Some Italian Hotels Won’t Refund Refundable Deposits

Filed Under: Hotels

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.

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After pushing back, the offer for a refund was essentially rescinded altogether, and the client was informed that a future credit would be the only option, though they’d allow the guest to use it within 24 months (rather than a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?

Comments
  1. Why not name and shame them?

    It’s completely absurd and I doubt with all the stimulus packages worldwide for the hotel industry (not just in the U.S.) that there is any sort of protection for hotels to be able to ultimately steal the money of those booking and canceling within the proper time. While we will see “Force Mejeure” as an excuse to void contracts I highly doubt this falls into a category that justifies it, especially since they canceled within the allowed time.

    Naming the hotel is the only way to pressure them. Especially if they are part of a global brand. It’s disgusting behavior.

  2. This will likely become the norm. My grandmother had a saying which made little sense to my 6 year old self, and all too much sense to my present day 56 year old self:

    “You can’t get blood out of a turnip”

    So true.

  3. What concerns me more is seeing US hotels use my credit card security to start taking money for a stay in August. At the time of booking (Jan) they didn’t take anything, and then as they crisis started they began taking money (without notifying me). The booking is completely cancellable. Presumably they have a cashflow crisis but it’s worrying what happens if they aren’t there in August (although this is a Four Seasons in Hawaii).

    If a hotel won’t refund in accordance with the contract, the credit card company must do so (at least in the UK).

  4. What concerns me more is seeing US hotels use my credit card security to start taking money for a stay in August. At the time of booking (Jan) they didn’t take anything, and then as the crisis started they began taking money (without notifying me). The booking is completely cancellable. Presumably they have a cashflow crisis but it’s worrying what happens if they aren’t there in August (although this is a Four Seasons in Hawaii).

    If a hotel won’t refund in accordance with the contract, the credit card company must do so (at least in the UK).

  5. The hotel doesn’t have the cash. No blood from a turnip. No telling what will remain when all is said and done.

  6. From what I understand, after reviewing the decree in Italian, they do have the option to offer a voucher for a future stay but they’re still obliged to provide a refund, if requested to do so.

  7. I don’t stay in Italian luxury hotels but my three and four star hotels in Italy have all provided refunds on my April reservations that were cancelled. The manager of my regular hotel where I stay in Venice, which has been closed down for some time right now, advised me that he is only permitted to leave his home and go to the hotel once a week on Monday to check the premises and take care of mail, etc. and as such, the processing of requests is slowed down somewhat. I’m not aware of any anti-refund laws in Italy and I’ve never had any issues in the past during the non COVID-19 era.

  8. Ben, there’s got to be a banking analyst out there who sees the tsunami of US chargebacks about to crash down on travel providers in the coming months due to airline, hotel, and TA monkey business. I’d love to hear more about what the finance industry is doing to anticipate and manage this situation, as it seems as big of an exposure point for them as for the vendors themselves.

  9. As an owner of a condo that I rent on Airbnb, I also understand the cash flow problems that small hotels face. However, I’m just a normal guy with even less resources and funding than even a small hotel, and I’m required by Airbnb to give 100% refunds for all coronavirus cancellations. We are all taking the hit and I’m still giving full refunds.

  10. This is not just an Italian trend. Hotels globally are issuing credits instead of refunds. Likewise, hotels are reversing their policies left and right and either issuing refunds when they initially only offered a credit (happened to me this morning from a hotel in Mexico; great news), or flipping and issuing a credit in lieu of a refund (happened to me two days ago from a hotel in France; annoying news).

    If you are that desperate for the true refund, I would dispute the charge with your card company.

  11. Hmm, this got me worried. I have cancelled all travel until May but have kept all trips starting late-June just in case things will get better sooner than i expect. Perhaps one should cancel more upcoming trips right away? I have a lot (45+) of upcoming hotel reservations but all are via Hilton, Marriott or Hotels.com, which seem safer than your average independent hotel?

  12. You won’t name and shame a hotel? Yet you had no problem doing it last year with the Aspen or Vail, wherever it was, Marriott hotel?

  13. You really are a piece of work. You feel sorry for hotels meanwhile people can’t pay rent or buy food. They lost jobs and the economy is tanking. People are dying. People booked refundable hotels that are breaking contract law….but YOU feel bad for them. Go ahead, tell us more how YOU feel sorry for hotels.

  14. @Nick Summy: Even if the Italian decree allows it, Italy is still subject to EU law and EU courts. I suspect there is some EU protections and consumer laws that could be invoked. Of course, the easiest solution is disputing the charge through the credit card company.

  15. @ Ernest Alleva — I said I feel sorry for small businesses/independent hotels. I didn’t say I don’t feel sorry for any other people or groups. I most certainly do…

  16. @ FNT Delta Diamond — A few things are different here:
    a) It’s not my stay/a public policy, but is only through email based on someone else’s stay, so I’m not as comfortable naming the hotel
    b) If you’re referring to the St. Regis Aspen, there’s a difference between having a punitive policy in good times that’s intended to screw customers, rather than something that’s purely out of desperation for survival (even if the policy is completely unfair)
    c) The hotel is quoting Italian law, and at the time I published this I wasn’t fully able to make sense of whether they were completely making that up, or what exactly the situation was

  17. Force majeure can be used to void a contract, but it voids commitment on both sides.

    Example: You have a ticket to Miami. A hurricane hits Florida. The airline invokes FM and thus does not fly you to Florida and you cannot claim damages. But, the airline has to give you your money back. It is out of its obligations AND you are out of yours.

  18. I found the decree (Italian decrees are published in the Gazzetta Ufficiale) … Article 88 refers to “Refund of residence contracts and termination of purchase contracts for shows, museums and other cultural sites”. It’s possible the hotel is considering themselves “residence”, and part 3 says the following: they can issue a voucher good for 1 year… “The purchasers submit, within thirty days from the date of entry into force of this decree, specific refund request to the seller, attaching the relevant purchase document. The seller, within thirty days from the submission of the application referred to in the first period, it issues a vouchers of the same amount as the purchase order, to be used within one year of issue.”

  19. Love how they underline they are “trustworthy” yet are backtracking on previously agreed terms and conditions!

  20. Obviously this is an extreme event but people should reconsider certain habits since it is better to owe, than have someone owe you.

    I try to avoid the following as much as I can:
    1. Auto bill pay – I want to control when bills are paid and how much will be paid. Companies make mistakes, fraudulent charges can be made, etc. It is much better to resolve these BEFORE you make the payment.
    2. Prepaying – You may save a few dollars but often it is non-refundable.
    3. Giving out credit card numbers for auto billing (similar to #1) – Minimize this as much as you can. I had one company that would only allow cancellation via a phone call (no online cancellation) and that, as you can imagine, took a while.
    4. Auto renew. They are a lot of websites where I would mind making a payment to support them but I absolutely refuse to deal with “auto renew for your convenience”.

    Obviously any person paying to stay in that kind of luxury can afford to lose the money but it has to be maddening where the person is clearly within the posted rules to cancel and should be refunded the money.

    Some of these companies changing the rules afterwards strike me as if I had purchased something for $100 months ago and now they say “Oh, we need more money so we are retroactively charging you an extra $20”.

    And sometimes it is hard to be safe. I once had my Wells Fargo (yeah, them) checking account cleaned out because they had a “mistake” where my bill pay (not automatic) was applied multiple times until it zeroed my account. Fortunately by the time I woke up the next morning they had resolved the problem but for those at night that tried to use their ATM card, it was useless. Fortunately I always have multiple cards (CC and ATM).

    You don’t want to be over the top paranoid but as anyone who has had issues knows, it is much easier to resolve things when you still owe someone than when you are trying to get money back from someone.

    All of this gift card soliciting by companies is well intended but I’m afraid more than a few people will be left with useless cards, so consider them a donation. I usually avoid in person charities since I don’t usually trust where the money was going but yesterday one was selling stuff and instead I just gave them some cash. Maybe I was in an exuberant mood because the store had toilet paper 🙂

  21. Do a chargeback; that’s what it’s for.

    Do you think for a second if you had a hardship (job loss, etc.) the hotel would give you a full refund if you were within 90 days? Of course they wouldn’t.

  22. So another blog is reporting that people are trying to do chargebacks for canceled Air France flights and American Express is refusing to process them. It may be that the credit card companies are now siding with businesses despite the laws. If so, it makes the bailouts these industries are getting pretty insulting. Apparently it’s two bailouts, one from the Government and another from private individuals whose money they are stealing.

  23. According to Business Traveller magazine , trade body Airlines UK has written to the government requesting that they can defer refunds and offer vouchers

  24. This is called a liquidity issue. A solvency issue.

    All “terms” and “guarantees” are made under the assumption that the company is solvent. But guess what happens if they company don’t have no money?

    Unfortunately, in the travel industry, it is very common for companies to use forward deposits for current expenditures. 99% of the time, it’s just fine as there are always more reservations coming in. But when the reservations stop…..

    An example of this is prepaid private jet cards. Sure, the $1m you put down for your prepaid flying can be “fully refundable,” but if the company goes belly-up, you lost it all. That’s why extra diligence is required for private jet companies.

    Now, this is happening with hotels. The financial guarantee is only good so long as the company can stay afloat….

  25. I see you’ve switched from saying “feeling badly” to “feeling bad”. I know, it’s a stupid, pedantic thing, but I made a comment about it once before and it seems you might’ve noticed it. Thanks for making my day (truly).

  26. @ Lucas: I advise you to cancel all air, hotel and tour bookings for this year. The health and economic crises won’t let up by year end. Even if western countries contain the disease, it does not mean a surge of second spread won’t happen. We will not fathom its severity when India, Africa and South America are at their peak fighting the disease. Unlike previous depression or great recessions that did not impact the top 10% elite, this disease has struck them that includes politicians, sport players, royal family members, medical professionals and top government officials such as UK Health Minister.
    @ Lucky: you must shame the said hotel but include the screen shot of reader’s comment. It is public info when commenting on a public blog. Your second point does not fly. 95% of the world population is now in survival mode, except you judging by your travel reviews, and it does not justify or dignify their predatory and unlawful practices. In times like this, businesses shine when they make their customers whole. Laws are out the window as enforcement agencies have neither resources nor inclination to prosecute anybody. The laws in the book are not in question. It is how people interpret and twist the contexts to serve their interests. Ethical and moral people do not need laws for guidance. They use logic and common sense to conduct themselves in decent manner. I operate a lodge and don’t ever charge customers for no-show or cancellation on same arrival date but I do bump people for late arrivals without advance notice. But the policies are transparent to deter speculative reservations. However, >95% of the culprits are Americans. Many bigger and wealthier businesses are leeches that prey on public and individual funds but they always come out much more dominant and influential. Patronizing main players in the industry may not come out ahead as you have no leverage or resources to fight them head on because the credit card companies or processors will not side with you when the laws clearly stipulate so.

  27. Honestly, I think a little less of you for not naming the hotel. Isn’t the whole point of this article to bring light to what is going on out there in the travel world? To only half way report something either shows lack of seriousness about your article, your feelings about the situation or something else that doesn’t appear genuine.

  28. I can confirm that there is a misunderstanding. I’ve read all the law decrees and there is some mention to hotels but it is limited to the period of the effect of the decree so until 3 April… and the rules have to effect only the reservation and the stays during this period not the future stays, furthermore it will not effect the usual cancellation policy that in this case seems to be fully covered because the cancellation hav been made 90 days before the stay….so they have to react strongly because is an abuse!

  29. In addition to the chargeback, don’t forget to assign a one-star review with your story on TripAdvisor, flyertalk, and/or any other website as a heads up for the next traveler!

  30. The hotel should be named and shamed. This is an absolute disgrace. If you booked a refundable rate you should be getting a refund. Name and shame the hotels so people are aware and don’t book with them in the future they deserve to go under with a policy like that. Italy generally seems to be a country where everyone wants to rip you off anyway. I personally didn’t like it when I visited.

  31. Is it possible to conduct an interview or get input from the banking industry regarding charge-backs for your blog?

  32. Chargeback. I had an issue with Aerolineas Argentinas in January. I was at the airport when the airline announced there was a strike. I couldn’t get the airline to refund my money. They wanted me to fly another day. I was only traveling to Mendoza overnight before a trip to Antarctica. I couldn’t change my schedule.

    Thanks to the myriad of blogs including this one, I knew not to leave the airport without a letter stating there was a strike in both English and Spanish. I called Chase and they charged back the flight. In that case, my trip delay insurance also kicked in since strike unlike the virus was covered.

    It is outrageous that a hotel would keep the refundable fee. The person should post the information on Tripadvisor. That is not cool.

  33. We are having the same issue with a hotel in France, even though the hotel, for now, is closed due to the virus outbreak, through mid-April, which may be extended into mid-May. We have a non refundable reservation for early May but they say we would have to wait and see what they are thinking of doing. $1600 down the drain. We will never book a non-refundable reservation again and will only patronize large chain hotels where one may have a little more clout over small, independent hotels. Negative reviews are probably going to be our only recourse.

  34. This guest should do a chargeback ASAP. That’s his best chance to get money back. If he trusts the hotel and waits until July for a refund and they say “Sorry, we can’t pay you, we’re broke” then it may be too late to do a chargeback then.

  35. If the hotel doesn’t have the money they won’t reimburse you regardless of the cancellation policy. Also filing aa dispute with your credit card company won’t help. They want to get paid just like you. None of them can afford to pay back card holders if vendors can’t pay them back.

    Amazes me that people have such an ignorant view of how the credit card disputes actually work

  36. Ugh. That’s a problem also, but so is the unwillingness of Emeritis Air from refunding my fare that was scheduled for May 13th??? I’m a senior.. will I Still be around in a year? They cancelled all flights as of Mar 25. Do I have any recourse. Are they under the purview of DOT?

  37. I made a booking before all this blew up at a NRT airport hotel. Unusually, full payment was required on booking, but refundable if cancelled within a few days of arrival.
    It was for early April, and I did need to cancel, as the whole itinerary is now unwound.

    The refund took about a week to land back in my account, and I even made a small profit due to the Japanese yen appreciating against the $ !

    It has always been my experience that the Japanese are consistently more honourable than many laissez-faire western countries.

  38. @AC – The banks are not worried about the interchange fee they’ll get on the amount (if they loose it at all). They also charge the hotel a chargeback fee if they loose.

  39. I am facing issues (regarding golf tee time payments) with getting refunds in spite of canceling much further in adavance than the cancellation policy in effect.

    Was actually told a 28 day or more full refund policy only applied in normal times and not unprecedented times despite no mention of this in the written policy.

    One would think policy would be eased not tightened in unprecedented times.

    I understand the cash flow pressures but when does it become outright theft?

    And to those that say just claim it on the travel ins policy is it right they get ripped off for the initial sin?

    I will say, if they remain in business I sure will interact with them differently going forward.

  40. That email from the hotel uses a lot of nonsense language to justify screwing the customer. We’re all in this together since we get to keep your money.

  41. Lucky — I read the law. Art 88 of law 18/2020 https://www.gazzettaufficiale.it/eli/id/2020/03/17/20G00034/sg at par. 1 extends the provisions of Art 28 of law 2/2020 to hotels that cannot offer their services due to Art 6 of law 6/2020 (i.e. “lockdow”). Art. 28 of law 6/2020 https://www.gazzettaufficiale.it/eli/id/2020/03/02/20G00026/sg does allow companies to choose to give out a voucher, but it’s not clear to me whether this applies only to non-refundable amounts (i.e. whether your existing contact, which calls for a full refund, takes precedent); I would assume so.

    Your post is weak: in this time of companies taking advantage of consumers as they’re losing their jobs, you need to name and shame.

  42. The financial plight of the hotel is irrelevant. They have entered a contract by taking a booking and if that contract stipulated the deposit is refundable, it must be refunded.
    In the UK there would be a simple remedy of making an on-line application to the “small claims court” for an adjudication but given the Italian love of bureaucracy and frequent ignorance of the law, I presume they have no similar remedy.

  43. All of you expecting to just ding your credit card issuer for the loss are in for a large and unpleasant surprise, I suspect.

  44. Hotels.com is “delaying” refunds for prepaid reservations cancelled well within the allowable window. They are no more reliable than the unnamed Italian property. At least that hotel responded (albeit questionably ). Good luck even contacting Hotels.com.

  45. I work in the travel business in Italy..a deluxe hotel pulled that same thing on me for a reservation booked for clients with my cc.. I told them it was not acceptable and did a chargeback. They then called me explaining..I told them I did not care that I have to refund the client. We have no protection as agencies ..why should they sit on our deposit.

  46. Thanks for the post Ben. Fwiw living here in Italy, a Cortina hotel we booked on booking.com tried the Article 88 argument with me, but booking.com overruled them and issued me the refund under the booking.com COVID policy as invoked by their force majeure clause. So kudos to booking.com .

    What is a bit amusing is that originally, the hotel didn’t want to do any refund at all when I cancelled and just take my money. If they had offered the voucher at that point as a gesture of goodwill, I would have gladly accepted it and held the hotel in high esteem. Instead, by being greedy and unreasonable, they got nothing instead and we will stay elsewhere during the many trips to Cortina we take every year.

  47. @Bee, from Hotels.com:

    When will I receive my refund?
    Please note that due to the unprecedented volume of travel disruptions, refunds may take up to 30 days to process.

    To me, up to 30 days is acceptable due to the unprecedented situation. I won’t take issue unless they become like the DESPICABLE airlines and deny refunds for for canceled flights for an indefinite period

  48. I actually tried a charge back after a hotel offered me a (likely useless) voucher after they cancelled my reservation. Amex flatly refused the charge back because “the hotel offered an alternative”. So much for Amex.

  49. I’m in the same situation, but hotel is in Portugal. I put down a deposit and my flight in May has been cancelled and the hotel is refusing to refund me my deposit. They keep saying I can use it as a credit towards a future stay. They didn’t have a cancellation policy and they keep dodging my emails. I’m going to charge back through my Visa card, but I’m sorry, this behavior is unacceptable, regardless of the circumstances.

  50. Hi there,
    Feel obliged to write something here as I am on the other side of the fence (hotel manager in Italy). This decree is a thing – and it is a godsend for Italian tourism. France has also established a similar decree, and I imagine it will soon spread to many other countries too. For those that were lucky to get funds back, this is a new decree (March 20) before that we were all trying to refund. That was before we realised how bad the situation was. This isn’t just a couple of months without work, this is a catastrophy of epic proportions, last seen in WW2. We have seen our whole years’ bookings vanish in just a few months.

    Initially, Coronavirus was considered an Italian problem or a Chinese problem – but as the last weeks events have shown, this is not the case. This is a worldwide problem. Why should all of Italy’s hotels suffer when travel insurance companies won’t pay out for COVID? If flight companies will only offer vouchers, why not hotels too? It’s not Italys problem, or you the holiday makers problem you don’t want to risk your health and fly – so why not share the hit? The decree is endorsed by the Federalalberghi association (hoteliers association) and you can find a question and answer page in Italian here https://www.federalberghi.it/primopiano/il-voucher-salva-vacanza.aspx#.XoNlaC1aZQI
    You guys in the US haven’t seen how bad this gets yet… I feel you will change your views in a few months.

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