Why are travel businesses offering credit vouchers instead of cash refunds?

Westin

There seem to be an increasing number of people reporting issues with obtaining refunds for cancelled travel within the 30 day period that the FCO has issued their latest travel advisory for. 

Please forgive me for starting (yet another) thread but I thought it might be worth trying to keep future discussions on the refund topic on one new thread.  Perhaps board monitors could start to merge in some of the other individual reported issues on refunds with specific companies on to here. That way if someone reports a solution it can be shared with others experiencing the same issues.

The current situation with travel and restrictions on movements of people is unprecedented.  From this I think we have started to see some new practices from travel firms which are not typically normal.  Whilst perhaps some are very understandable in the current situation, people are rightly getting confused, upset and perhaps feeling mislead.

Package Holidays are typically very well protected but I think it concerning that it seems many are now reporting that even the large tour operators are now telling customers that refunds are not possible and only travel credit will be given.

Legislation under the Package and Linked Travel Arrangements Regulation 2018 is meant to ensure that should a trip/holiday covered by this regulation be cancelled by the supplier then the supplier has an obligation to "provide the traveller with a full refund of any payments made for the package" further that this "must be made to the traveller without undue delay and in any event not later than 14 days after the package travel contract is terminated."

For those at home already bored with daytime TV, here is something to read –

https://www.legislation.gov.uk/uksi/2018/634/contents/made

I understand that ABTA have made approaches to government to seek urgent talks with a wish to introduce temporary changes to regulations to ensure that customer’s money is protected under the current extraordinary circumstances.   This may not appear on the face of things "fair" but I think many will understand that all businesses now will be protecting cash reserves and trying to protect their staff and jobs.  I suspect the new and temporary norm might be that some form of protected rights credit voucher might become necessary rather than a full cash refund.  Not great, not ideal but travel firms and airlines I suspect will simply not be able to give all customers cash refunds. 

Given the large number of people being faced with this issue at the moment I hope that MSE might use their access to government departments and senior players in the UK travel industry to seek clarity and share outcomes on the main MSE article running on this travel subject.

I am sure that together we can all get through this and also focus on what really matters at this time.  Patience and forbearance is necessary.

I thought these remarks from the ABTA.com website are appropriate to share –

-          If your trip has been cancelled because of the change in FCO advice, talk in the first instance to your travel provider to discuss options.

-          If possible, postpone your holiday or travel arrangements, don’t cancel – this will mean you have a holiday to look forward to in the future, and it will help your travel provider maintain its cash flow through the short-term challenges.

-          If you have a travel booking for later in the year, please be patient. The situation is changing rapidly, and travel restrictions are currently only in place until mid-April.  You may incur cancellation charges or lose your deposit if you make a hasty decision.

-          If you are not able to postpone, they may offer you a refund credit voucher instead of a cash refund. ABTA is in urgent talks with the Government to ensure that these credit arrangements have the full cover of financial protection. You should await further guidance on this.

-          If your travel provider has said they will offer a cash refund, please be patient with them as they process this: they are likely to be dealing with an exceptionally high volume of enquiries.

-          If your travel company isn't offering refunds, or you're facing other consequential losses, your travel insurer will usually cover any non-refundable costs due to the Government warning

Source and credit to https://www.abta.com/news/coronavirus-outbreak

 

Now, my suggestions perhaps to make this credit voucher vs. cash refund perhaps more palatable for customers. 

Suggested to tour operators/travel providers from a customer stand and perhaps to show mutual support:-

If under legislation and/or booking conditions a full cash refund should be provided but instead your business is offering a credit voucher or travel waiver

a. The credit voucher is a small amount higher than the initial holiday balance – i.e. voucher is %110.

b. There will be no change or amendment fees imposed on the new trip when the customer is ready to book.

c. The credit voucher validity is sufficiently long (12 or 18 months).

d. ABTA or other trade bodies set up a type of voucher guarantee/bond to ensure should the travel provider fail; the voucher still has value.

e. Additional low cost to travel provider but token gestures are offered to customers who accept this voucher in lieu of cash. 

These might be ; making no charge for standard pre-booked seats on flights,  a percentage discount on inflight café purchases on the reschedule trip, a discount on in resort/on holiday trips arranged via the same operator, even a £xx rain check type voucher for another future 2021 holiday.

 

Apologies for the lengthy read.

 

Travel safe (when we can) everyone.

bagand96

You are right @Westin. The reason they are doing it is simple: cashflow.

Yes they will get accused of trying it on, trying to pull the wool over peoples eyes etc...

But the blunt reason is that many of them now face a fight to survive this.  Even those that 2 weeks ago were healthy and successful businesses.  I did hear of at least one airline offering 120% of people's booking if they took vouchers.

KHthejudge

Looks like we will all have to wait and see, but the reality is that cash flow will be difficult for everyone, even the people now awaiting refunds.
On another note, knowing how the travel industry has worked in the past, if vouchers are given, there are two scenarios that will come into play:
1/ Will the travel company still be around for you to spend your voucher?  (Sorry to be blunt but that's the stark reality)
2/ Just watch them send prices  sky high when everyone starts to come in for a new holiday, so your voucher isn't worth as much as when you originally booked it.

bagand96

KHthejudge said:

2/ Just watch them send prices  sky high when everyone starts to come in for a new holiday, so your voucher isn't worth as much as when you originally booked it.

I foresee the opposite scenario.  Every company in the travel industry will be desperate for bookings and cashflow, I expect they will be very competitive to generate bookings and generate a return to the norm ASAP.  Screwing people with vouchers will do them no favours.

Westin

KHthejudge said:

Looks like we will all have to wait and see, but the reality is that cash flow will be difficult for everyone, even the people now awaiting refunds.
On another note, knowing how the travel industry has worked in the past, if vouchers are given, there are two scenarios that will come into play:
1/ Will the travel company still be around for you to spend your voucher?  (Sorry to be blunt but that's the stark reality)
2/ Just watch them send prices  sky high when everyone starts to come in for a new holiday, so your voucher isn't worth as much as when you originally booked it.

Valid question which I also had raised.  I think it quite reasonable that customers who might accept a credit voucher in lieu of a refund from a tour operator, helping them out at this current time,  will be asking for and needing some assurance that the credit funds are protected.  I believe ABTA is addressing this and trying to discuss with government bodies.  I feel this should be wrapped into the ATOL Protection scheme.  Let's see what happens.

bobblebob

I can see alot of people that wanted to travel will now not want to, due to losing their job because of the virus. So i cant see how a credit note will work for everyone

badger09

Thanks to Westin for starting this thread.
We had a cruise booked with Fred Olsen due to depart 29 March which we booked way back in February 2018.
Arrived back from Australia & NZ (trip to celebrate my 70th) on 11 March, very concerned about the upcoming cruise.
FOC emailed 13 March to say all cruises up to 23 May cancelled and these are our options

• Transfer your booking to any other cruise on sale. Additionally, we will offer you a voucher worth 25% of this booking which you can spend on any future cruise (or use it to increase the value of the cruise to which you are transferring).
• A full refund if you would prefer to cancel altogether. Please email us directly on guest.services@fredolsen.co.uk and we can automatically process this for you.

As we already have another cruise booked with them in November, we're still considering this offer, which I think is generous under the circumstances.

growler834

We were due on a cruise in May but due to the FCO advisory re 70+ people not cruising, we received an email on 13/3 from Cunard offering a full refund or a future cruise credit if we needed to cancel. As my husband is 70+ our insurance would have been invalidated if we went against the FCO advisory. We contacted our TA on 15/3 to cancel the cruise & receive a full refund &, at his behest, put it in writing on 16/3. Since that time Cunard have suspended cruises up until mid April. Today, they changed the booking/cancellation policy & are now only offering a 110% future cruise credit to be used by March 2022. They say they will honour any refund cancellations made in the past week but we can't reach our TA to see if he has contacted Cunard before the change in cancellation policy. A future cruise credit is of no use to us as we already have 2 cruises booked with Cunard over the next 21 months & we can't afford the time or cost of another new booking.  Where do we stand if our TA hasn't been in touch with Cunard before today?

Westin

@badger09: Nice to hear that Fred Olsen have offered you a couple of good options.  Also that they give you a clear process and email contact for you to let them know what you want to do   Quite a few businesses seem to have a revised policy but fail to have a workable procedure in place to allow customers to take that next step. People then left to try for hours to make contact.

Westin

@growler834:  First, love the user name .  At least it gave me a smile today.   I would think Cunard will be honouring the offer made to you.   For now I would make a record of your actions, when instructions given, letters sent etc. - just to back up your case if needed. 

growler834

Thanks Westin. Haha - Growler used to be my nickname at work. Not because I'm a beast  but because my bob haircut was once likened to a pork pie - which in Yorkshire is known as a Growler!