We’ve seen airlines play all kinds of games with refunding customers, given the cash bind they’re in. There are plenty of hotels doing the same.
In this post:
I feel bad for hotels during this time
Before I get into the crux of this story, let me note that I feel so bad for the entire tourism sector, and in particular small businesses in the industry, including hotels that are either independent or run as franchises.
This entire situation has destroyed their businesses for the time being, and a lot of them are unable to cover their costs, including laying off employees, and/or not being able to pay them.
While I have issues with multi-billion dollar airlines violating federal regulations to deny refunds, I’m generally more sympathetic to the issues that small businesses face. That’s not to say that I support them violating federal regulations or screwing customers, but I realize they often don’t have the safety net or access to funds that publicly traded companies may have.
Italian hotels refusing to refund stays
Many independent luxury hotels require a deposit in advance, which is often refundable. Presumably it’s primarily to make sure people are “serious” about their stay, rather than just booking something speculatively and sitting on inventory.
I’ve been forwarded communication from a luxury independent hotel in Italy where someone booked a 1,700+ EUR per night stay, with the following cancellation policy:
- A 50% deposit was required at the time of booking
- Free cancellation is allowed until 90 days prior to arrival, including a refund of the deposit
The guest wanted to cancel this stay more than 90 days in advance (as he is entitled to, per the terms), and how did that go?
First the hotel responded offering a credit towards a future stay, or alternatively offering a refund of the deposit “by the end of July 2020” at the latest:
“As you know, all the sector is facing a big crisis and this is why, as the first option, we offer the Clients that are cancelling their reservation, the possibility to hold the deposit paid as a credit for a future reservation from May 2021.
If, instead, the Clients prefer to be refunded, the amount could be refunded at latest by the end of July 2020.”
After pushing back, the offer for a refund was essentially rescinded altogether, and the client was informed that a future credit would be the only option, though they’d allow the guest to use it within 24 months (rather than a year):
“We are perfectly aware of our agreement in which we assured a full refund of the deposit paid, but in light of the events that are currently impacting our country and the restrictive measures put in place by the Government, we are not able to proceed with any form of cash reimbursement.
As per the government decree on the coronavirus emergency – more specifically, in accordance with the provisions of article 88 of law decree no. 18/2020 and article 28 of law decree no. 9/2020 – we are asked to make a refund in the form of a voucher for the same value of the service that you paid, valid for 12 months.
As we also understand your situation, we have decided to extend the validity of the voucher to two years in order for you to be able to re-organize your trip in the easiest and convenient way, offering also the possibility to transfer the voucher to another person, if that is your wish.
Our commitment is to protect the value of your money and this is the only way we have to do that, remaining loyal to one of the pillars of our establishment: being trustworthy, as we have always been.
We are all in this together and we believe that we will get out of this situation stronger than ever!”
My thoughts and questions on this situation
I have some thoughts and some questions. First of all, I’m not here to name and shame the hotel, because I recognize the struggles hotels are going through. I imagine this hotel isn’t alone in having a policy like this.
Obviously I sympathize with hotels at this time, but it would seem to me like refusing to refund a refundable deposit outside of the cancellation period is a breach of contract, plain and simple, regardless of the financial circumstances.
It’s one thing to refuse to offer a credit (or refund) for a booking that’s within the cancellation deadline during this time, but this is a stay that was cancelled prior to the deadline.
And that brings me to me question? Is there really some Italian law saying they can’t refund people? I searched the articles referenced, and maybe it’s a translation issue or something, but I’m not seeing how they would apply in this particular case.
Is there actually an Italian law saying hotels can’t refund deposits that are supposed to be refundable, or is this hotel counting on people to simply believe that?
What do you make of this situation?