookings as we would otherwise likely to just have to ask you to refund the monies paid.
Bookings have been transferred, but why can't I have the money now? Why are you holding on to it?
You will receive payment as per your normal payment terms. We incur a lot of upfront costs of doing business to secure your bookings (for example, marketing, website and personnel costs). We are not 'holding on' to the funds unnecessarily, rather to pay our upfront costs, and then pay you to terms.
What if a guest wants to transfer but they can't yet commit to new dates to transfer their holiday to?
In this instance, we will be able to hold a credit on their account and/or issue an e-voucher, for use on a future holiday before 31/12/2021. You will receive payment for future bookings in line with your normal payment terms if/when these bookings take place.
What if a guest wants to transfer but I can't yet commit to new dates to transfer their holiday to?
We can offer the guest credit/an e-voucher to be used before 31/12/2021, we would encourage them to use this at your property, however, they could choose not to do so.
What if I want to block some availability?
We encourage you to open up as much availability as possible in order to make a transfer as appealing as possible to the guest.
Will my insurance cover me for cancelled bookings?
Please speak with your insurer to check whether your policy may cover you.