Cancellations and refunds due to flooding

1. If you cancel a booking

A booking is a contract between you and your customer.

Normally, if you cancel a booking you are in breach of contract and your guest is entitled to claim damages from you to compensate them for any loss. This might include the cost of taxi fares to find alternative accommodation or coach transfer to another venue. However, if your business has been flooded and you are unable to open, then this should be treated as a case of force majeure, whereby an “act of God” has prevented you from fulfilling the terms of the contract and compensation is not due.

Most customers will, of course, be sympathetic to your situation, as long as you have informed them immediately of any problems and, where possible, helped identify alternative options.

2. If your customer cancels a booking

Similar to the situation where you have to cancel a booking due to being flooded, your customer may be able to claim a case of force majeure if they are not able to get to your property due to the flooding or they themselves have been flooded.

However, if your customer simply cancels the booking because of more general concerns such as the weather or whether surrounding attractions will be open, then force majeure does not apply.

In this type of circumstance, you should consider the reason why the customer is cancelling the booking and make a commercial judgment in terms of retaining deposits or imposing cancellation charges. In making a decision you will need to weigh-up the goodwill generated through not imposing cancellation charges against the loss in cash flow to the business.

Remember social media and review sites are new routes for customers to let others know how you have reacted to the situation (positively or negatively) and while they should not hold you to ransom, you need to at least consider them in your decision making.

If you are concerned, speak to other businesses and your Destination Management Organisation to find out how others are handling cancellations and look at Pink Book Online for guidance on legislation in this area.

Where you have to make refunds to customers, review the conditions of your business insurance policy to see if there is any relief under the business interruption and consequential loss sections. If your insurance includes cancellations, check the conditions of this in respect of the current issue – it is also important to speak to your customers and ask them to check any insurance policies they may have.

3. New bookings

Before taking any new bookings, check your standard terms and conditions and cancellation policy and update them if necessary, to ensure that they are clear in case of future weather-related impacts. When new customers book, let them know your cancellation policy if floods occur and confirm that they have accepted it. 

Cancellation provisions within a contract can only be applied when these terms were made clear at the time of booking. This will be important should your customers subsequently decide to cancel their visit.