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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 or airlines collapsing (e.g. Monarch, Thomas Cook).

Here, we provide some tips on how to handle guests who cancel their holiday booking.

Have a clear written policy in place

The secret to handling cancellations professionally is to think ahead. It will inevitably happen so decide on a plan of action for cancelled bookings and make sure this is clearly outlined in your booking terms and conditions.

You will need to:

  • Decide if/when a refund is due and the amount
  • Recommend that guests take out holiday insurance
  • Be clear on your goodwill policy

It’s up to you to decide on a time frame for refunds and how much money to return. Typically, a non-refundable deposit of 25% of the holiday price is payable at the time of booking. However, if the guest gives 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 have paid in full and cancel at short notice should only expect a small percentage of what they have paid as a refund.

Also, consider:

Administration fee: Many holiday cottage owners charge an administration fee for booking cancellations to cover the cost of the extra work involved in filling the cancelled dates (e.g. £30). Remember, your time isn’t free!

Re-advertising: Any costs incurred in re-advertising your holiday rental, plus any discount off the original booking price should also be deducted.

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.

Cleaning and utility charges: The cost for cleaning and utilities are typically factored into the rental rate. If the guest isn’t entitled to a refund but has paid in full, these costs should be refunded to the guest as you haven’t incurred these expenses.

Damage deposits: Don’t forget to refund in full.

So considering the above points you should work out a clear policy with regards to cancellations and refunds. The booking terms and conditions should form part of your rental contract when a booking is confirmed. Having everything set in stone will greatly help you when dealing with cancelled bookings.

How to reply to booking cancellations

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.

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 the fill cancelled holiday dates. Explain that if you get a new booking you will refund for the cancelled booking (the exact amount will depend on the terms in your booking contract) minus the administration fee and any 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. In this case you should gently encourage them to speak to their insurance company and offer to help with any booking paperwork to support their insurance claim. 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 for each booking you take.

If the cancellation is due to an airline collapsing and the guest has paid by credit card or debit card, they should contact their card issuer for a refund. They could also try to claim for “consequential losses” from their travel insurer. However, ‘company failure’ cover is rarely included as standard.

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 a holidaymaker should protect their booking from unforeseen circumstances by taking out holiday insurance to cover cancellation. Insurance policies cover many events that could cause them to have to cancel their stay at your holiday let, e.g. accidents, illness, injury and death.

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:

If you manage to re-let

Refund, but deduct any re-advertising costs, last-minute discounts and admin charge. You could also offer to deduct the refund payment off a future booking.

If you don’t manage to re-let the dates

You are entitled to keep the non-refundable deposit or the full amount paid, less any costs that you won’t incur such as cleaning and utility bills. If guests ‘demand’ a full refund and threaten a bad review, then you are entitled to stick to your cancellation terms as per your booking contract.

If they want to book for next year then you might feel like offering a small discount off a future booking as a goodwill gesture. It encourages repeat bookings and makes you feel like you have done the right thing.

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?

However, don’t lose sight of the fact that a cancellation can mean lost income for you. After all, your accommodation is still available – it’s the guests 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.

17 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.

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