Unless otherwise informed by the authorities that be, the cancellation procedures set out in the Consumer Protection Act still applies to cancellations of reservations/bookings made in advance. There has been uncertainty in the hospitality industry when it comes to the COVID-19 pandemic with business owners not knowing where they stand and not knowing the options available to them as a result of such cancellations.
It is clear that Section 17 of the Consumer Protection Act states that a consumer has a right to cancel an advance booking or reservation. It is a somewhat standard procedure that a deposit is required from the consumer to reserve such booking. Section 17 further makes provision for imposing a reasonable charge for cancellation of that reservation.
There are factors set out in the act which determine whether a charge is reasonable. The first factor is one of the nature of the good or service. In relation to this, accommodation, for example, is generally reserved until cancelled or honoured. It is not ethical for a guesthouse owner to double book in anticipation of a reservation not being honoured.
The second factor is the length of notice of cancellation provided by the customer. It is common practice that should one be unable to honour such reservation/booking, one should notify guesthouse management immediately or as soon as reasonably possible. The longer the notice period, the easier it is for the guesthouse management to re-advertise the room and find other guests to fill that particular room. The shorter the length of notice, the harder it is for guesthouse management to re-advertise and the likelihood is that that room remains empty.
The third factor is the reasonable potential for the service provider, acting diligently, to find an alternative consumer between the time of receiving the cancellation notice and the time of the cancelled reservation. This is where the plot thickens. Given the recent events around COVID-19 worldwide it is unlikely that, even if re-advertised, the guesthouse management would find an alternative consumer to mitigate the guesthouse losses.
The fourth and final factor is the general practice of the relevant industry. Most reservations for accommodation usually consist of terms and conditions which are signed by the consumer upon booking.
These terms and conditions form the basis of the agreement between the parties and consumers are bound by the same as long as the terms and conditions are not unlawful. In those terms and conditions, one can find a cancellation clause which generally consists of a sliding scale which sets out a percentage of the total booking which may be retained by the guesthouse as a result of cancellation. The longer period of notice allows for the smaller percentage being withheld. The same applies to the other end the spectrum which allows for a higher percentage being withheld given shorter notice. This is commonly referred to as a reasonable cancellation fee.
As with most rules, there are exceptions. Should any reservation or booking be cancelled due to death or hospitalisation of the person for whom or for whose benefit the reservation or booking was made, the guesthouse management may not impose any cancellation fee in respect of such booking. Adequate proof, in all fairness, may be necessary to prove such claim and may be courteously requested under the circumstances.
It is advisable that the hospitality industry approach cancellations with a bit of flexibility given that in some instances consumers themselves are unable to fulfil their obligations due to circumstances beyond their control, for example, unable to book flights to get to the accommodation or being quarantined pending the outcome of test results. One has to keep in mind that once this pandemic is over, it is business as usual and consumers appreciate and acknowledge service in a manner and quality that they are generally entitled to expect. The postponement of any reservation or booking is therefore recommended, where possible and devising mutual agreements with consumers which benefit both the consumers and the guesthouse may be preferred.
ABOUT THE AUTHOR
Ashlin Naidoo is an admitted attorney, obtaining his LLB degree from the University of KwaZulu-Natal. He worked as a professional assistant prior to joining SEESA and specialised in civil litigation. He is currently a SEESA Consumer Protection & POPI legal advisor at our Durban office.