Date: 17/06/2020 | COVID-19, Dispute Resolution
Hotels, self-catering accommodation and bed and breakfasts are among the businesses that are likely to have taken money (either deposits or the full sum) but now find themselves unable to offer the service that they were contracted to provide. Likewise, many customers are wondering what to do about their bookings.
As with almost all disputes of this nature, the starting point is to consider what the terms of your contract may say. It is unlikely that coronavirus is specifically catered for but it may be that closure for other reasons is expected by the contract and is provided for. If that’s the case, those provisions should be considered closely and parties will be compelled to adhere to those clauses.
Regardless of the presence of clauses that cover this situation, it might be possible to argue that the contract is now void as a result of the impossibility of parties complying with the terms of the contract: neither the customer could legally travel to the accommodation, nor could the accommodation provider legally honour the contract. Customers should remember an important point: they should wait for their provider to cancel, not to cancel themselves; if they cancel the trip, then it is difficult to see why the provider should be forced to pay back any sums, even if they cancelled it on the basis of their expectation that the provider would not be open.
The difficulty that many businesses will be experiencing is that they are not able to refund sums already paid. Many businesses are offering a voucher to customers or allowing customers to re-book. Other incentives may also be considered if it means that the cashflow can be protected. What might be offered and the value of offering will depend on each business, but creative thinking should be applied, particularly if the sum that must be paid to the customer is substantial.
Likewise, customers should strongly consider any incentives that are offered, not least because of the human impact that demanding their money may have on a business. The press reports about high profile business failures are starting to mount, and customers may want to do all that they can to help businesses, particularly small, local ones. That should be balanced against the need to protect oneself from the insolvency of an accommodation provider, and payments made with credit card may offer some insurance here.
If the customer wishes to insist on repayment, then the business ought to refund the customer and it is difficult to envisage a defence to a court action if repayment was not made.
For the customer that cannot recover payment from a business, they may wish to contact their credit card company if the accommodation-provider was paid by credit card. They may also consider contacting the booking platform to find out if they can assist with dispute resolution. If incentives are being offered to the customer, they may also want to consider their own bargaining position here to see if they can leverage further extras from the accommodation-provider.
What will be clear is that the need to offer incentives, vouchers or refunds will put an enormous strain on many hospitality businesses. Whilst government reliefs are in place, and have already begun to pay out, these will not make good the losses of many businesses. Businesses will want to consider whether they have any insurance (though, there are some difficulties on that front).
If you are having difficulty negotiating with customers or recovering money paid for a holiday, please contact our dispute resolution team.
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