The coronavirus pandemic continues to have a monumental effect on our lives. If you turn on the news, you’ll see that there are more cases detected across the U.S., and more restrictions placed on citizens’ daily activities.
This impact and these restrictions mean changes in how you buy your groceries, the way you dine out, schooling, and social visits to friends, the public library, along with live performances and sporting events.
The coronavirus also has had a severe impact on the travel and hospitality industry. This means the family vacation to London over spring break is no more, and the week-long business conference in Las Vegas is kaput. It also now requires online classes for students and perhaps working from home for Mom and Dad.
But what about the pre-paid airfare and hotel accommodations made months ago?
What does your company do about the 50% deposit it made for catering the annual meeting, the block of rooms at the resort, and the entertainment after the awards banquet?
You need to know what options you have when an expensive family vacation or major corporate event your company is planning is canceled. This article will discuss some of the issues concerning the coronavirus cancellation of hotel, airline, and conference reservations and how businesses in the travel and hospitality industries are handling this unique situation.
Force majeure translates literally from French as “superior force.” It’s language that is part of most contacts and agreements to eliminate liability for natural and unavoidable catastrophes that derail the expected course of events and keep the parties from fulfilling their obligations. There can be some argument over what force majeure includes, but one business group, the International Chamber of Commerce, has tried to clarify the meaning by defining it as “impracticability.” This would mean that following-through with the terms of an agreement is “impossible, unreasonably burdensome, and expensive.”
Typically, the event that creates this situation must be external to both parties, unforeseeable, and unavoidable. While it can be difficult to prove these conditions, it’s pretty safe to say that the coronavirus pandemic satisfies these requirements.
Just how businesses are addressing the coronavirus is a tough question to answer in one sentence. “It’s evolving” is as accurate as we can be. While the airline ticket, hotel reservations, and conference contracts most likely have a force majeure clause, the way that a specific business is handling the impact of the coronavirus is unique. While no one will want to do business with a company that plays hard ball with a contract during a crisis, the company also doesn’t want to go out of business because of the coronavirus.
Here are some tips on how to research your specific situation:
Review the event/hotel/airline’s cancellation and refund policy. It may be that an event may have an established refund policy once it’s canceled, so attendees should determine whether they can still get compensated in the future. If your company is an exhibitor at a conference, you may be entitled to the refund of your deposit.
Watch for policy changes. Some events may impose very strict force majeure clauses, but others may have some wiggle room. And many conferences organizers are considering amending their refund and cancellation policies.
Look for what your hotel and airline is doing specifically around coronavirus. As far as travel booked for events, it looks like most airlines have been flexible with refunds and compensation. American Airlines, Alaska Airlines, and JetBlue have introduced “peace of mind” travel policies. These airlines are waiving ticket change and cancellation fees for travelers who change plans for certain dates and destinations due to of coronavirus. Allegiant Air offers a one-year voucher for air travel cancelled during the pandemic.
Norwegian’s temporary “peace of mind” travel policy lets travelers cancel their cruise reservation to 48 hours prior to departure with no questions asked. Other cruise lines are offering credit for sailings until the end of April or May. Celestyal Cruise Line customers are permitted to change their plans up to seven days before the sailing date without incurring cancellation fees.
In the hotel industry, COVID-19 has primarily impacted the major chains in countries outside of the U.S., but domestic locations are beginning to offer similar fee waivers. Business Traveler says that hotel groups with locations in mainland China, Hong Kong, Macau, and Taiwan are waiving cancellation fees and offering more flexible rebooking policies. Refund and cancellation polices are being updated daily. Hilton, for example, now states that all reservations—even those that are in its “non-cancellable” (or “Advanced Purchase”) price category—for arrival before April 30th can be modified or cancelled at no charge up to 24 hours before the scheduled arrival. Likewise, Airbnb’s refund policy classifies a coronavirus cancellation as an “extenuating circumstance.” The company says that anyone who is unable complete their trip because of official travel restrictions covered by the policy, medical or disease control duties, flight or ground transportation cancellations as a result of the coronavirus by the provider, or suspected or confirmed cases of coronavirus, can cancel and receive a full refund.
In the past, a force majeure clause may have been some of the fine print you neglected to read or disregarded as something that never would be needed. But with the coronavirus, you’ll now want to read this boring “boilerplate” language.
Coronavirus shows us that these force majeure events do occur, and it’s another point to remember when signing an agreement.
But for now, it pays to continue to monitor a company’s policy that may not currently be as forgiving as those mentioned here because, again, these policies are changing daily.
And wash your hands!