On 13 June 2014, the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (the “Regulations”) will come into force. Whilst some of the provisions in the Regulations are largely the same as the previous legislation, hotel operators and travel agencies (including online intermediaries such as Expedia and lastminute.com) will have to make some changes to the conduct of their sales in light of the Regulations coming into force.
The Regulations implement the EU Consumer Rights Directive in the UK and generally apply to consumer contracts for the supply of both goods and services. The Regulations will replace the Consumer Protection (Distance Selling) Regulations 2000 and the Cancellation of Contracts made in a Consumer’s Home or Place of Work etc. Regulations 2008.
The Regulations provide for three main categories of contracts:
- Distance contracts are contracts where the seller and buyer are not in the same physical location (e.g., ecommerce, catalogue or telephone orders).
- Off-premises contracts are those that are made where the buyer and seller are in the same physical location but in a location which is not the business premises of the seller.
- On-premises contracts are those which are neither distance nor off-premises contracts and are those which are traditionally concluded on the business premises of the trader.
Key changes to consumer contracts in scope
Some of the key changes imposed that hotel operators and travel agencies will have to be aware of across the board with respect to room sales are:
(a) Pre-contract information requirements:
The Regulations introduce a new list of pre-contract information that hotel operators and travel agencies must give or make available to a consumer prior to the consumer being bound by any contracts.
Schedule 1 lists the information that hotel operators and travel agencies would need to provide to a consumer buying on-premises. The information required is unlikely to differ materially from what the operator already does and the Regulations only require for the information to be provided under Schedule 1 where it is not already obvious from the circumstances.
However, in respect of online hotel room sales operators will have to provide the information listed in Schedule 2, which include (amongst other things): the address at which the operator is established; the telephone/fax numbers and email address (where available); the total price of goods and services inclusive of tax and any other additional charges; the operator’s complaint handling policy; the conditions of after-sale customer assistance/services; and information that no right to cancel exists. This significantly extends the list of pre-contract information for distance contracts over what was previously required.
(b) Express prior consent for additional payments
The seller must have express consent from the customer for any additional payments (for example fees charged for breakfast options or wifi use). The Regulations also prevent the use of pre-ticked boxes for any additional payments.
(c) No premium rate helpline
Sellers are no longer permitted to use premium rate charges for their telephone helpline in relation to completed contracts. All calls should be at the basic rate.
Additional key changes for online or other distance contracts
With respect to hotel room sales that are conducted online or by telephone, hotel operators and travel agencies should be aware of the following:
(a) Means of providing information – durable medium
Information must be provided and addressed personally to the customer in a durable medium (e.g. by paper or email, which enables the recipient to store the information and allows an unchanged reproduction of the information stored. This is unlikely to require change in respect of reservations booked online. But, for telephone reservations, the hotel operator and/or travel agent will have to either send a confirming email or letter to the customer.
In addition, hotel operators will need to provide the consumers with confirmation (in a durable medium) “before the service is provided” (i.e., before the customer checks in). It must be noted that the confirmation must include all of the information required under Schedule 2 to the extent not already provided. That is, they will need to provide a full description of the booking and the full price including tax and any additional charges.
(b) Express acknowledgment of an obligation to pay
For online sales requiring pre-payment, the customer must be made aware in a clear and prominent manner that he/she will be under an obligation to pay directly before he/she places the order. This is most commonly done with a button that says ‘pay now’. This also ensures that the customer explicitly acknowledges any obligation to pay.
(c) Rules on cancellation of contracts
However, one of the biggest changes for distance contracts does not apply to hotel operators. There is a new statutory minimum cancellation (“cooling off”) period for distance contracts which has extended the period from 7 working days to 14 calendar days.
This new statutory minimum does not apply to hotel operators or travel agencies as hotels are exempt. The specific exemption states that the right to cancel does not apply to, amongst other things, the supply of accommodation relating to leisure activities on a specific date. This is intended to protect operators who may set aside specific capacity for a customer which they may not be easily able to fill or resell should the customer change his/her mind.
It is should be noted that the existing Package Travel, Package Holidays and Package Tours Regulations 1992 (the “Package Travel Regulations”), gives travelers the right to cancel a contract and receive a full refund if any of the essential elements of the travel package are changed1.