Hotels should ensure they have procedures in place to handle:
- the termination or postponed performance of an event contract or tourism-related contract by a non-performing party, and
- the situation if it is the non-performing party (for example, if the hotel is required to suspend operations for certain reasons).
The practical implication is that if a person who booked a venue with the hotel for an event postpones the event because of COVID-19 restrictions, the hotel (as the venue provider) cannot forfeit the person's deposit unless the hotel obtains a determination from an assessor that it would be just and equitable to forfeit either the whole deposit or a part of it (for example, if the person cancels the booking entirely). This could include bookings for a venue and related services bookings for conferences and wedding banquets which are typically booked many months in advance of the event date, and accommodation bookings by individuals and businesses (for example, tour operators).
Details of the form and manner for an assessor's determination is to be carried out are so far unclear and will be set out in the regulations in due course. We expect that the regulations will also provide more guidance on the process for the assessor's determination. Meanwhile, parties served with a notification for relief should note that the Act empowers the assessor with wide discretion, as the assessor:
- may take into account the ability and financial capacity of a non-performing party to perform the contractual obligation and other prescribed factors and;
- must seek to achieve an outcome that is just and equitable in the circumstances of the case.
Experience, including industry experience, is likely to vary significantly amongst the assessors appointed by the Minister. How the assessors interpret the requirement for a just and equitable outcome is also likely to vary as well. It will be important for Hotels to ensure that they are well prepared with clear evidence and detailed submissions in matters that they wish to contest before assessors.
Following the COVID-19 crisis, hotel groups worldwide have been communicating their cancellation policies to their customers, and in this regard, local hotel operators should ensure that their group-wide cancellation policies (and implementation thereof) are not contrary to the relief which the Act would provide to their customers, including the fact that cancellation fees may not be charged and be mindful of the consequences, which can include criminal sanction.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
