Tourist accommodation contracts

Cancellations and refunds are the main causes of disputes between accommodation owners and guests.

To avoid any problems with cancellation, no-shows or curtailment (when a guest cuts their stay short), you should have a clear cancellation policy in place. 

You must make your cancellation and refund policy clear to guests before you accept the booking. Include this in your terms and conditions, and advise your guests of it via your website, on the telephone, by email or in writing. 

Dealing with cancellation

Be fair and flexible when dealing with cancellations. Keep in mind that your guest may cancel for a variety of reasons, eg death in the family, the wedding being called off or simply because they've changed their mind.

Common ways of dealing with cancellations, no-shows and curtailment are:

• Charging an administration fee for the loss of business. The fee may vary according to the amount of notice given of cancellation.
• Retaining the deposit, or a part of the deposit, paid at the time of booking. Again, the amount you retain may vary according to the amount of notice given of cancellation.
• You may wish to give customers an option to take out cancellation insurance while booking their stay. If you need to comply with the Package Travel Regulations, you are required to tell the guest about the possibility of taking out cancellation insurance in good time before the start of their holiday. You can contact a local insurance company or broker for details on how to offer this facility. See package travel regulations.

Remember that your guest does not have an automatic right to a refund if they cancel. Terms and conditions should always cover any cancellation charges, wherever possible, and require that a certain amount of notice is given. It's also a good idea to require confirmation that the cancellation is accepted, so the customer cannot claim that they cancelled if they haven't.

Cancellation charges

On cancellation or curtailment, you will need to send an invoice to the guest for the amount due. This should exclude VAT (as no services have been provided) and less any deposit that you have retained.

If the guest refuses to pay, you may be able to: 

• Charge the amount to their credit/debit card. This is only an if you have clearly stated to the guest at the time of the booking that their card account will be charged in the case of a cancellation, and they have accepted the condition.
• Take the matter to court using the small claims procedure.