COVID-19: Regulation of Hotel Cancellations - EUROPE - DLA Piper
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EUROPE
COVID-19: Regulation of
Hotel Cancellations
COVID-19 ALERTSCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Introduction
Across many European countries COVID-19 lockdown restrictions This article provides an overview of the governmental
have required hospitality and leisure businesses to temporarily regulations, local laws and COVID-19 guidelines applicable
close and cease trading to consumers. As a result, many hotel to hotel owners and operators and the cancellation of guest
owners and operators are re-evaluating their cancellation bookings across 10 European jurisdictions:
policies to recognise the significant impact of COVID-19 on
its business and its guests. Whilst many operating within the • Austria
sector are taking reasonable steps to offer guests alternative • Belgium
arrangements or refunds for cancelled bookings, the current • Czech Republic
COVID-19 pandemic is placing immense pressure on the sector • Denmark
and consumer rights must remain a priority. • England and Wales
• Finland
In the UK the COVID-19 Taskforce established by the Competition • Germany
and Markets Authority (“CMA”) has received an increasing • Hungary
number of complaints relating to cancellations and refunds. • Netherlands
The CMA has consequently identified holiday accommodation • Poland
as an area of particular concern and we understand that this
is an issue not just for the UK, but across the global sector. In setting out these details we seek to provide guidance to those
in the sector who are reviewing their position and cancellation
policies during the current COVID-19 crisis. For further guidance
and advice on navigating the rules and regulations regarding
the cancellation of hotel bookings, please get in touch with
Matthew Duncombe (Partner).
Please note that this information is correct as of
Monday 4 May 2020.
Matthew Duncombe
Hospitality & Leisure Global Co-Chair
Intellectual Property & Technology
+44 (0) 113 369 2948
matthew.duncombe@dlapiper.comCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Austria
What are the local laws regulating The Federal Minister of Health has issued an ordinance
room cancellations? prohibiting entry to hotels for relaxation or leisure
activities. This does not affect room bookings made for
The EU Regulation on Package Travel Arrangements
the following purposes:
was implemented into Austrian law with the
Pauschalreisegesetz (“PRG”), which governs contracts
• individuals already using a room at the establishment for
that combine at least two different travel services, such as
a previously arranged duration;
transportation, accommodation, car/motorcycle rental or
any other tourism service. Therefore, package travel room • for the provision of care to individuals that require assistance;
cancellations are governed by this Act.
• for work purposes; and
The Consumer Protection Act (Konsumentenschutzgesetz • for the fulfilment of urgent accommodation requirements.
or “KSchG”) governs contracts between businesses and
customers. If the hotel charges a cancellation fee, it may be This provision is – currently – in force until 29 May 2020.
subject to judicial discretion under this Act, especially if the fee
is deemed to be too high. However, it is possible to justify a
cancellation fee of up to 100% if the room booking is offered Is a hotel owner/operator obliged
for a reduced price (i.e. the customer can be given the choice by law to provide a full refund for
to bear the full economic risk of a cancellation fee for a lower room cancellations?
room price or accept the regular price, agreeing on a lower
Whether a full refund must be provided depends on the
cancellation fee).
circumstances of the cancellation and whether a cancellation
takes place (instead, perhaps the contract has been dissolved).
In the absence of further specific laws regarding room
Additionally, a cancellation fee may not be charged if the
cancellations the statutory provisions of the Austrian Civil Code
contract is terminated in exercise of a statutory right.
(Allgemeines Bürgerliches Gesetzbuch, or ABGB) apply.
Amongst many other areas, these cover contractual penalties,
For all the below scenarios, it must be added that the proximity
rules on default, impossibility of performance and rescission of
of the date of the hotel booking plays an important role. It is very
contract. The ABGB can also apply when considering the validity
difficult to reliably predict further COVID-19 developments, so a
of specific cancellation fees.
premature argument for cancellation or dissolution of contract
may not be successful because the circumstances at the actual
time of performance cannot be assessed sufficiently.
Are there any COVID-19 laws applicable
to room cancellations?
The consequences in any case strongly depend on the contents
Whilst not directly regulating room cancellations, the Ordinance of the actual contract in question.
on Preliminary Measures to Prevent the Spread of COVID-19 is
aimed at the hotel industry and the forced closure of hotels for PACKAGE TRAVEL ARRANGEMENTS
relaxation and leisure activities. If the accommodation is part of a package travel deal,
the contract may be terminated by the traveller before they
Ordinance on Preliminary Measures to Prevent the Spread commence their travel, if unavoidable and extraordinary
of COVID-19 (Verordnung betreffend vorläufige Maßnahmen circumstances occur at the place of destination or its immediate
zur Verhinderung der Verbreitung von COVID-19) vicinity that substantially affect the performance of the package
3 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
travel (Section 10 Para 2 PRG). If it would be unreasonable for
Does a refund have to be “cash” or can it
the traveller to commence the journey, they may terminate the
be a voucher, etc?
contract, with the traveller being entitled to a full refund of all
payments made for the package travel arrangement. Such cause If a refund is due, any payment that has been made towards the
for a termination was previously affirmed for terror attacks performance of the contract must be reimbursed. As payment
and the outbreak of the SARS disease in the early 2000s. for room bookings will in most cases have consisted of money,
a refund would generally have to be “cash”.
For individual accommodation contracts other
possibilities arise:
Are there rules around timing
• Impossibility of performance of refunds?
The performance of the accommodation contract may
No. Statutory civil law applies for the demand of refunds along
become impossible for either party due to factual or legal
with ordinary civil procedures.
reasons. The hotel owner may be ordered to close their
business (as has happened), for example, or the customer
may not be able to travel to the establishment due to
Are there any legal requirements for
travel restrictions. In this case the contract is dissolved
communicating details of a cancellation
by law. Neither party must perform their obligations and
to a customer? (For example, does the
any payment that has been made towards the contract
hotel need to inform customers a certain
must be returned. A cancellation fee (909 ABGB) may not
number of days in advance or in a
be charged by the hotel owner/operator in this case.
certain way?)
• Frustration of contract
No. However the contract itself may cover communication
Another possible way the contract may dissolve is the principle
between the parties. The violation of such contractual
of frustration, which is regarded as a last resort and is only
obligations may trigger a claim for damages.
rarely applied in exceptional cases. Frustration involves an
extraordinary change in circumstances that the parties could
not have foreseen when concluding the contract. The parties
Does local law permit the use of a
can’t be held to fulfil the contract and it may ultimately be
“subject to local law” caveat in the
dissolved. A cancellation fee (909 ABGB) may not be charged
cancellation policy?
by the hotel owner/operator in this case. When considering
whether frustration applies (although not a prerequisite), it is General Terms and Conditions (“GTCs”) are subject to strict
favourable to the argument of extraordinary circumstances assessment in Austria, especially in relation to contracts between
if a travel warning has been issued for the destination. businesses and consumers. The ABGB and the KSchG contain
different provisions concerning the overall validity of GTCs and
• Cancellation due to caution
the individual clauses. In particular, Section 6 Para 3 KSchG
If a customer cancels a booking merely based on caution,
requires GTCs to be transparent, meaning an average consumer
not on any legally relevant circumstances that affect the
must be able to comprehend their rights and obligations without
contract (e.g. governmental travel restrictions), a cancellation
requiring any profound legal knowledge. A general reference
fee would not legally be waived and a full refund would not
to local law would in most cases not meet this standard
have to be issued.
of transparency.
4 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Belgium
What are the local laws regulating Are there any COVID-19 laws applicable
room cancellations? to room cancellations?
In relation to package travels, EU Directive 2015/2302 was COVID-19-specific measures have been adopted in relation
transposed into Belgian law with the Act of 21 November 2017: to package travels through the Ministerial Decrees of
19 March 2020 and 3 April 2020. They currently apply until
• The traveller has a right in all circumstances to cancel their 20 June 2020 (but could be extended beyond that date).
package travel prior to the start of the travel, subject to If package travel is cancelled by either the traveller or the travel
payment of appropriate compensation to the travel organiser as a result of the coronavirus crisis, then the travel
organiser. If, however, there are exceptional and unavoidable organiser has a right to issue a voucher to the traveller instead
circumstances at or in the immediate vicinity of the destination of a refund.
which have a significant impact on the performance of
the package tour or on the transport of passengers to the The voucher must comply with the following conditions:
destination, then the traveller may cancel their booking
without paying any cancellation costs and all payments already • the voucher must represent the total amount which had
made must be refunded. The traveller is however not entitled already been paid by the customer;
to additional compensation from the travel organiser. It is
• no cost can be charged to the traveller for the delivery of
likely that travellers may successfully invoke this legal ground
such voucher;
to cancel their booking as a result of the COVID-19 crisis, if
they can demonstrate that their travel is significantly impacted. • the voucher must be valid for at least one year;
• The travel organiser only has a right to cancel the package • the voucher must explicitly mention that it has been delivered
travel in certain circumstances: (i) if not sufficient participants as a result of the coronavirus crisis;
have registered (subject to specific conditions); or (ii) in case
• the voucher can be redeemed against the travel organiser
of exceptional and unavoidable circumstances. If the
that has issued it;
organiser cancels the package travel on the above grounds,
the consumer must receive a full refund. The traveller is • the voucher can be spent by the traveller as they please.
however not entitled to additional compensation from
the travel organizer. If the voucher complies with these conditions, it cannot be
refused by the traveller. If after one year from issue the voucher
However, the situation for travels organised directly by the has not been used, the traveller can request a refund instead.
consumer is different: The travel organiser then has a six month deadline to pay
such refund.
• A hotel reservation constitutes a binding contract, which
cannot be cancelled unilaterally. As a result, if a traveller No specific measures have been taken in relation to the
cancels their hotel booking, they would not have any right to a cancellation of hotel bookings outside of package travels.
refund. (In principle, the hotel could even claim compensation As a result, the general principles described under question 1
for damages, although they would then have to prove their apply and it should also be considered whether the COVID-19
actual damages). Hotels can of course deviate from these crisis can be seen as a situation of force majeure.
general principles and provide an alternative (more customer-
friendly) solution in their own general terms and conditions; Under Belgian law, force majeure is defined as any exceptional
these will however only be applicable if they have been and unavoidable circumstances which take place outside of the
notified to and accepted by the traveller when the booking will of the party invoking force majeure, and the results of which
is made. could not have been avoided by taking precautionary measures.
• If a hotel cancels a traveller’s booking, the traveller will be
Although the COVID-19 crisis may constitute a situation of
entitled to receive a full refund for any payments already
force majeure, it is not in itself a circumstance preventing
made and would also have a right to claim compensation
the execution of the traveller’s contractual obligation,
for damages. Any clause in the hotel’s general terms and
namely payment. Whilst there is no official guidance regarding
conditions which would exclude such a right, would be
the need to refund customers as a result of force majeure (and
considered a prohibited abusive clause towards consumers.
5 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
it remains to be seen how the courts deal with this in practice), Hotel bookings outside of package travels – see answers to
it is accepted in legal doctrine that, in case of a bilateral contract questions 1 and 2. Under normal circumstances, the hotel must
under which one of the parties has an obligation to perform refund the booking if it is cancelled by the hotel, but not if it is
a service, and that service cannot be delivered as a result cancelled by the traveller. This is only different if the cancellation
of force majeure, the other party is also freed from its is done on the basis of force majeure; in that case, the hotel
payment obligation. must refund any payments already made.
Therefore, in principle, all hotel bookings will need to be
refunded if their cancellation is a result of force majeure, Does a refund have to be “cash” or can it
regardless of the party performing the cancellation. be a voucher, etc?
The question then remains in which cases the COVID-19
It depends on the type of booking.
crisis can be invoked as force majeure. The Belgian government
has prohibited all non-essential travel outside of Belgium and
In terms of package travel, typically if the traveller is entitled to
has imposed an obligation on all Belgian citizens to stay at
be refunded under the Act of 21 November 2017, such a refund
home until 18 May 2020 (which can be extended). It therefore
must be made in “cash”. However, if the traveller is entitled to
seems that at least until 18 May 2020, all hotel bookings need
be refunded as a result of the COVID-19 crisis, then, as a result
to be cancelled as a result of force majeure. From 18 May 2020,
of the Ministerial Decrees of 20 March 2020 and 3 April 2020,
there is a possibility that the obligations to stay at home may be
the travel organiser has a choice to refund in “cash” or by means
relaxed, but this depends on the evolution of the COVID-19 crisis.
of a voucher (which must then comply with the conditions set
out in the Ministerial Decrees).
With respect to general terms and conditions and
cancellation policies, the following clauses are prohibited
In term of hotel bookings outside of package travels,
in consumer contracts:
if the hotel booking is cancelled as a result of force majeure,
the pre-paid amounts should be refunded “in cash” if these
• a clause which does not allow the consumer to cancel
had been paid “in cash” by the traveller. If the traveller had
the agreement in case of force majeure;
used a voucher for the booking, it may be acceptable to
• a clause which only allows the consumer to cancel the perform the refund by issuing a new voucher. There is a
agreement for reasons of force majeure if the consumer certain grey zone in this regard and that a refund through
pays compensation; a voucher will not be regarded as unlawful per se, even if the
amounts had originally been paid by the traveller in “cash”.
• clauses allowing the company to keep all amounts prepaid
by the consumer in situations where the booking is cancelled
by the company; and
Are there rules around timing
• clauses allowing the company to keep all amounts prepaid by of refunds?
the consumer in circumstances where the consumer cancels
It depends on the type of booking.
the booking, without providing a right for the consumer
to receive similar compensation in situations where the
Under the Act of 21 November 2017, all package travel refunds
company cancels the agreement.
should be made without undue delay and in any event at the
latest within fourteen days after the cancellation of the package
travel contract. Under the Ministerial Decrees of 20 March 2020
Is a hotel owner/operator obliged
and 3 April 2020, no specific date has been set by which the
by law to provide a full refund for
vouchers need to be issued. It is only stated that the vouchers
room cancellations?
remain valid for one year as from their date of issue. If they have
It depends on the type of booking. not been used within one year from their date of issue and the
traveller requests a refund, then such refund must be made
Package Travel – see answers to questions 1 and 2. If there within a term of six months.
are exceptional and unavoidable circumstances at or in the
immediate vicinity of the destination which have a significant There are no specific rules for hotel bookings outside
impact on the performance of the package tour or on the of package travel, but it can be assumed that refunds
transport of passengers to the destination, then the traveller or (if applicable) must be made within a reasonable term.
the travel organiser may cancel the booking and all payments
already made must be refunded.
6 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Are there any legal requirements for Does local law permit the use of a
communicating details of a cancellation “subject to local law” caveat in the
to a customer? (For example, does the cancellation policy?
hotel need to inform customers a certain
There is no specific prohibition under Belgian law to use such
number of days in advance or in a
caveat. Nevertheless, it is strongly recommended to provide a
certain way?)
localised version, as there is a general principle with regard to
It depends on the type of booking. consumers that terms and conditions (including a cancellation
policy) must be provided in a “clear and understandable” manner.
Under the Act of 21 November 2017, package travel In our view, it is not likely that terms containing references
cancellations should be notified a specific number of days to provisions of local laws will be deemed to be “clear and
in advance if they are based on the fact that the travel understandable” for consumers; as a result, those terms
organiser has not reached a minimum number of participants. may be considered non-opposable and/or unenforceable.
However, if a cancellation is done on the basis of exceptional
and unavoidable circumstances, then the cancellation should
be notified at the latest before the start of the package
travel. Under the Ministerial Decrees of 20 March 2020
and 3 April 2020, no specific terms mechanism is provided.
There are no specific rules for hotel bookings outside of
package travel, but it can be assumed that the cancellation
must be notified as soon as possible before the start of the travel
date on the basis of the general principle of good faith and each
party’s obligation to limit damages inflicted to the other party.COVID-19: REGULATION OF HOTEL CANCELLATIONS
Czech Republic
What are the local laws regulating • Is the cancellation because of the governmental measure or
room cancellations? is the guest being cautious and cancelling future bookings
for dates not subject to restrictions?
The legal relationship between the guest and the
accommodation provider is governed by the Czech civil law,
If the guest is a consumer, on the basis of Section 2006
in particular the Act No. 89/2012 Coll., Civil Code (“Civil Code”).
of the Civil Code it is recommended that bookings cancelled
due to government measures are fully refunded, including
The provision regarding the cancellation of the booking is laid
any cancellation fees, because the obligation to provide
out in Section 2330 (1),(2) of the Civil Code which provides that
accommodation service has been extinguished. If the
the guest may terminate the accommodation agreement before
guest cancels a booking for dates that aren’t subject to any
the expiry of any stipulated period, which is often prior to the
governmental measures (i.e. dates that are beyond the current
date of the stay. In such cases, the accommodation provider
period of lockdown), the accommodation provider will be
has a right to compensation if it could not have prevented
able to charge a cancellation fee as stipulated in the booking
the damages incurred due to the cancellation.
contract. Such guests could be redirected to their insurance
providers (if their policy covers such events). Any term in the
However, if force majeure events are the reason for cancellation
contract that stipulates that the consumer assumes liability
other provisions of the Civil Code shall apply, mainly Section
in a force majeure event would be deemed as invalid.
2006 which relates to the impossibility of performance due
to governmental measures. This stipulates that if after the
As a cancellation fee is a type of a contractual penalty,
formation of the contract, the provision of accommodation
in consumer contracts the fee must be included in the
becomes impossible, the obligation is extinguished due to
contract itself, otherwise the consumer would be eligible
impossibility of performance.
for a full refund, including the cancellation fee.
Companies (including guests that have made the booking
Are there any COVID-19 laws applicable
for the purpose of work) can be subject to a cancellation fee.
to room cancellations?
Further, in business to business relations the parties may
In accordance with the Czech government’s extraordinary assume liabilities under force majeure clauses. Therefore, if the
measure, as of 16th March 2020 the provision of hotel booking contract contains an applicable force majeure clause,
accommodation is forbidden. This measure shall last until the the cancellation fee may be charged even where the booking is
end of the state of emergency (which is currently until at least cancelled as a direct result of the governmental measures.
17th May 2020). Since 27th March 2020, hotels are only allowed
to accommodate guests who need to be accommodated for the
purposes of work or business, or to the guests of health spas. Does a refund have to be “cash” or can it
It is hoped that hotels and accommodation facilities will be able be a voucher, etc?
to reopen generally from 25th May 2020.
If not agreed otherwise with a guest, the refund should be in
cash. If the guest is not legally entitled to a refund, the guest
may be refunded in any other form, including a voucher.
Is a hotel owner/operator obliged
by law to provide a full refund for
Prior to the payment of the refund, the hotel may negotiate
room cancellations?
a different settlement with the guest, including a rescheduling
This would depend on the terms of the agreement made of the cancelled booking.
between the hotel and the consumer.
Due to the governmental measure forbidding the provision of Are there rules around timing
hotel accommodation, it is necessary to take into account the of refunds?
following information when considering refunds:
Generally, the refund should be paid to the guest without undue
• Is the guest a consumer or legal entity? delay (typically within a few days) after the cancellation.
• Did the guest assume any liability in case of force majeure event?
8 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Are there any legal requirements for Does local law permit the use of a
communicating details of a cancellation “subject to local law” caveat in the
to a customer? (For example, does the cancellation policy?
hotel need to inform customers a certain
Yes, legal relationships entered into with consumers in the
number of days in advance or in a
territory of the Czech Republic must be in compliance with
certain way?)
the Czech law.
If the booking is cancelled due to the impossibility
of performance i.e. due to governmental measures Business to business relationships may be governed by
(Section 2006 of the Civil Code), the accommodation Czech law or any other law.
provider should act in accordance with Section 2008 and
notify the guest without undue delay. Typically this should
be up to 3 days after it became or must have become
aware of the impact of the governmental measures.
Failure to notify the guest could result in the guest being able
to claim compensation for damages incurred as a result of not
having been made aware in due time.COVID-19: REGULATION OF HOTEL CANCELLATIONS
Denmark
What are the local laws regulating If the consumer cancels the stay or is prevented from arriving
room cancellations? and the hotel is still open for business, the consumer will usually
not be entitled to a refund. This will depend on the terms of the
Under Danish law, no specific laws regulate room cancellations.
agreement between the hotel and the consumer.
However, agreements entered into between consumers
and businesses are regulated by the Danish Consumer
Protection Act. Though, only some of the provisions apply
Does a refund have to be “cash” or can it
for hotel accommodation. For instance, the provisions of law
be a voucher, etc?
regarding the consumer’s right of cancellation does not apply
to hotel reservations. If the hotel cancels the stay, the consumer will typically be
entitled to a full refund in cash. However, as above,
Further, general principles from the Danish Sale of Goods Act the hotel’s policy may contain terms setting forth certain
will apply in regard to consumers too. exceptions. Whether such a condition is reasonable – and thus
valid – will depend on the specific situation and circumstances.
Generally, the terms for room cancellation will depend on the
terms of the agreement entered into between the hotel and If the consumer cancels the stay or is prevented from arriving
the consumer, which typically are stipulated in the hotel’s policy. and the hotel is still open for business, the consumer will not
The consumer must have accepted the terms of the policy in necessarily be entitled to a refund, and not necessarily a refund
connection with entering into the agreement with the hotel. in cash.
A special set of rules apply to cancellation of hotel rooms booked
as part of a package travel pursuant to the Danish Package Are there rules around timing
Travel Act (in Danish: ”Lov 2017-12-26 nr. 1666 om pakkerejser of refunds?
og sammensatte rejsearrangementer”) which implements the
If the hotel cancels the stay, the consumer will typically be
EU’s package travel directive.
entitled to receive the refund from the hotel without undue
delay. However, the hotel’s policy may contain specific terms
regarding this.
Are there any COVID-19 laws applicable
to room cancellations?
No specific COVID-19 laws apply to cancellations of hotel rooms. Are there any legal requirements for
However, an aid package has been adopted by the Danish communicating details of a cancellation
government supporting the Danish travel industry by ensuring to a customer? (For example, does the
that consumers in some cases can receive a refund through the hotel need to inform customers a certain
Danish Travel Guarantee Fund if a package travel is cancelled. number of days in advance or in a
certain way?)
No specific rules providing a mechanism for communicating
Is a hotel owner/operator obliged
details of a cancellation to a consumer apply. However, for the
by law to provide a full refund for
sake of good order, the communication should be in writing.
room cancellations?
If the hotel cancels the stay, the consumer will typically be
entitled to a full refund. However, the hotel’s policy (which the Does local law permit the use of a
consumer must have accepted when booking the stay) may “subject to local law” caveat in the
contain terms setting out certain exceptions. For example, the cancellation policy?
policy may contain special terms for cancellation in connection
Yes.
with, for example, epidemics, pandemics or the like. Whether
such a condition is reasonable – and thus valid – will depend on
the specific situation and circumstances.
10 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
England and Wales
What are the local laws regulating Is a hotel owner/operator obliged
room cancellations? by law to provide a full refund for
room cancellations?
Consumers who have paid for a package holiday are covered
by the Package Travel and Linked Travel Arrangements The Package Travel Regulations offer financial protection
Regulations 2018 (“Package Travel Regulations”), which offer so that if any element of the package holiday is cancelled or
consumers greater protections. Whether a holiday is covered by significantly changed (this could include the hotel booking),
the Regulations will depend on what and how the holiday was then the consumer has the right to request a full refund of any
booked. Typically, package holidays include the provision of at payments made towards the holiday.
least two of the following elements: transport, accommodation
and extras such as car hire. In terms of a hotel room booking, a consumer’s right to a refund
depends on the contractual terms and conditions agreed
Cancellations of bookings in relation to hotel rooms only will at the time of the booking. If the contract states that a full
be primarily governed by the terms and conditions agreed refund will be offered if the hotel provider cancels the booking,
between the hotel and consumer at the time of booking. then the consumer should be able to demand a full refund.
Here, the general principles of force majeure (if contractually However, it is possible that the contract contains terms that state
applicable) and frustration may apply. Under the Consumer what the consumer’s specific rights are during “extraordinary
Rights Act 2015, whether the terms and conditions are fair circumstances”, which could include a pandemic.
and therefore enforceable would depend on their wording
and their transparency.
Does a refund have to be “cash” or can it
be a voucher, etc?
Are there any COVID-19 laws applicable
Under the Package Travel Regulations, the refund should be
to room cancellations?
cash. However the Association of British Travel Agents (“ABTA”)
No, not currently. has recently launched a “Save Future Travel” campaign, calling
for changes to the Package Travel Regulations that would allow
However the Coronavirus Act 2020 gives the Secretary providers to offer consumers credit vouchers instead. At the time
of State the power to issue directions in relation to events, of writing it is believed that the UK Government are considering
gathering and premises. As a result, businesses providing amends to the Package Travel Regulations to reflect this.
holiday accommodation (including hotels, hostels, B&Bs)
were required to close temporarily from 24 March 2020 for In relation to a hotel room booking, this will again depend on
commercial use to comply with the social distancing guidelines. the terms and conditions agreed at the time of the booking.
There are limited exceptions to this order that allow hotels to Usually, if it is the hotel that has cancelled the booking, the hotel
continue operating commercially e.g. where rooms are used as will offer a consumer a full refund. However, during the current
interim abodes or for those attending funerals when returning COVID-19 pandemic, hotels have also been offering credit
home would be impractical. vouchers. This could be a breach of contract if the terms and
conditions do not allow for credit vouchers to be offered.
11 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Are there rules around timing Does local law permit the use of a
of refunds? “subject to local law” caveat in the
cancellation policy?
Any refund under the Package Travel Regulations must be
made within 14 days of the cancellation being known. As part Generally, hotel booking terms and conditions should comply
of ABTA’s COVID-19 campaign, it has been requested that this with the Consumer Rights Act and associated consumer
time period is extended to 4 months. At the time of writing it is protection laws. It is sufficient in England to say that any terms
believed that the UK Government are considering amends to and conditions are subject to local statutory requirements/laws.
the Package Travel Regulations to reflect this.
In relation to a hotel room booking, this will again depend on the
terms and conditions agreed at the time of the booking.
Are there any legal requirements for
communicating details of a cancellation
to a customer? (For example, does the
hotel need to inform customers a certain
number of days in advance or in a
certain way?)
No. However, this could be addressed in the hotel’s booking
terms and conditions. As a matter of good practice, hotels
should communicate any cancellations to their guests in good
faith and without delay. We would also recommend that the
cancellation is made in writing.COVID-19: REGULATION OF HOTEL CANCELLATIONS
Finland
What are the local laws regulating Does a refund have to be “cash” or can it
room cancellations? be a voucher, etc?
Chapter 3 of the Finnish Consumer Protection Act (38/1978) There is no specific regulation. Usually the refund is given
has some general regulation (for example, no unfair contract in cash, but depending on the hotel’s policy and on the
terms are allowed [3:1§]) in business to consumer agreements, agreement made by the parties, the hotel may provide the
but there is no specific legislation for hotel reservations refund with a gift card, voucher etc. as agreed. Whether such a
or cancellations. condition is fair and reasonable – and thus valid – will depend on
the specific situation and circumstances.
Are there any COVID-19 laws applicable
to room cancellations? Are there rules around timing
of refunds?
No specific COVID-19 laws apply to cancellations of hotel rooms.
No specific regulation. However, the refund should be provided
to customer without undue delay. However, the hotel’s policy
Is a hotel owner/operator obliged may contain specific terms regarding this. Whether such
by law to provide a full refund for conditions are fair and reasonable – and thus valid – will depend
room cancellations? on the specific situation and circumstances.
If the hotel cancels the stay, the consumer will typically be
entitled to a full refund. However, the hotel’s policy (which the
Are there any legal requirements for
consumer must have accepted when booking the stay) may
communicating details of a cancellation
contain terms setting out certain exceptions. For example, the
to a customer? (For example, does the
policy may contain special terms for cancellation in connection
hotel need to inform customers a certain
with, for example, epidemics, pandemics or the like. Whether
number of days in advance or in a
such a condition is reasonable – and thus valid – will depend on
certain way?)
the specific situation and circumstances.
No specific regulation. However, written communication
If the consumer cancels the stay or is prevented from arriving is recommendable.
and the hotel is still open for business, the consumer will usually
not be entitled to a refund. This will depend on the terms of the
agreement between the hotel and the consumer. Does local law permit the use of a
“subject to local law” caveat in the
cancellation policy?
Yes.
13 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Germany
What are the local laws regulating or Section 543 para. 2 No. 1 BGB and demand a full refund.
room cancellations? Ministers of the states have recently announced that overnight
states in hotels for tourist purposes shall be possible with certain
German statutory law does not specifically address
restrictions. Each state can impose different measures and
the cancellation of hotel rooms, but general rules for
timelines and it remains to be seen how and when each state
cancellations exist.
will allow overnight stays.
Particularly relevant are Sections 275, 313, 326 and 346 of the
In the case of business trips, the overnight stay may still go
German Civil Code (Bürgerliches Gesetzbuch, or “BGB”),
ahead. However, as the circumstances have changed significantly
which govern the termination of contracts before the exchange
as a result of COVID-19, it can be assumed that the courts will
of services in general, as well as Sections 537 and 542 BGB,
grant the guest the right to cancel the room and demand full
which provide additional rules for rental agreements.
refund according to Section 313 para. 3 BGB if the contract was
concluded before the official restrictions started. However, there
is currently no case law on this matter.
Are there any COVID-19 laws applicable
to room cancellations?
If the owner/operator cancels the room, he is obliged to
No, there are no COVID-19 laws that explicitly deal with the provide a full refund to the guest.
cancellation of hotel rooms.
However, since 23 March 2020, the authorities have imposed Does a refund have to be “cash” or can it
restrictions until 10 May 2020 that prohibit overnight stays for be a voucher, etc?
tourist purposes. In those cases the room must not be made
According to Section 346 BGB the guest is entitled to a cash
available to the customer.
refund if the room cannot be made available to him/her.
This also applies to business guests if the guest can only cancel
Is a hotel owner/operator obliged
the room because the circumstances have changed significantly.
by law to provide a full refund for
In this case, however, repayment in the form of vouchers could
room cancellations?
be considered by a court as a milder form of contract adjustment
Yes, under certain conditions. and, thus, permissible (§ 313 para. 1 BGB).
Under German law the guest can cancel the room if it cannot be
made available to him/her, or if the circumstances have changed Are there rules around timing
in such a way that it is no longer reasonable to continue the of refunds?
contract. In these cases the owner/operator must refund the
There are no exact time regulations. From the point of time
full price.
the owner/operator or the guest rightfully cancels the room,
the guest is entitled to a refund. The owner/operator has to
As a result of the ban on tourist overnight stays in hotels,
refund the payment within a time frame that corresponds to
the room must not be made available to the guest, who may,
the common practice of the hotel industry.
therefore, cancel the room according to Section 326 para. 5
14 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Are there any legal requirements for Does local law permit the use of a
communicating details of a cancellation “subject to local law” caveat in the
to a customer? (For example, does the cancellation policy?
hotel need to inform customers a certain
No. If the cancellation policy is used in more than two cases
number of days in advance or in a
and, thus, qualifies as standard terms and conditions, the
certain way?)
somewhat restrictive German rules governing standard terms
There are generally no rules on this matter. However, if the and condition (“T&Cs Law”) apply, wherefore every clause of
owner/operator terminates the contract, he should inform the the cancellation policy must comply with German T&Cs Law.
guest as soon as possible, at least at a time when the guest has Clauses that do not comply with T&Cs Law are not upheld to the
likely not yet started his/her journey. extent legally possible, but are invalid in their entirety. Instead of
the invalid clause, the relevant statutory default rule applies.
Such a caveat conflicts with Section 307 para. 1 clause
2 BGB, which requires T&Cs to be transparent, i.e. clear
and comprehensible.COVID-19: REGULATION OF HOTEL CANCELLATIONS
Hungary
What are the local laws regulating Under the Hungarian Civil Code if the performance of the
room cancellations? agreement is rendered permanently impossible (physically,
legally or economically) and a causal link between the pandemic
In Hungary, no specific regulation has been adopted with
(or related measures) and the impossibility to perform the
respect to room cancellations.
agreement can be proved (e.g. the hotel is locked down due to
legal measures), then the agreement is frustrated and due to such
Certain provisions of Government Decree 472/2017. (XII. 28.)
frustration of the agreement, the hotel owner/operator is obliged
on contracts for travel services, including in particular package
to provide full refund.
travel contracts and contracts concerning linked travel
arrangements can be invoked, which only state as a general
It could be argued that the introduction of COVID-19
principle that travel contracts may be cancelled by the consumer
governmental measures (such as the limited curfew, closure of
anytime in line with the provisions of the contract. Such travel
the borders of Hungary), performance of room reservations has
contracts may include a penalty payment consumer obligation
been frustrated.
upon cancellation; however, the amount of the penalty may not
exceed the contract price.
Does a refund have to be “cash” or can it
Furthermore, the main general rules applicable to hotel room
be a voucher, etc?
reservations are set out by Government Decree No 45/2014
on the detailed rules of contracts between consumers Unless otherwise agreed by the guest, the refund should be
and business entities and Act V of 2013 on the made in the same form of consideration as the accommodation
Hungarian Civil Code. was originally paid for.
Are there any COVID-19 laws applicable Are there rules around timing
to room cancellations? of refunds?
There are currently no specific COVID-19 laws in Hungary No specific deadline is set out by the relevant legislation;
regarding room cancellations. however, the timing of the refund must comply with the
requirement of good faith and fair procedure (i.e. the timing
must be reasonable).
Is a hotel owner/operator obliged
by law to provide a full refund for Furthermore, it is to be considered that in line with the general
room cancellations? consumer protection rules a general contract term between
a consumer and hotel would be considered unfair (until proven
The owner’s/operator’s obligation to provide full refunds
otherwise) if it allows a period of over 45 days for the hotel to
for room cancellations depends on the reason for and the
satisfy its debt or to provide an inappropriately determined
circumstances of the room cancellation.
deadline for the performance of its service.
16 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Are there any legal requirements for Does local law permit the use of a
communicating details of a cancellation “subject to local law” caveat in the
to a customer? (For example, does the cancellation policy?
hotel need to inform customers a certain
In Hungary, local law does not prohibit the use of a “subject to
number of days in advance or in a
local law” caveat. As a general rule, the imperative provisions of
certain way?)
the applicable Hungarian law, such as consumer protection laws,
No specific mechanism is set out by the relevant legislation; will override any contradictory contractual or policy provisions.
however, in line with the general contract law principles,
the contracting parties should notify each other in due Also, it is to be noted that under Hungarian law, a general
time (without delay) of any circumstances preventing the contract term shall be null and void if that term, contrary to the
performance of the contract; and the communication requirement of good faith and fair dealing, causes a significant
regarding cancellation must be in an evident form. and unjustified imbalance in contractual rights and obligations,
to the detriment of the consumer entering into a contract with
Furthermore, the principle of good faith and fair procedure, business entity imposing said term.
as well as general consumer protection rules, must also be
complied with.COVID-19: REGULATION OF HOTEL CANCELLATIONS
Netherlands
What are the local laws regulating Does a refund have to be “cash” or can it
room cancellations? be a voucher, etc?
Under Dutch law, certain stipulations contained in an The ACM has indicated that accommodations and booking
agreement between a business and a consumer are considered sites have more flexibility to make bespoke arrangements
unreasonably onerous. Article 6:236 of the Dutch Civil Code with all guests, such as distributing vouchers or rescheduling
(“DCC”), the so-called black list, contains stipulations that are their bookings. However, consumers continue to be entitled
void in every situation. Article 6:236 paragraph b DCC states that to refunds.
the consumer’s right to terminate an agreement, as provided for
in section 5 of title 5 DCC, may not be excluded or limited.
Are there rules around timing
Every failure of a party in the performance of one of its of refunds?
contractual obligations, gives the opposite party the right to
Refunds can be demanded immediately.
terminate that agreement. The legal effects of non-performance
set in even before the performance has become due and
demandable, if it is certain a party cannot possibly perform
Are there any legal requirements for
its obligations. With a government lockdown of hotels, it is
communicating details of a cancellation
certain that hotels can are unable to perform their obligations
to a customer? (For example, does the
(i.e. provide rooms) as scheduled. In those cases, consumers
hotel need to inform customers a certain
have the right to terminate the agreement. Hotels will then
number of days in advance or in a
be obliged to repay the amount paid by the consumer. It is
certain way?)
important to note that regardless of the existence of a ‘force
majeure’, the consumer can still terminate the agreement. No.
However, if the hotel is open but the consumer prefers to cancel
the booking, article 6:236 paragraph b DCC is not applicable. Does local law permit the use of a
The consumer cannot terminate the agreement if the hotel “subject to local law” caveat in the
is able to perform its obligations, and actually will (unless the cancellation policy?
consumer has the contractual right to cancel the booking).
Yes. However, the policy would not be enforceable to the extent
that it does not comply with mandatory consumer protection
laws. The ACM can also enforce consumer protection laws and
Are there any COVID-19 laws applicable
seek changes to policies which are in conflict with consumer
to room cancellations?
protection law (and in some cases issue penalties).
There are no COVID-19 laws applicable to room cancellations.
However, the Dutch Authority for Consumers & Markets (“ACM”)
has issued some guidance regarding room cancellations.
During the COVID-19 crisis, ACM seeks to strike the right
balance between the rights of consumers and the interests
of companies.
Is a hotel owner/operator obliged
by law to provide a full refund for
room cancellations?
In most situations, yes.
18 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Poland
What are the local laws regulating Before 4 May 2020, during the nationwide ban on providing
room cancellations? hotel services, room cancellations were regulated under the Bill
on Specific Support Instruments in relation to the Spread of the
This is an issue usually regulated by the contract between
SARS-CoV-2 (the so-called “Anti-Crisis Shield”).
the parties.
In the context of hotel room cancellations, the Anti-Crisis Shield
However, some specific rules do apply to consumers.
provides that if the agreement under which the hotel services
are provided is dissolved directly due to the negative effects of
In the Polish Civil Code there are regulations (e.g. Article 385(1))
COVID-19, the hotel must refund any monies already paid by
which deem that provisions of a consumer contract that are
the client.
contrary to good practice and grossly violate the consumer’s
interests would be classed as unlawful contractual provisions.
The exact wording of the Anti-Crisis Shield is unclear, as it only
refers to the client’s right to cancel room bookings. It therefore
The Polish Civil Code contains a list of the contractual provisions
appears that hotel operators/owners are not able to cancel
which, to avoid doubt, should be automatically deemed unlawful,
bookings under the Anti-Crisis Shield provisions (despite the
unless they are specifically agreed with the consumer. This list
previous nationwide ban on providing hotel services) and
encompasses provisions which:
cancellations are only permitted to be made by the guest.
• exclude an obligation to reimburse the consumer for any
payments made for performance which has not been fully
Is a hotel owner/operator obliged
or partly completed, if the consumer decides not to execute
by law to provide a full refund for
or perform the contract; or
room cancellations?
• impose on the consumer an obligation to pay an agreed sum
Yes, if the cancellation was made by the guest in relation to
in the event of withdrawal from execution or performance
the COVID-19. The refund must cover all monies actually paid
of the contract e.g. a cancellation fee, without a reciprocal
by the client for the services.
obligation on the other party.
However no, if it is not related to COVID-19.
In the context of hotel room cancellations, any contractual terms
depriving the consumer of the right to be reimbursed, if the
Generally, in relation to consumer bookings, the booking
consumer decides to cancel the reservation, must therefore
agreement should explicitly stipulate that under certain
be individually agreed with the consumer.
conditions refund is not provided.
It should be noted that the Polish Court of Competition and
Consumer Protection and the President of the Office for
Does a refund have to be “cash” or can it
Competition and Consumer Protection are not bound by the
be a voucher, etc?
statutory list of unlawful contractual clauses. If either believe
that any term in a consumer contract which was not agreed Under the Anti-Crisis Shield, subject to the guest’s approval,
specifically with the consumer, is contrary to good practice and/or the refund may be done in the form of a voucher for the services
violates the consumer’s interests, they could deem it unlawful. that will be honoured by the hotel for a period of one year
from the day in which the original services were supposed
General principles of force majeure rules could also apply. to be provided.
The value of the voucher cannot be lower than the amount
Are there any COVID-19 laws applicable of any refund in cash.
to room cancellations?
As of 4 May 2020, the provision of hotel services in Poland is
permitted again, subject to restrictions on some supplementary
services (such as hotel restaurants – which are still required to
temporarily close).
19 WWW.DLAPIPER.COMCOVID-19: REGULATION OF HOTEL CANCELLATIONS
Are there rules around timing Does local law permit the use of a
of refunds? “subject to local law” caveat in the
cancellation policy?
Yes. The Anti-Crisis Shield provides that the refund must
be made within 180 days of the effective dissolution of The use of such a caveat does not mitigate a hotel’s
the agreement. responsibility if the policy or general booking terms and
conditions contain unlawful contractual clauses.
Are there any legal requirements for The hotel’s cancellation policy and/or general terms and
communicating details of a cancellation conditions of the booking should be made available to
to a customer? (For example, does the the guest before the agreement was concluded.
hotel need to inform customers a certain
number of days in advance or in a A cancellation policy would supplement the general terms and
certain way?) conditions and as such would usually be governed by law –
there is no need to add the caveat “subject to local law”.
The wording of the Anti-Crisis Shield is not clear but,
The cancellation policy should be compliant in full with Polish
as explained above, it seems that cancellations made
law, especially in respect to unlawful contractual clauses. If the
under this regulation should be made by the guest.
policy contains unlawful contractual clauses, the company
endangers itself to penalties.
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