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Ways to Handle Holiday Booking Cancellations & Refund Requests

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The holiday letting business is full of unexpected events and sometimes there’s no knowing what’s going to happen next. This inevitably means you’ll have to deal with booking cancellations and refund requests at some point due to bereavement, illness, the weather, airlines collapsing or pandemics.

Cancelled bookings are frustrating for hosts. There’s the lost income, acquisition expenses, the opportunity of missed enquiries and it’s often too late to attract other guests.

Here we provide some tips on how to manage guests cancelling their cottage holiday.

Have a clear cancellation policy in place

The secret to handling cancellations professionally is to think ahead. Nobody wants to cancel a holiday but booking cancellations will inevitably happen. So, make sure your cancellation policy for direct bookings is clearly outlined in your terms and conditions to protect you.

You will need to:

  • Decide if/when a refund is due and be clear about charges/fees
  • Make it clear that it’s the guest’s responsibility to take out travel insurance

Here are some tips on refunding:

Deposit payments
Typically, a non-refundable deposit (e.g. 25%) of the holiday cost is payable at the time of booking. However, if the guest gives plenty of notice you might be prepared to refund the deposit (less admin fee/expenses) if you manage to re-let the dates.

Paid in full
Guests who have paid in full and cancel at short notice before arrival should only expect a small percentage of what they have paid as a refund if you are unable to re-let the dates.

Also, consider:

  • Administration fee: Many holiday let owners and agencies deduct an administration fee from the refund to cover the cost of the extra work involved in filling the cancelled dates (e.g. £30).
  • Re-advertising costs: Any costs incurred to re-advertise your holiday rental, plus any discount off the original booking price should also be deducted from refunds.
  • Bank charges: If you’ve had to pay fees for credit card payments, you may also want to take these off the amount you’re refunding.
  • Refund cleaning and utility charges: The costs for cleaning and utilities are typically factored into the rental rate. If the guest isn’t entitled to a refund, these expenses should be refunded to the guest as you haven’t incurred them.
  • Damage deposit: If you take one don’t forget to refund in full.
  • Listing site bookings: The amount that is refunded will depend upon the cancellation policy of the listing website where the guest booked, they will have to submit a cancellation request through that website.

Be fair

1 in 5 people felt that they had been treated unfairly when cancelling a booking.

Travel companies have recently been warned by The Competition and Markets Authority against mistreating customers by relying on unenforceable deposit and payment demands. During the coronavirus pandemic the CMA is investigating suspected breaches of consumer protection law in the holiday accommodation sector and has taken enforcement action.

Note: Fair terms are a legal requirement and the cancellation fee must genuinely reflect the actual losses you experience from a cancellation.

How to reply to booking cancellations

Most guests will only cancel a holiday due to unforeseen circumstances. They are likely to be disappointed (and probably upset over the event that led to the cancellation) so remember to be sympathetic.

When you reply be understanding and if necessary, offer condolence or sympathy – but don’t lose sight of the fact that a cancellation can mean lost income for you.

Depending on timescales, you may be able to re-advertise and fill the cancelled holiday dates.

Sample booking cancellation reply email

Dear (guest name)

We are very sorry to hear that due to (the reason) you have decided to cancel your holiday at (your property name) from (holiday dates). As per our terms and conditions, the cancellation policy will apply.

We will make every effort to re-let the booked holiday dates. If we are successful in re-letting the dates, at the same rate and terms, you will receive a refund of the deposit/full amount (delete as appropriate) less a £x administration charge and any costs incurred in re-advertising the holiday.

If re-rented for a lesser amount, the difference between your booking and the lesser rental amount shall not be refunded. 

If we are unable to re-let the dates, we will refund any costs which we will not incur due to your cancellation, being (the cleaning and estimated utility costs).

As per our booking terms and conditions, we advise all guests to take out travel insurance to protect themselves from the financial impact of cancelling. If you would like us to supply any paperwork to support a travel insurance claim then please let us know.

We will let you know if we manage to re-let the dates and confirm any refund due.

Regards,

(your name)

Encourage guests to postpone rather than cancel their booking where possible. This often means less administration work for you, plus guests don’t miss out on their holiday or financially. It encourages repeat bookings, positive reviews and makes you feel like you have done the right thing.

How to reduce guest cancellations

Some cancellations can be avoided by being clear about your house rules and property description.

If you don’t accept pets, large groups, parties and smoking make it clear from the beginning. If your property is not suitable for children or guests with reduced mobility, make it clear in your description. If guest know what to expect from the outset, cancellations because your rental isn’t suitable can be avoided.

It’s the guests responsibility to take out holiday insurance

One of the most important things to emphasise in your booking terms and conditions is that guests should protect their booking from unforeseen circumstances by taking out holiday insurance to cover cancellation costs. If you are unable to refund, then guests can claim on their insurance.

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 cottage. If you choose not to then you accept responsibility for any loss that you may incur due to your cancellation”.

To summarise:

Considering the above points you should have a clear policy with regards to cancellations and refunds which forms part of your booking contract. Having everything set in stone will greatly help you when dealing with cancelled bookings or refund disputes.

If despite all your efforts the guest is still unhappy and ‘demands’ a full refund or they will give you a negative review, don’t lose sight of the fact that a cancellation can mean lost income for you.

After all, your booking terms will protect you and your accommodation is still available – it’s the guest’s responsibility to get to your accommodation and to take out insurance to protect their booking.

If you need any advice on dealing with cancellations then please comment below.

21 Comments

  • Emma |

    I’m currently dealing with a guest who is supposed to arrive in 2 days time, but a family member has passed away so they aren’t able to make it for their weekend stay. He asked if it was possible to swap to a future weekend which I unfortunately had to say no because with less than 48 hours until arrival there’s just no chance of it being re-let. Following my reply, the guest became irate over email and threatened to leave a bad review online of me and my company because of my ‘lack of understanding’. I was very understanding and sent my sincerest condolences for his situation. I honestly feel very upset by his reaction but at this late notice, we will be seriously out of pocket (and it’s summer booking that tides us over throughout the year). Our terms and conditions are clear about our cancellation policy and guests have to agree to them during the online booking process. I’m not sure what to do, except just wait for the bad reviews to come in.

    How do you handle an unreasonable guest?

    • Philip |

      Sorry to hear this. It’s unfortunately the guests can’t come, did they take out travel insurance? If not, then it was their decision to take the risk and not take out travel insurance to protect against situations like this. This is why owners have booking terms so everyone knows what happens should the holiday be cancelled. I would refund any costs which you will not incur due to the cancellation, e.g. the cleaning and utility costs. There is an email template to use for cancellations in this post http://www.schofields.ltd.uk/blog/3982/holiday-let-email-examples/. I wouldn’t worry about ‘review blackmail’, you can always respond giving your side of the story. As holiday rental owners, we try to be flexible and understanding where we can, but you are running a business after all and only have a limited supply of weeks to let. This situation highlights the importance of having booking terms and recommending that guests take out travel insurance to cover cancellation. I hope everything is resolved amicably.

  • Lynne Morrison |

    Hi. I’m having a problem with a guest who had cancelled their holiday three week before they are due to arrive

    The airline that they booked has gone into liquidation and they couldn’t find another flight in their price range so cancelled. They are now looking for a full refund because they cannot take the holiday

    It clearly states on my booking form to take out Comprehensive Travel insurance in the event of cancellation and it also states cancellation fees. We refund 10% if cancelled in this time frame

    Why should I lose out also …The PERSON completed, signed and dated the booking form in order to accept the terms and conditions

    • Philip |

      Hi Lynne, I expect there are other accommodation providers who are in the same situation after the airline collapse. If travellers don’t take out comprehensive travel cancellation insurance that’s the risk they take. Your accommodation is still available after all. If you manage to re-let the dates then you could refund as advised in the post above. Terms and conditions are there to protect both you and the renter. It’s essential that the cancellation fees are included so everyone is clear should a booking be cancelled.

  • Lynne Morrison |

    Thank you for taking the time to reply to my predicament Philip.

    I did return the damage bond immediately with a coveting letter informing the traveller that if I can re let the property that I would reimburse in full but as it’s quite a late cancellation if I don’t manage to get the property booked my terms and conditions will stand at a return of 10%.

    I did point out that this reservation has been held for 16 months and in that time I have declined a lot of enquiries and potential bookings for this date which is Oct half term, the traveller said that this is irrelevant in terms of how long this booking has been reserved. I disagreee !!!

    I have offered to give the traveller a letter for their insurance company only to be told that the policy he holds is only for possessions which in my opinion is not Comprehensive Travel Insurance which we encourage travellers to take on our booking form.

    He obviously paid for his flights on credit or debit card so will be reimbursed for flights, if I also give a full refund, I will be the loser in this scenario

    The traveller said he will take the matter further if he doesn’t receive a full refund but I believe I am in within my rights.

    Thanks again for your reply

    Kind regards
    Lynne

    • Philip |

      If in doubt get the legalities of your booking contract looked at by a lawyer. Ideally, travel insurance should be taken out that includes end supplier failure and covers bookings for villas, car hire etc.

  • Rick Bond |

    Good article. To nip a problem in the bud, respond to it the moment it is reported is so important. Even if you can’t fix it straight away, get on the phone – listen to the complaint and then let them know what you plan to do and when, seeking confirmation that they are happy with this. If not, guests tend to scrutinise a property for the rest of their stay to find every last excuse to ractchet up a number of complaints to justify their claim for a refund, (example: “the pots in flower in your photos were not in flower when we arrived. – This is a flagrant contrvention of the Trades Description Act.” – this from a guest who arrived on a snowy afternoon in late January, who really wanted to complain about the fact that the WiFi wasn’t working on arrival, which the owner failed to address for 24-hours).

    In all our terms and conditions we include the following statement:

    Any complaints must be notified in the first instance to My Holiday Marketing immediately so that they can investigate the circumstances and take any necessary action. In no circumstances can compensation be made for any complaints that are made after the date of departure, or where your have denied or prevented us or our agents the opportunity to try to put matters right during the bookers stay.

    It usually does the trick! However, if ever there has been a genuine fault and properly reported I can’t save how important it is to over compensate. It’s actually proved useful in securing repeat bookings when handled properly. Everyone knows things can go wrong – it’s how you respond is how you are measured in the long run.

    • Philip |

      Great tips Rick, thanks for your valued input.

      Listen to the complaint and then let them know what you plan to do and when, seeking confirmation that they are happy with this. If not, guests tend to scrutinise a property for the rest of their stay to find every last excuse to ractchet up a number of complaints to justify their claim for a refund

      You are absoloutely right, simple communication with the guest and an action plan can put a stop to the situation escalating beyond repair.

  • Sean |

    We just had guests stay at our luxury 4 bedroom villa in an upmarket resort on the beach in South Africa, there was absolutely no problem with the property and the guests in fact expressed how happy they were with the property. Then a huge storm hit the area and took out the power, blew roofs off of buildings and damage many of the beachfront properties. Power was out for 2 1/2 nights and the guests moved out of the property on the last night to stay in the resort hotel. The guest is now claiming a refund for the cost of the hotel and a partial refund for his 2 nights without power. I have offered him a nights refund and 10% discount on any future stay. As I understand it the storm was an act of god which affected the municipality supply over which I had no control or influence, so essentially I have no liability and my offer to him is a gesture of goodwill. Please advise where I stand on this.

    • Philip |

      Maybe a refund for the 2 nights affected? Can you claim on your insurance? Put yourself in their shoes, how would you like the situation to be resolved?

  • Grainne |

    Hi,

    My dad had a family of 4 stay in our apartment abroad in spain. They booked for a week. On nearing the end of their trip they emailed to say they had a terrible time as there was construction going on in the apartment below which my dad had no idea about. The guests are now looking for a full refund and more on top of what they paid. My dad was going to refund half and im all for that but would it be disrespectful to investigate how long they had to vacate the apartment for or how would this be best measured on refunding their money? My dad also lent them his own sat nav so they would find the apartment better has we found the ones provided in car rentals hard to use. Im weary about my dad refunding all just because they demand it…any advice?

    • Philip |

      Did they stay for the whole week? If so then refunding half is reasonable as you have incurred expenses. They should have informed you straight away rather than at the end of their trip. This should be in your booking contract. I would inform future guests about the construction work to avoid further complaints.

  • Claire Hadgraft |

    Hi, i’m new to holiday lets and my property isn’t yet compete, but i’m trying to plan ahead! What happens if, heaven forbid, a guest causes damage that cannot be rectified before the next booking? Can i get insurance to cover this or other disasters that affect a guests stay?

    • Philip |

      If it’s an insured event you can claim on your insurance for loss of rent/alternative accommodation. It’s essential to have trusted tradespeople on hand who can help out in an emergency to put things right. Have a read of this guide https://www.schofields.ltd.uk/holiday-let-insurance/

  • Lilia |

    Hi
    We rented our villa in Spain to the big family for one month . So this Tenants was little bit a pain … complaining about little things or demanding extras during their staying . However there wasn’t really serious issues . We was trying to sort the extras they demanding , without any extra charges . We just tried to be nice . A week after they Left our villa , they are demanding A FULL REFUND . We just received all kind of treads , they apparently was “extremely unhappy” ( what we wasn’t even aware of till now ) . I thought if someone unhappy with their holiday property , they wouldn’t stay for whole month there . So they knew they was going to claim whole payment back plus extras , while holidaying at our place which cost us in bills so far around 6000€ .

  • jenny doran |

    my sister paid deposit for holiday rental she saw on facebook, but now cant get time off work
    .she signed nothing can she get refund as the owner has no advertising fees cleaning etc.

    • Philip |

      What does the booking contract state with regards to the deposit? Typically, it’s not refundable.

  • Hannah |

    We have had a lot of cancellations due to this virus. We have also been told by the french authorities that ‘deep cleaning’ is needed in between guests and if we cant provide that then we cant take guests. So we have Begrudgingly decided to write the summer off. While we obviously refund any previously booked guests due to us cancelling, i’ve had a complaint that people have paid for flights and crossings that are now likely to go ahead so they wont be refunded by the airlines. Are we in any way responsible? I feel bad but not sure really what we can do.

  • Amanda |

    Should I have a separate Cancellation Policy in addition to T&C’s?

    • Philip |

      Include your cancellation policy in the terms and conditions – but make them clear with a heading so they stand out.

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