The Assurance All Travel Brands Should Provide (But Probably Can’t)

Filed Under: Travel

There’s no denying that some travel brands are handling the current COVID-19 crisis better than others. I know there are some airlines and hotel groups I think of more favorably in light of all of this, and some I think of less favorably.

Once travel is possible again, one area where I know a lot of travel brands are brainstorming is with answering the question of “how can we make customers feel comfortable booking with us again?”

In this post I wanted to focus on one specific concern I have, which very few brands are addressing properly.

There’s no trust left with refunds

We’ve seen so many brands break their promises when it comes to refunds. I totally understand how we got to this point. Virtually no travel companies were planning for a crisis like this, and many have gotten to the point where they simply can’t afford to refund customers.

For example, we’ve seen:

The situation reminds me of this Seinfeld clip about what it means to have a car rental reservation:

This is a problem even when things normalize

As I think about the prospect of planning travel once things start to recover, this is one of the things that concerns me most. It could be that things normalize for a bit and then get bad again, and that concerns me when it comes to making deposits for travel.

Many hotels (especially luxury and remote properties) charge refundable deposits at the time of booking. Similarly, you of course have to pre-pay for flights.

I’m concerned about making a booking when things get better, only for things to get worse again and be told “sorry about that, we actually can’t afford to refund you.”

One hotel group does this right

Last year Ford and I took my dad on an incredible safari in South Africa, where we stayed at two Singita properties — Singita Boulders and Singita Lebombo. The trip was one we’ll never forget.

Singita Boulders

I’m still on the Singita mailing list, and today they sent out an email outlining their flexible booking policy. As is the case with virtually all safaris, a deposit is required at the time of booking.

However, Singita is specifically reassuring guests that this money is kept separately, and will be refunded in the event that you want a refund. Here’s the relevant part of the email:

“Singita has always been fastidious in ensuring that all deposits are separated from any operational bank accounts within the group. All funds associated with bookings are warehoused in a separate call account and are ringfenced from our daily operational, conservation and community development costs. This means that all Singita guests can be assured of the security of their booking deposits.”

It’s sad that this needs to be said, but I find it reassuring that this is specifically addressed — it’s good to know that my refundable deposit will actually be refunded, rather than spent right away to continue to fund operations.

Now in fairness, in some way talk is cheap:

  • If a company goes out of business you’re probably not getting a refund
  • Just because a company says they’ll do something doesn’t necessarily mean they will (as we’ve seen from other brands)

However, I do find it assuring that they at least address this and recognize that this is a concern for some customers.

Singita Lebombo

Bottom line

Coming out of this COVID-19 pandemic, I’m going to be a lot more skeptical about deposits and refunds than ever before, even in situations where I’m technically entitled to one.

It’s nice to at least see one luxury safari group outright say “hey, we’re not going to spend your money before you stay, and you can get a refund if you’re entitled to one.” But unfortunately it does seem necessary, given all else that has gone on…

I’d love to see more travel brands provide this level of clarity, because I think it’s needed nowadays.

If/when travel starts to recover, what kind of assurance will you be looking for from travel brands, so that you feel comfortable planning travel?

Comments
  1. This sounds nice, but practically it doesn’t mean anything. If they were to go bankrupt anyone trying to get their deposit back would be lumped in with all other unsecured creditors.

  2. That’s reassuring but may not be of any significance. Companies can always choose to refund a customer no matter where the money is held. Keeping it seperate is great but if it’s between returning the money and going out of business or using that money to keep operations going what are most companies going to do?

    If a company runs out of money and goes into receivership or bankruptcy, all assets are likely to be returned per legal statue. In bankruptcy, even if the money was held In a special account, that doesn’t mean the court has to return it customers. It likely gets returned according to statutory orders of priority.

    I think a better way to measure this is look at companies who have treated customers right so far. Who has returned money per the original contract. Those are the companies I would trust going forward.

  3. Sorry, off topic.
    Big fan of your blog, Lucky.

    Do you have any advice for UK based travellers in terms of collecting points and miles? Amex doesn’t allow churning any more, and several other cards have been closed. Situation seems dire compared to the US!

  4. I prefer the IHG approach. Besides offering refunds for existing reservations, they’ve pulled all the prepaid rates from their website. All rates are flexible. Since you don’t have to prepay, there’s nothing to refund.

  5. Yeah, have to agree with other commenters. This isn’t worth the pixels it’s rendered with on their website. All these company’s already had this writing before and they aren’t honoring it so why believe it now?

    Having said that I am sure they are sincere but hotels and airlines didn’t have a problem refunding deposits or fees before the pandemic either. It’s all a response to the situation.

  6. Words are meaningless. What hotel brands actually do during this crisis, that will be my basis for trust (or not) going forward.

  7. I had multiple trips booked before this pandemic (averaging over one round trip weekly). Thankfully, I do fly enough that I will be able to use those credits (and the bonuses which do help me). But I can’t imagine for people who need the money now. I spent about $200 one way for each of these flights, and I canceled about $2,300 worth of short domestic flights just for April. I have similar amounts of travel booked for every month.

    Now, I may have to start commuting again to work by plane, where my schedule often changes. So I can’t book in advance, and fares go from $20 to $400 as soon as your a week from departure on my routes.

  8. If by ‘warehoused’ they mean legally ring fenced then that’s to be applauded. Were the company to go bust that money’s safe from creditors.

    I can see a future where airlines and hotels are going to have to protect customers cash in this way and carry more reserves of cash. Much like the banks were after the Lehman debacle.

  9. The other big problem I have with trust going forward is travel insurance through my credit cards. I have the Chase Sapphire Reserve and use it because of the insurance. I had to cut a trip short because some of the countries I was going to closed due to corona and Chase’s trip interruption insurance didn’t even pretend to investigate, they just sent me a letter a few hours later telling me that government closures don’t count (that’s not excluded from coverage) and they won’t do anything, and there was not even an option to dispute it, they are just blanket telling everyone to pound sand and hope they go away. And as we’ve seen on the blogs, when you dispute an airline charge you’re told to take it up with the airline. I pay a hefty annual fee for the protections of a travel credit card and they are refusing to do anything about it.

  10. I cancelled a VRBO reservation weeks ago that was still within the period to get a full refund. The owner notified me within about 10 minutes that he processed the refund. It shows in my VRBO account as “refunded”.

    However, weeks later and nothing has credited back to the card. VRBO is just sitting on the money. I’m naming and shaming them. Avoid that company going forward.

  11. JB – if AA is your airline of choice, you may get some value from the AirPass. I was reading about it last night on another site and the promotion they’re running that allows you to purchase one for $5k. I’d be interested to hear Ben’s thoughts on the value of the AirPass and a breakdown of the benefits.

  12. We need mandatory escrow procedures for all prepayments made by customers. Only this way this madness will not happen again in the future.

  13. Just want to give a shoutout to a small travel company in New Zealand called Dart River Safari which has a small deposit/prepayment (equivalent to a night in a hotel) from me for a trip that was canceled. I suggested they could keep the money for future travel, which they declined and requested my bank information for a refund (since they say they cannot access their credit card machine because of the restrictions). Then I thought I would just ignore the issue as a small contribution to their solvency. But they are not giving up and I guess I will collect the refund. And no, I do not believe this is a scam to obtain my bank address, but if it turns out to be so I will update …

  14. RCB: I have Chase Business Preferred with their much lauded travel protection. Guess what? They will not honor any travel refunds for any cancellation vaguely related to coronavirus issues. I questioned this, as nothing references this in their terms and conditions (I read ALL the fine print). After going way up the line of authority, I was finally told, “because we can”. I’ll give that supervisor points for candor, at least.

    TOOMUCHFLYING: i have exactly same issue with VRBO. Owner promptly refunded paid in full reservation and VRBO has been sitting on money for exactly one month now. Impossible to get through to VRBO, last attempt I was on hold over one hour.

    Does anyone have any suggestions on how to get Emirates to refund first class ticket booked on their website? They have been non-responsive to emails, SM, DM and telephone calls. It’s always “we’re busy”. For seven weeks?

  15. I have never trusted advanced payments for any resort/hotel. Period. I would rather pay a premium and have the option of cancelling when things get altered in my travel OR I check in and find the place had a really good photographer and my room overlooks a dumpster.

    I make exceptions for properties that I trust and have been to before many times. And if I am certain I will be able to go. Otherwise, forget it. Even Four Seasons properties I am not familiar with I refuse to give deposits.

  16. @Max

    Never gonna happen. The hotels are operating now on your deposits for the future. Every business is a Ponzi scheme in some way. It’s just reality.

  17. My attitude to refunds versus credits depends on the company. I will add, I am fortunate in that I still have a job. If I did not have a job I would actively be seeking refunds.

    Re airlines – there is no way I would take a flight credit with Virgin Australia as they were in trouble before this saga and are at risk of not being able to honour the voucher. Interestingly enough it is all over the media this morning in Australia that Chinese Airlines are considering buying VA! Anyway, Singapore Airlines on the other hand I have no problem with as the government will bail them out if needed. Added to that SQ are providing an incentive (different amount depending on class of travel) to keep a flight credit.

    As for hotels, I typically book on a corporate rate which means I can cancel, or a full flex rate. A couple of months ago I booked a super cheap pay in advance rate for Grand Hyatt Melbourne (staycation). Whilst they remained open most of their services were cut. They contacted me and asked me if I wanted to cancel and offered a full refund which I chose. They have now shut their doors – as soon as they reopen I will go back just to support them and their staff (who are all currently not working)

    As for smaller boutique hotels, it would depend on the circumstances.

    Yesterday the Chief Medical Officer for my state (Victoria – Melbourne) said that”Australia’s borders could remain shut until a COVID-19 vaccine is obtained”. So most likely t is bye bye to Antarctica for me and bye bye to a “liveaboard” in the Galapagos. Will be interesting to see what happens with those large deposits.

  18. Segregated accounts for travel agencies and tour operators are quite common in Canada and the regulatory bodies that require them actually have indemnification funds that refund customer deposits in the event that the registered agency/tour operator goes under.

    Worth noting that comprehensive cancellation coverage exists for this very reason (ie to cover losses incurred on prepaid travel arrangements)

  19. Even when times are normal they don’t play fair, payment is instant yet a refund takes at least a week or sometimes even a month.
    There’s a handy online system to request anything else, but a refund option is deliberately excluded.
    Calling the company, the sales line is 24 hours and answered instantly, the refund line 9-5 in a different time zone with a 45 minute wait. Often requiring another department.
    A refund is the only thing that requires you to submit a form or god forbid, send a fax.
    No one ever forgets to take payment, yet 50% of refunds get ‘forgotten’ mid allocated or otherwise not processed, have to be chased.

    There really should be a penalty or regulation surrounding holding on to a customers money or compensating them for their time taken in pursing entitled reimbursements or over charges.

  20. Our June cruise to the Baltic has been cancelled. Already the excursion portion of the cruise has been refunded and Princess Cruises says it will refund our cruise cost in full once we fill out the relevant form. If we stick with them they will credit us the full fare plus 25% towards a future cruise. I think the Princess Cruises approach engenders trust in the brand and is a great example of how to win customers in the future.

    Now I must approach WestJet to refund my YYZ-LGW return fare and, although I am full of trepidation, they may yet surprise me. I think I might get my LGW-YYZ refund because of EU regulations but am investigating my rights on the YYZ-LGW portion. Canadians are poorly protected from airline vampires because our politicians have been bought and sold by them; the so-called airline watchdog recently ruled that airlines need only give credit as refunds. WestJet is a relatively decent airline by reputation but look out for Dracula, Air Canada, with its longtime (way too long) CEO, the arch predator Ravinescu.

    Oh, and yes, my EasyJet refund. Perhaps the EU regs will cover that.

  21. @Stuart. “I have never trusted advanced payments for any resort/hotel. Period.” Good luck finding a hotel in CBD Sydney over New Year’s Eve. All are non-refundable pre-pay. You need to buy a travel insurance policy.

  22. Name and shame indeed. I had four tickets booked for Highclere Castle’s spring tour (where Downton Abbey was filmed). They weren’t cheap – 120 GBP each – and they are refusing to refund despite being closed due to Covid. Truly disgusting behavior from one of the wealthiest families in Britain, the Earl and Countess of Carnarvon!

  23. @Max’s proposal — an escrow account, preferably held by a trusted intermediary (such as a bank) — is clearly the safest solution in a world where companies are struggling and may go bankrupt in huge numbers. But the cost and complexity of implementing it would be high.

    In the UK, all payments over £100 made with a credit card* are effectively guaranteed by the credit card company — they are jointly liable with the supplier for the delivery of the good or services and, if those are not delivered (or if the supplier goes bankrupt), the credit card company *must* refund you. Experience since this legislation was introduced in the 1970s is that the credit card companies mostly operate on a “no questions asked” basis, certainly in the case of bankruptcy, and their presumption is generally in favour of the consumer, leaving it to the company to prove otherwise.

    As we know from 2008, most retail banks (who issue most of the credit cards in the UK market) are “too big to fail”, so are guaranteed by government. That’s about the best protection I can see for deposits for future travel.

    Start lobbying your legislators!

    *This legislation only applies to cards offering credit, not to debit cards which simply use money in your current/ checking account. Pay with a debit card and there is no protection.

  24. Segregated accounts are certainly the way to go in the future.

    As for the current situation, we are currently preparing criminal cases against the C level management of those not refunding refundable fares/rates. There are different titles which can be used. Maybe, the perspective of going to jail will change their policy … at least their jail terms will be a signal for future managers.

  25. Just holding the money in a separate account won’t help. Maybe some kind of 3rd part escrow fund services will pop up for travel bookings. Trust in the travel industry to honor their commitments has been completely eroded.

  26. I had a really rough go with Priceline on a hotel refund. After three phone calls I got a refund, Bottom line….never use them again. Who wins in this scenario…?

  27. I’m simply not going to be doing prepaid rates for hotels anymore and Bonvoy has finally been 100% cut off for us. Feels good!

  28. Hotels.com cannot be trusted to get you a refund, even when the hotel notifies it will be closing up temporarily on our dates of stay. All I’m being offered is a voucher, which is virtually useless because I may not be back to that continent, much less that town, in the next year. Epic fail here. Last time I will book anything with them. Surprisingly, some other OTAs have done better.

  29. #RCB, It’s a purchaser’s responsibility to read the PDS on their Credit Card insurance before deciding to avail themselves of it, should the need arise. Typically credit card policies do not offer the same level of cover as a standalone travel insurance policy, in my experience. It is particularly tricky if some elements of the trip were not purchased on said card, as then likely not to be covered at all by the cc policy.
    Don’t blame the credit card company – take a little time to read the (admittedly) boring PDS to make sure it offers you the peace of mind you seek, in respect to what categories are important to you & the amounts of cover you require.
    Some travel insurance companies offer an annual policy, offering cover for multiple trips within the 12m validity of the policy, both domestic and international. If you travel frequently and feel your cc policy to be inadequate for what you need, perhaps this could be worth your while investigating.

  30. I almost never prepay for hotels or cars, and for airlines it’s always with a CC to at least have a method to dispute problems. But since I’ve started the card churning all my hotels and flights are with points.

Leave a Reply

If you'd like to participate in the discussion, please adhere to our commenting guidelines. Your email address will not be published. Required fields are marked *