Dealing with holiday refund requests & cancellations
Business, as in life, is full of unexpected events and sometimes there’s no knowing what’s going to happen next. In the holiday letting business this inevitably means you’ll have to deal with cancellations and refunds at some point due to bereavement, illness, job etc.
Here, we provide some tips on how to respond to a guest who has to cancel their holiday.
Plan ahead – Cancellations will happen
The secret to handling cancellations well is to think ahead. It will eventually happen so decide on a plan of action for cancelled bookings and make sure this is clearly outlined in your booking terms and conditions. This should involve:
- Time frames
- Amount of refunds due
- Advice on holiday insurance
- Good-will policy
It’s up to you to decide on a time frame for refunds and how much money to return. For guests who give plenty of notice (e.g. over two months), you might be prepared to give them a refund if you manage to re-let. On the other hand, guests who cancel at short notice should only expect a small percentage of what they paid as a refund.
You also need to consider:
Administration fee: Many holiday let owners charge an administration fee for cancellations to cover the cost of the extra work involved in filling the cancelled weeks (e.g. £30).
Bank charges: If you’ve had to pay bank charges or payment processing fees via Paypal or your merchant account for example, you may also want to take these off the amount you’re refunding.
Damage deposits: These should always be returned in full if the stay is cancelled.
Re-advertising: Any costs incurred in re-advertising your rental, special offers or discounts should also be deducted.
Cleaning and utility charges: If you’ve included charges for cleaning and utilities, these should be refunded in full to the guest as you haven’t incurred these expenses.
Have a clear written policy in place
So considering the above points you should work out a clear policy when you first launch your rentals business with regards to cancellations. The booking terms and conditions should form part of your rental contract that your guests enter into to when they book, and having this in place will greatly help you in dealing with cancellation requests. Ethical rental owners will stick by the booking policy and its time frames and amounts, and if you need to refund money, do it as quickly as possible.
Typically, a non-refundable deposit of 25% of the holiday price is payable at the time of booking, with the balance payable 6-8 weeks prior to the holiday. If guests cancel less than 6 weeks prior to the holiday then the full balance remains due and is not refundable.
Beware of scams
Asking for holiday let refunds shortly after payment is a known scam. Before refunding any money check the payment has been cleared by your bank. Never make a refund on un-cleared funds or into an overseas account unconnected with the original transaction.
One of the most important things to emphasise in your booking terms and conditions is that a holidaymaker can protect their money in the light of unforeseen circumstances by taking out holiday insurance. Travel insurance policies will cover many events that could cause them to have to cancel their stay at your holiday let, e.g. accidents, illness, injury and unemployment.
As well as mentioning it in your booking conditions, you can also make sure your guests are aware of their responsibility to take out travel insurance by including a short sentence in your booking confirmation email.
For example, “we strongly advise taking out comprehensive travel insurance to cover possible cancellation costs and your stay at our holiday let. If you choose not to then you accept responsibility for any loss that you may incur due to your cancellation”.
Replying to cancellation requests
Most guests will only cancel a holiday if they have to and for legitimate reasons, and they’re likely to be disappointed (and probably upset over the event that led to the cancellation) so remember to be sympathetic.
Start your reply understandingly and if necessary, offer condolence or sympathy, but don’t lose sight of the fact that a cancellation can mean lost business for you.
Start off by showing good will. Depending on timescales, maybe offer the guest a choice of alternative dates, and mention that you will re-advertise the cancelled dates. Explain that if you get a new booking you will refund for the cancelled stay (the exact amount will depend on the terms in your booking contract) minus your administration fee and possibly the costs involved in re-advertising the property.
If you’re unable to get a new booking the guest may not be entitled to a refund, so in this case you should gently encourage them to speak to their insurance company and continue your gesture of good will by offering to help with paperwork to support a claim for insurance purposes. In order to make a claim they will need a copy of the original booking confirmation, receipts for payments made to date, and possibly a copy of your terms and conditions. Ensure you have all the necessary paperwork in order for each of the bookings you take.
Being understanding and not seeing everything in black and white is what sets holiday rental owners apart from faceless multi-chain accommodation providers. How would you like to be treated in the same scenario?
If guests ‘demand’ a full refund they you are entitled to stick to your booking terms. For genuine unforeseen cancellations, then a partial/full refund or an offer of alternative dates may be a solution that’s mutually beneficial, encourages repeat bookings and makes you feel like you have done the right thing.
Considerate owners are what sets the private holiday rental industry apart, you need to be caring, but firm when dealing with cancellations. Don’t lose sight of the fact that a cancellation can mean lost business for you.
If you don’t manage to re-let the dates:
You are entitled to keep the amount paid less any costs that you won’t now incur such as cleaning and utility bills. If they haven’t paid in full and owe you the balance, pursue for the outstanding money.
If they want to book for next year then you might feel like offering a small discount as a generous gesture against a future booking.
If you manage to re-let:
You refund less any re-advertising costs, last minute discounts and a reasonable admin charge to cover loss of revenue. You could also offer to put their payment towards a future booking.
If you need any advice on dealing with cancellations then please comment below.