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28 August 2021

Covid-19 and accommodation bookings: your rights if you need to cancel

What you need to know if your plans are foiled by the lockdown.

Booked accommodation but need to cancel because of the Covid-19 lockdown? We answer common questions about consumer rights.

I booked accommodation but won’t be able to use it due to the lockdown. What should I do?

Contact the accommodation provider. If you want to delay your trip, you could always ask the company to put your booking on hold.

We’d expect businesses to be flexible about cancellations during the lockdown. It’s in the interests of good customer relations for them to do this.

I’ve asked for a refund but the accommodation provider is refusing. Can I get my money back?

First up, check the terms and conditions you were given at the time of making the booking.

Look for a clause that states what happens if the accommodation can’t be used due to events outside the control of either party (such as a pandemic). These terms sometimes use the words “force majeure”.

The company needs to make sure any cancellation terms that apply in these situations are fair. Otherwise, it risks breaching the Fair Trading Act.

In our view, a term that lets the company keep a sizable chunk or all of your money is likely to be unfair and open to challenge.

If the terms entitle you to a refund but your accommodation provider refuses? Contact your bank to ask about a chargeback (a refund to your card) if you paid by credit or debit card.

If there’s nothing in the terms that state what happens in a lockdown situation, then you can rely on the Contract and Commercial Law Act.

This act applies where a contract is “frustrated” – that is, it can’t be fulfilled due to events outside the parties’ control. It gives you the right to request a refund and limits what the company can charge to its reasonable administration costs.

In March, a Consumer NZ member successfully took an Airbnb host to the Disputes Tribunal after the host refused a refund for a booking cancelled because of the August 2020 lockdown.

The company says if I cancel, I have to pay a cancellation fee. Is that right?

It can only charge a cancellation fee if the terms and conditions allow for this – and the terms are fair.

Companies can’t just charge whatever they like. A term allowing a company to charge a steep cancellation fee in this type of situation risks being unfair and breaching the Fair Trading Act.

The same would apply if the contract allowed the company to cancel at any time without penalty but imposed a fee on the consumer for doing so.

Excessive fees may also be considered penalties under contract law and open to legal challenge.

If you’ve been unfairly stung, you may be able to get a chargeback from your bank. Alternatively, you could lodge a claim in the Disputes Tribunal for a refund.

Make a complaint to the Commerce Commission and let us know too.

I’ve decided to postpone the date of my booking but there’s an extra fee for doing so. Do I have to pay it?

The company can only charge extra to change the date of your booking if the terms and conditions allow for this (and they are fair).

You’re within your right to question any additional charges that you weren’t told about when you booked.

I was never shown any terms and conditions when I booked, but the company is now quoting them at me to refuse a refund. Do they apply?

No. Terms and conditions only form part of the deal if they were disclosed to you prior to making the booking.

Providers can’t just make up terms to suit themselves when circumstances change. The terms need to have been in place at the time the contract is made. Any attempt to impose new terms on a consumer is likely to breach the Fair Trading Act.

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