A Taiwan-unique Policy on Hotel Bookings

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Should customers cancelling a special offer be guaranteed a refund?

When arranging an overseas holiday, have you ever booked hotel rooms online as part of a special promotion such as an “early-bird package” offering an attractive discount from the ordinary room rate? If so, you undoubtedly noticed and agreed to the stated conditions – pre-payment and lack of refund in case of cancellation – that usually accompany such special offers.

In other markets around the world, those conditions are invariably accepted by consumers as a reasonable trade-off in exchange for the chance to enjoy advantageous pricing. Among major markets, only in Taiwan – in another example of the Taiwan-unique approach too-often found in this country’s laws and regulations – has it been written into the law that hotels here must refund at least part of the payment if the booking is cancelled before the arrival date.

Currently the executive branch is proposing an amendment to the Consumer Protection Act that would decrease the mandated percentage of refund from 50% to 30%. But representatives of the hospitality industry have used this opportunity to question the rationale for requiring hotels to provide any refund at all.

At a recent meeting set up by AmCham Taipei, representatives from the Chamber’s Travel and Tourism Committee – including executives from both hotels and online travel agencies – made the case for removing that requirement to officials from the National Development Council, Taiwan Tourism Bureau, and the Executive Yuan’s Consumer Protection Committee. Although the government officials were disinclined to revise the draft amendment that is due to go soon to the Legislative Yuan for deliberation, they left the door open to reconsideration of the issue in the future.

In a position paper, the Travel and Tourism Committee outlined reasons why the refund obligation should be eliminated. One is simply to bring Taiwan in line with global practice. Since it is standard procedure for international hotel chains to attach the no-refund condition to certain special offers, it is unreasonable to ask them to treat Taiwanese consumers more favorably than customers from any other country.

More fundamentally, the no-refund policy is clearly stated on the website of the hotel or travel agency, and is agreed to by customers when they choose to book the special offer rather than the regular rate.

In addition, the practice is a reflection of the dynamics of supply and demand. Hotels use it to help boost occupancy during low season by offering very special rates, or to avoid loss of revenue on high-demand occasions such as New Year’s Eve.

“Travelers are already used to this concept in booking airplane tickets,” notes Committee Co-chair Achim v. Hake. “They know that to obtain the lowest price they may have to sacrifice certain flexibility. There is no reason why this concept should apply to aviation and not to the hotel business.”

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