Non Refundable UK Cruise Deposits May Not Hold Water in the Future

[ChucktownSteve]

According to a recent article in Travelweekly, "Travel companies face the prospect of being forced to abandon strict rules surrounding non-refundable deposits following intervention by the UK competitions regulator into a case involving Regent Seven Seas Cruises.

 

Firms that refuse to refund payments for cruises and other travel arrangements which have to be cancelled could be breaking the law, the Competition and Markets Authority warned.

 

Even airlines could be acting illegally when they sell “non-refundable” tickets."

 

http://www.travelweekly.co.uk/articles/63688/travel-faces-crackdown-on-non-refundable-deposits

Edited November 13, 2016 by ChucktownSteve

[Cruise Junky]

I read that last week. Will be interesting how it plays out

[HTFCcruiser]

Big can of worms that will ultimately be bad news for the consumer.

 

 

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[ChucktownSteve]

Big can of worms that will ultimately be bad news for the consumer.

 

Can you please explain?

[HTFCcruiser]

People are ultimately selfish and will book multiple options only to cancel many bookings closer to travel date, thus lowering choice, travel agents tour operators and airlines will factor in this and adjust up their prices accordingly. Holiday insurance is available to cover genuine reasons to cancel.

 

 

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[ChucktownSteve]

People are ultimately selfish and will book multiple options only to cancel many bookings closer to travel date, thus lowering choice, travel agents tour operators and airlines will factor in this and adjust up their prices accordingly. Holiday insurance is available to cover genuine reasons to cancel.

 

They do that now in the U.S. On Celebrity, the TAs are not allowed to alter the price from what the cruise line charges except for group bookings. Currently when a lot of people cancel just before final payment and Celebrity has a lot of available cabins, the price drops dramatically just after final payment. Prices in hotels, on airlines and on cruise ships go up and down based upon vacant rooms/seats/cabins.

 

So yes initially the cabin prices will rise however I believe it will drive more people to book at the last minute if they don't care about selection but want lower pricing.

[champagnebarfly]

Isn't that already being done by some cruisers in the US?

[Project_gal]

People are ultimately selfish and will book multiple options only to cancel many bookings closer to travel date, thus lowering choice, travel agents tour operators and airlines will factor in this and adjust up their prices accordingly. Holiday insurance is available to cover genuine reasons to cancel.

 

 

Sent from my iPhone using Forums

 

The article only commented on cancelation "through no fault" of the consumer. It appears to be a long way from cancelling for any reason.

[jagoffee]

Since one has a choice of booking either a refundable or norefundable air fare it is hard to imagine that this would apply to airlines.

 

I cannot believe the travel industry in the U.K. gets away with not refunding deposits. Although I am not impacted because I live in the US I hope they change it. I have always suspected it was more the Travel Agent industry than the cruise company. Does the TA get any of the deposit when a cruise is cancellles and it is not refunded?

[bengaltiger1]

Since one has a choice of booking either a refundable or norefundable air fare it is hard to imagine that this would apply to airlines.

 

 

 

I cannot believe the travel industry in the U.K. gets away with not refunding deposits. Although I am not impacted because I live in the US I hope they change it. I have always suspected it was more the Travel Agent industry than the cruise company. Does the TA get any of the deposit when a cruise is cancellles and it is not refunded?

 

 

I have booked directly through Celebrity and cancellation at any point means the loss of the deposit.

 

 

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[downsmead]

Deposits were not in question in recent uk articles. In the uk, if after final payment, the companies actually resell the cabin / room etc, then the consumer is actually entitled to a refund of the monies that the company have gained as a result of the resell, since the companies are not actually out of pocket, and if they keep the original payment, are actually quids in! Needless to say, a lot of companies, and not just cruise companies, fail to repay the money if the holiday is resold.

Deposits come under a different legal category in uk law and therefore are unlikely to be changed in the near future 🙄

[AnOnymously]

Uk consumer protection law already prohibits taking more than their loss, and I guess that one of the casualities from this law will be, when there is a massive price drop and one cancels but then re-books the same cruise and same room and all of the £300 deposit is taken.

 

"Excessive cancellation fees

Terms that allow the trader to take too much of your money if you back out

of a contract can be unfair.

 

If you want to end a contract, a trader can claim for administration and

marketing costs and for any work they had started and loss of profit but no

more."

[The_Big_M]

Good to hear. Since companies haven't been complying with the law, it's necessary to get some action to bring them into line - for something that is without justification.

[RDC1]

Can you please explain?

 

Because to offset their risk they will raise the prices with the assumption that the deposits will be refunded. I would expect the increase to be some percentage of what the person would have to pay for travel insurance to get the same level of protection. Same with the airline tickets.

 

Instead of having the option to buy travel insurance, the travel companies will just adjust price based upon their own risk, and you still wont get the other features of the travel insurance.

 

So to put it simply you will be able to cancel with sufficient cause, but your base price will be higher.

 

If the court rules against the cruise line expect UK fares to increase around 3%. Airline will adjust some percentage, I would expect it to be higher. Probably around 5-10% depending upon what the exact conditions that they would have to pay out. Since the change would impact all airlines and all cruise lines it would pretty much be an across the board increase, not a case of an individual company being held back for competitive reasons. The consumer protection laws is one of the reasons UK fares tend to be higher than US fares, on average, already.

 

Will cost them less to adjust prices and make the payouts then it would be to put in a system to track individual cost recovery of resale on a canceled reservation.

Edited November 14, 2016 by RDC1

[AnOnymously]

Because to offset their risk they will raise the prices with the assumption that the deposits will be refunded. I would expect the increase to be some percentage of what the person would have to pay for travel insurance to get the same level of protection. Same with the airline tickets.

 

Instead of having the option to buy travel insurance, the travel companies will just adjust price based upon their own risk, and you still wont get the other features of the travel insurance.

 

So to put it simply you will be able to cancel with sufficient cause, but your base price will be higher.

 

If the court rules against the cruise line expect UK fares to increase around 3%. Airline will adjust some percentage, I would expect it to be higher. Probably around 5-10% depending upon what the exact conditions that they would have to pay out. Since the change would impact all airlines and all cruise lines it would pretty much be an across the board increase, not a case of an individual company being held back for competitive reasons. The consumer protection laws is one of the reasons UK fares tend to be higher than US fares, on average, already.

 

Will cost them less to adjust prices and make the payouts then it would be to put in a system to track individual cost recovery of resale on a canceled reservation.

 

I don't see why they should not treat us as they do USA bookings, where deposits are refundable anyway and the fares are cheaper.

[WpgCruise]

I don't see why they should not treat us as they do USA bookings, where deposits are refundable anyway and the fares are cheaper.

 

Do you think it may be because the cost of doing business in the U.K. may be higher than the cost of doing business in North America ?

 

Different consumer protection laws, different tax implications, for example would impact the bottom line the business needs to generate to meet shareholder expectations

 

Different markets impact pricing not only in the cruise business but retail as well. Look at Amazon U.K. vs Amazon U.S.

 

Another example, currency fluctuations Celebrity is a U.S. company selling into the U.K. market. They convert Pounds to U. S.dollars

Given the fall of the pound against the dollar do you think this has an impact on their U.K. pricing?

Edited November 14, 2016 by WpgCruise

[AnOnymously]

Do you think it may be because the cost of doing business in the U.K. may be higher than the cost of doing business in North America ?

 

Different consumer protection laws, different tax implications, for example would impact the bottom line the business needs to generate to meet shareholder expectations

 

Different markets impact pricing not only in the cruise business but retail as well. Look at Amazon U.K. vs Amazon U.S.

 

Another example, currency fluctuations Celebrity is a U.S. company selling into the U.K. market. They convert Pounds to U. S.dollars

Given the fall of the pound against the dollar do you think this has an impact on their U.K. pricing?

 

The pound pricing will effect prices, but that was not the discussion. The discussion was about non-returnable deposits and if that will affect prices. Celebrity make it difficult for UK consumers to even change a product when they offer a better deal. That is automatic if you live in North America, but they take the whole deposit, in UK as they did with me and with others, when one swops from one deal to another in the same cabin and at only a stroke of the computer and that deposit is £300. That's an easy way to make money, but with luck it will not be soon. Also USA gets to stack up cruises and abandon them at final payment and leave owing nothing, leaving the cruise company to sell them cheaply, for my money the UK and others subsidise that because we are stuck with a cruise or lose the large deposit.

 

Can you just illustrate those protectiuon laws in ther Uk, we have heard that before on this forum, but no one ever produced any evidence. As for tax laws big companies like Amazon, they have paid little or no tax in the UK for many years, they had to be shamed into it recently. So I am sure that Celebrity are as wise and they probably pay little tax here too.

 

About time we saw this change and about time cruises were held to account. It was only a few weks ago that I was told by Celebrity

"If guests want to receive the new promotion then it is a case of cancelling their existing booking, losing the deposit paid and re-booking under the new prevailing rate and promotion"

That is scandalous and highway robbery and will now have to change, I am glad to say.

 

And if anyone relies on these new laws instead of taking out full and proper travel insurance they are daft IMHO.

Edited November 14, 2016 by AnOnymously

[WpgCruise]

Some prefer not to see the big picture and want to argue at the granular level.

 

The result is an inability to understand why there are different terms and conditions for different markets and why prices differ as well.

 

The information is out there, we can either educate ourselves or not.

[villauk]

Did I miss something in the article only it didn't state that the gentleman concerned actually got his full deposit refunded? It did state that Regeant would welcome the CMI's views and their upgraded £600 credit offer, but not that a full cash refund had been awarded. It was also stated in the article that they were unsure if the courts would take the same stance.

 

The comments at the end of the article from Dermot mention that First Choice did a detailed submission to the OFT proving that loss of a deposit was a reasonable estimate of the loss to the company of a cancellation. Perhaps it will come down to the circumstances involved in each particular case, as Project Gal mentioned above? The deposit in this instance was rather high compared to most - perhaps that will also be taken into consideration. Companies will say they incurred extra charges for having to re advertise the empty berths and the necessary paperwork involved (staff time etc.) and if they take this into consideration pre booking (as was suggested in the article), then prices will have to rise to compensate for the lack of cancelled deposit revenue they will no longer receive.

 

Relying on this instead of taking adequate travel insurance will indeed open another can of worms.

[RDC1]

I don't see why they should not treat us as they do USA bookings, where deposits are refundable anyway and the fares are cheaper.

 

There are a number of things with UK law that a cruise line has to comply with:

 

1. Under the PTR the passenger must received what was booked. So if there is a change to room number, cabin type, etc. Basically any change at all. A claim can be raised under the PTR. As a result the cruise line would need to track and document any changes sufficiently to be acceptable to meet legal requirements, of any changes, even if the passenger is the one making the request. There systems are not capable of tracking and providing such documentation. End result no changes to bookings allowed. Change results in virtual cancellation of the old booking and creation of a new booking.

 

2. Claims under PTR can be raised for a number of circumstances such as a major change to route, quality of services, that someone from the US cannot claim. Basically deviations from brochure are claimable under PTR. End result is adjust price to account for risk potential.

 

3. The question concerning the deposits, also deals with the entire fare. If someone cancels for medical reasons, the cruise line potentially is on the hook to refund not only the deposit but also the fare if they are able to resell the room (i.e. that interpretation is based upon the fact they are also talking about impacting non-refundable airline tickets). This would remain considerably different than the US market where deposits are not refundable after final booking date. For all practical purposes deposits in the US are often pretty minimal prior to final booking dates anyway (FCC, low deposit sales, etc.).

 

There are other things that impact fares that are not necessarily impacted by regulation such as currency risk, competitive environment (not just cruise costs but costs for other type vacations), arragements with vendors such as travel agents, etc.

[RDC1]

The pound pricing will effect prices, but that was not the discussion. The discussion was about non-returnable deposits and if that will affect prices. Celebrity make it difficult for UK consumers to even change a product when they offer a better deal. That is automatic if you live in North America, but they take the whole deposit, in UK as they did with me and with others, when one swops from one deal to another in the same cabin and at only a stroke of the computer and that deposit is £300. That's an easy way to make money, but with luck it will not be soon. Also USA gets to stack up cruises and abandon them at final payment and leave owing nothing, leaving the cruise company to sell them cheaply, for my money the UK and others subsidise that because we are stuck with a cruise or lose the large deposit.

 

Can you just illustrate those protectiuon laws in ther Uk, we have heard that before on this forum, but no one ever produced any evidence. As for tax laws big companies like Amazon, they have paid little or no tax in the UK for many years, they had to be shamed into it recently. So I am sure that Celebrity are as wise and they probably pay little tax here too.

 

About time we saw this change and about time cruises were held to account. It was only a few weks ago that I was told by Celebrity

"If guests want to receive the new promotion then it is a case of cancelling their existing booking, losing the deposit paid and re-booking under the new prevailing rate and promotion"

That is scandalous and highway robbery and will now have to change, I am glad to say.

 

And if anyone relies on these new laws instead of taking out full and proper travel insurance they are daft IMHO.

 

The law in the UK is Package Travel Regulations 1992 is the law that has driven some of the differences in the past. I have not read the new law "Consumer Rights Act" to see how that expands the PTR 1992. If you read the US versions of the Cruise contracts and compare them to the UK versions you will see that a number of the differences use the explicit language in PTR 1992.

 

Here is a pretty good summary

 

http://www.which.co.uk/consumer-rights/regulation/package-travel-regulations

 

Some key elements

What is an essential term?

 

In the context of a package holiday contract, an alteration to an 'essential term of the contract' is likely to include a change of any of the following:

 

the price

the precise accommodation, standard of accommodation and accommodation facilities

the type and standard of transport

the place of departure and destination

any facility or service advertised or promoted as forming a part of the package

any term required by the Package Travel Regulations or the Abta Code of Conduct to be included as part of the contract,

although what constitutes an 'essential term of the contract' will often depend on the circumstances of the case.

 

In practice, the problem is that the tour operator or travel agent may not inform you of any pre-departure changes until shortly before your planned departure date.

 

Many of you would have already have booked your holiday time off well in advance and find it difficult either to rearrange your holiday time or find an alternative holiday at the same price.

 

Invariably, you are left with little choice but to go ahead with the package holiday, as the alternative will be no holiday at all.

 

It's important to note that, even if you do decide to cancel the package holiday (and you do manage to find an alternative holiday), you may still be entitled to some compensation in addition.

 

Use our template letter to claim compensation if your package holiday was changed.

Edited November 14, 2016 by RDC1

[RDC1]

For anyone interested here is a link to the regulations

 

http://www.legislation.gov.uk/ukpga/2015/15/contents

 

It is not certain that it would be considered applicable to the cruise line case by a court. It seems like stretch.

[ReneeFLL]

What are the ramifications if people book using a US TA? Are there any?

[AnOnymously]

There are a number of things with UK law that a cruise line has to comply with:

 

1. Under the PTR the passenger must received what was booked. So if there is a change to room number, cabin type, etc. Basically any change at all. A claim can be raised under the PTR. As a result the cruise line would need to track and document any changes sufficiently to be acceptable to meet legal requirements, of any changes, even if the passenger is the one making the request. There systems are not capable of tracking and providing such documentation. End result no changes to bookings allowed. Change results in virtual cancellation of the old booking and creation of a new booking.

 

2. Claims under PTR can be raised for a number of circumstances such as a major change to route, quality of services, that someone from the US cannot claim. Basically deviations from brochure are claimable under PTR. End result is adjust price to account for risk potential.

 

3. The question concerning the deposits, also deals with the entire fare. If someone cancels for medical reasons, the cruise line potentially is on the hook to refund not only the deposit but also the fare if they are able to resell the room (i.e. that interpretation is based upon the fact they are also talking about impacting non-refundable airline tickets). This would remain considerably different than the US market where deposits are not refundable after final booking date. For all practical purposes deposits in the US are often pretty minimal prior to final booking dates anyway (FCC, low deposit sales, etc.).

 

There are other things that impact fares that are not necessarily impacted by regulation such as currency risk, competitive environment (not just cruise costs but costs for other type vacations), arragements with vendors such as travel agents, etc.

 

Cancellation for whatever reason, will have to be adjusted according to when the person cancells not the circumstances and the amount refundable is not all the deposit and indeed there can still be a cost to the customer if the agency can show a loss. The notion is that the cruise line etc will receive a 'fair' payment and not a punitive payment. So the cases will have to be based on individual circumstances. The one of particular interest to me is when a customer is forced to cancel one booking and is not allowed simply to transfer to the same cruise but on a different offer, as would be allowed in North America, and has to cancel the first booking, lose an entire deposit, and at the click of a button a new booking with the same cabin is given. Taking the whole deposit in these circumstances is, IMO, punitive and unfair and will not now be allowed because there is no way the admin costs of such a small alteration can be justified. It was and is highway robbery.

 

And if the cruise lines insist on treating all this on an absolutely individual basis they will have massive spralling costs as they will need to continually instruct solicitors and fight court cases. Mercifully for the individual, Small Claims Courts do offer a great deal, it will be held close to the indivuals place and so the cruise line will have to travel, and it is set up insuch a way that individuals can represent themselves and the cost of the case is small.

 

I welcome the move and say again that anyone in the UK who relies on any of this instead of travel insurance, which covers for many other things including health insurance is daft.

[AnOnymously]

The law in the UK is Package Travel Regulations 1992 is the law that has driven some of the differences in the past. I have not read the new law "Consumer Rights Act" to see how that expands the PTR 1992. If you read the US versions of the Cruise contracts and compare them to the UK versions you will see that a number of the differences use the explicit language in PTR 1992.

 

Here is a pretty good summary

 

http://www.which.co.uk/consumer-rights/regulation/package-travel-regulations

 

Some key elements

What is an essential term?

 

In the context of a package holiday contract, an alteration to an 'essential term of the contract' is likely to include a change of any of the following:

 

the price

the precise accommodation, standard of accommodation and accommodation facilities

the type and standard of transport

the place of departure and destination

any facility or service advertised or promoted as forming a part of the package

any term required by the Package Travel Regulations or the Abta Code of Conduct to be included as part of the contract,

although what constitutes an 'essential term of the contract' will often depend on the circumstances of the case.

 

In practice, the problem is that the tour operator or travel agent may not inform you of any pre-departure changes until shortly before your planned departure date.

 

Many of you would have already have booked your holiday time off well in advance and find it difficult either to rearrange your holiday time or find an alternative holiday at the same price.

 

Invariably, you are left with little choice but to go ahead with the package holiday, as the alternative will be no holiday at all.

 

It's important to note that, even if you do decide to cancel the package holiday (and you do manage to find an alternative holiday), you may still be entitled to some compensation in addition.

 

Use our template letter to claim compensation if your package holiday was changed.

 

This article does not think it a stretch

http://www.telegraph.co.uk/news/2016/10/24/crackdown-on-unfair-company-tcs-spells-the-end-of-non-refundable/

and this is from the assistant general counsel at Carnival UK

There is currently a well-established understanding that any table of cancellation charges based on the date of cancellation by a consumer should reflect the losses of the business due to that cancellation—and that as long as the business makes a loss or breaks even by applying its charges overall, those charges are generally enforceable. It is possible under the new package travel Directive that tour operators will need to justify cancellation charges levied in each and every case, which will no doubt be an area of intense debate in the travel industry.

http://blogs.lexisnexis.co.uk/comet/cruising-towards-new-travel-legislation/

Edited November 14, 2016 by AnOnymously