COVID-19: Regulation of Hotel Cancellations

EUROPE

COVID-19 ALERTS COVID-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 [email protected] COVID-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

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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.

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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.

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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.

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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?

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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.

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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.

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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.

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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

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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.

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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.

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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).

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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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