The Legal Impacts of COVID-19 in the Travel, Tourism and Hospitality Industry

The Commission is aware that cancellations entailed by the COVID-19 pandemic have led to an unsustainable cash-flow and revenue situation for the travel industry, as well as for the transport sector. The liquidity problems of organisers are exacerbated by the fact that they have to refund the full price of the package to the traveller while they do not themselves always receive reimbursement of prepaid services that are part of the package in due time. This can de facto result in an unfair sharing of the burden among the operators in the travel eco-system. Additionally, if organisers or carriers become insolvent, there is a risk that many travellers and passengers would not receive any refund at all, as their claims against the former are not protected. The same problemmay arise in a business-to-business context, in which organisers receive a voucher as reimbursement for prepaid services from carriers, which later become insolvent. First of all, the Recommendation recalls that on 19 March 2020, informal guidance on the application of the Package Travel Directive in connection with COVID-19 has been published on the Commission’s website, confirming the traveller’s right to get a full refund, but also stating that it is possible for the traveller to accept a voucher. In particular, the Commission expressly reaffirms that vouchers that carriers or organisers may propose to passengers or travellers, as an alternative to reimbursement in money, are subject to the passenger’s or traveller’s voluntary acceptance. According to the Recommendation, making vouchers more attractive, as an alternative to a cash refund, would increase their acceptance by travellers and passengers. From the Commission perspective, this would help to ease the liquidity problems of operators and could ultimately lead to better protection of the interests of passengers and travellers. To achieve this, the Commission recommends that vouchers have, inter alia , the following characteristics: – a minimum validity period of 12 months; – the organisers should automatically refund the amount of the voucher concerned to the traveller, at the latest, 14 days after the end of its validity period, if the voucher has not been redeemed; – if the vouchers have a validity period longer than 12 months, the passengers should have the right to ask for reimbursement within 12 months after the issuance of the voucher concerned, as well as afterwards, subject to any prescriptive time limits; – the travellers should be able to use vouchers for payments in respect of all new bookings made before their expiry date even if the payment or the service takes place after that date;