After the storm, who has your refund?

by Christopher Elliott on November 27, 2012


The recent superstorm and series of nor’easters that slammed into the East Coast grounded tens of thousands of travelers, including Neil Weiss.

Fortunately, most travel companies waived their usual rules, offering those delayed by the storms a refund or a credit. But not all travel companies. Weiss, an editor for a trade magazine based in Cherry Hill, N.J., found an unlikely roadblock to his refund: his online travel agency.

After superstorm Sandy, Weiss had to cancel a business trip to Las Vegas that he’d booked through Expedia. US Airways agreed to waive its change fee and allowed him to reschedule his flight. His hotel, Treasure Island Hotel & Casino, did not. It wanted to charge him $200 for being a “no show,” according to Expedia.

But when Weiss contacted Treasure Island directly, he heard a different story. The hotel would be happy to cancel his reservation, he was told, but because he’d made the booking through Expedia, a refund would be up to the agency. And Expedia wouldn’t give him his money, citing its published refund policy, he says.

Weiss’s cancellation isn’t the only refund case I tried to mediate after the storms. These problems highlight one of the often unmentioned risks of booking through a travel agent: Even when an airline or hotel is willing to refund a purchase, you may still have to get past an agency’s own refund rules.

The Weiss case is interesting because after he canceled his trip, he received conflicting information from Expedia and Treasure Island. Expedia says that it advocated with the hotel on his behalf, trying to secure a refund of his first night’s stay. But it claimed that the hotel wouldn’t allow it.

In an unusual e-mail, a vice president at Treasure Island disputed Expedia’s account. “If Expedia suggested that they’d already paid us for your room and kept a cut, you either spoke to someone who does not have the correct information, or deliberately told you something that is not true,” he wrote. “Without getting into too many details, that is not — nor ever has been — the way our Expedia billing accounts are set up.

“In addition, if Expedia advised you that they will not refund your payment due to policies in place by our hotel, that is also untrue.”

Either way, Treasure Island promised to return Weiss’s money. After I contacted Expedia on Weiss’s behalf, the agency agreed to refund his hotel charges. A company spokeswoman said that Expedia was the merchant of record on his hotel booking, meaning that it had charged him, not Treasure Island.

A similar problem befell Jason Singer, who had booked a car rental through Hertz for his 30th high school reunion in Manhasset, N.Y. When Sandy struck, both American Airlines and La Quinta offered him immediate refunds. But Hotwire said that its refund policy meant that his car rental fee couldn’t be returned. Singer was on the verge of starting a “boycott Hotwire” campaign when he contacted me.

“A Hertz representative apologized profusely for Hotwire’s policies and for the fact that they could do nothing about it,” says Singer. “She added that not only would they have refunded me without question if I had made a prepaid reservation through them directly, but that they were receiving multiple calls with the same Hotwire issue.”

I asked Hotwire to review Singer’s case, and the company said that his request had been handled correctly on one level and incorrectly on another.

For one thing, Singer’s travel dates fell outside the window for which refunds were being offered. And he’d paid a special deep-discount rate that was subject to strict non-refundability rules. “You can see how standard practice would recommend against a refund in this case,” spokesman Garrett Whittemore told me. “It’s nearly impossible to reliably prove that any customer’s travel was meaningfully changed by this natural disaster.”

But Hotwire refunded Singer’s purchase anyway. Why? It turns out that the Hertz location was closed because of storm damage, so he wouldn’t have been able to pick up the car if he’d traveled. Hotwire was the merchant of record in the transaction.

These cases raise two key questions: Who takes your money when you’re buying a travel product? And how do you know where to go for a refund?

When you buy through a bricks-and-mortar travel agency and pay by credit card, charges are passed through to the airline, hotel or car rental agency and are governed by its merchant agreement, which is the contract between the company and the credit card.

“That means that when our clients see their credit card statements, they’ll see a charge for the specific supplier they’re using, rather than for the agency,” says Steve Loucks, a spokesman for Travel Leaders, a travel agency consortium in Plymouth, Minn.

Refunds on credit card purchases pass directly back to the consumer, so an agency wouldn’t be able to hold back the money because of its refund policy.

In other words, if you want to know who has your money, check your credit card statement. Unfortunately, you can’t always know who will charge you until you’ve been billed. But roughly 5 percent of travel purchasers can know, because they pay by cash, check or other non-credit-card method, according to Loucks. For them, the company taking the money is the company that will give them the refund.

Singer and Weiss probably would have gotten their refunds eventually without my involvement. Even if they hadn’t asked me to intervene, they could have filed a dispute with their credit card company. With right on their side, they would have won.

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  • Johnp

    I do have to wonder why anyone would go to an agency similar to Expedia or orbitz. It is better to deal directly with the hotel , car companies and airlines and will result in less costs. You always have a better situation dealing directly and Not working with agencies especially Orbitz and Expedia. My suggestion, after years of traveling is go with American Express , they will respect your situation.

  • DCTA

    Johnp – if you’re using American Express to book your travel – you’re using a Travel Agency. You may not recognize it as such, but it is. You can walk into an Amex office, call Amex or book on-line – but it is a Travel Agency.

  • Kevin

    I kind of see Expedia’s point here — that made me cringe — insurance was offered to the client which covered unexpected events and such — why should a business lose money because the client didnt take insurance to cover his trip. If the hotel and air want to offer a refund great for them but the provider can and has a right to charge a fee for the cancellation. I see nothing wrong with it.

    Kevin.

  • JohnCF

    One would think that “Weiss”, as an editor of a travel trade magazine, would know better than to book through Expedia, and use a tried and true travel agent.

  • Anonymous

    Maybe he had a coupon :)

  • Anonymous

    Kevin, why do you think Expedia (or an OTA) lost money? Can’t they themselves cancel with the hotel or car company and NOT PAY them?

  • Kevin

    They lost commission through no fault of their own…. I don’t feel sorry for anyone that does not protect their travel plans with some form of insurance…. a tree fell on my car a few years ago – i didn’t ask ford to fix my car or let me out of the payments because I planned ahead and had insurance. Why do consumers think that they can get out of cancellation fees just because something happened that is out of their control or that is unexpected — thats what insurance is for.

  • Anonymous

    But Kevin, (during Hurricane Sandy) the airlines, hotels and rental cars were willing to cancel or change reservations without penalty. So why shouldn’t an AGENT comply with the PRINCIPAL’S wishes. After all the OTAs are not selling anything they have in inventory. They are just booking other supplier’s products.

  • Kevin

    No they are not selling inventory…but time is money… I’m so over people saying ‘oh but I didnt know that (fill in the blank) was going to happen” S*%$* happens people. Grow up and protect yourself with insurance….it’s not a nanny state…a Las Vegas hotel that is not effected lost money because of this ….and it was great of them to refund the clients but I still think the retail agent had a right to charge a cancel or change fee if insurance was offered or not bought.

  • Anonymous

    If time is money, then they should charge a NON REFUNDABLE SERVICE FEE. But they need to refund the fares, taxes and fees that come with airline tickets, hotels, car rental, etc. when the PRINCIPAL agrees to a refund. As a travel agent we return our commissions (aka RECALL) when the airline refunds the ticket. That is SOP.

  • Kevin

    SOP is different depending on where you go….a lot of agencies have their own cancel/change fees above and beyond the principals… all I’m saying is people need to be responsible and not rely on the good hearts of others because the hotel or whatever supplier may say NO — and that not wrong of the supplier, it’s just business — protect yourself and get insurance that way your covered!

  • Anonymous

    I live and work here in the NYC Metro (NJ/NY/CT) and parts of my area was badly affected by the Hurricane. How can I blame the traveler coming here when flights were cancelled, hotels had no electricity, roads and rental cars were flooded, there was no gasoline to buy, etc. etc… You don’t need insurance when the supplier CANNOT deliver what you are buying. You just simply need to cancel and get your money back. I am a Travel Agent and I know what I am talking about. I cannot keep peoples money under these circumstances.

  • Kevin

    Tony…in the situation you posted of course they would get their money back with or without insurance…..but in this case the hotel was in Vegas…so the hotel was able to deliver the room….the supplier (hotel) has every right to keep the money… why is it their fault that the client cant make it there… they have no control over the weather, flights or other unforeseen events ….they sold a room in good faith, the room was useable, the client didn’t show and they are not able to re-sell it with no or very little notice…so why should they lose money because the client didn’t have the hindsight to buy insurance.… a large company can absorb the cost as a matter of good will…but a lot of smaller companies cant afford to be so kind hearted…imagine a small B&B in Boise with 10 rooms and no one showed because of bad weather out east that hotel may have had fifty others that wanted rooms and you expect him to refund all the no-shows for something he has no control over…..again this is not a nanny state (yet) people need to be pro-active and buy insurance for unforeseen events…that what insurance is for! As a fellow agent you know I’m right deep down ;-)

  • Anonymous

    No you are wrong. Read the article again. Treasure Island was willing to cancel without penalties.
    Treasure Island promised to return Weiss’s money. After I contacted Expedia on Weiss’s behalf, the agency agreed to refund his hotel charges. A company spokeswoman said that Expedia was the merchant of record on his hotel booking, meaning that it had charged him, not Treasure Island.

  • Kevin

    Tony, Sorry I went beyond the scope of the article several post ago ;-) But I still stand on the fact that A) there is nothing immoral about charging a cancel fee even if the hotel and air provides a refund — the agency has a right to do so if it’s clearly stated in the terms and conditions. B) people need to buy travel insurance to protect their money.

    PS you have to see my point regarding a small hotel in the above post — it not fair to the hotel owner for the client to expect a refund when they can offer the room — TRAVELERS NEED INSURANCE!!!!!!

  • Anonymous

    The cancellation fee of an AGENT cannot be the room rate and tax paid. It should be only the service (booking) fee which is a reasonable amount that reflects the amount of work done by the agent. That is why service fees must be separate from the room, cruise, airline fare, etc. You are legally and moraly right to be paid for your work. No one works for free.

    Also I agree that travelers should always consider to buy the CORRECT insurance.

  • DCTA

    And that would be why I do charge a non-refundable service fee.

  • Kevin

    We agree on one thing INSURANCE — woo hoo!!!!

    I’m not really talking about a SERVICE Fee BUT a CANCELLATION fee — they are different — some agencies have both, or one or the other or neither.

    On the Cancel fee — Who is anyone to say/judge what an independent business cancellation fee should be — my is a sliding scale starting at $50 and going up from there based on when they cancel — if it’s more than the service so be it — but all clients are fully aware of it (I sure Expedia hides it very well— and thats wrong). But as an independent business I clearly state my cancel policy and stick to it regardless of the reason for cancellation.

  • Anonymous

    Remember that your so called Cancellation fee is really Liquidated Damages. You are not doing any additional hard work to cancel. In lieu for suing for actual damages, parties can agree beforehand. However, if you are charging a penalty that is too high, it may be construed as punitive. You don’t have the right to punish your customer. Your real problem to begin with is proving the damage to you – an agent, when someone cancels. If you overcharge, no one will use you and they will badmouth you. So I believe you are smarter than those online agencies that scam people.

  • Kevin

    We agree on another thing — online agencies are bad for customers — we’re well on the way to becoming BFF’s ;-)

    We are a storefront and have seen dozens of them fall around us — so I’m doing something right — but I’m a professional that will work my butt of for my clients and always dig for the best for them — even if it’s less money or more work for me.

    But, I will charge you a cancellation fee — thats is clearly pointed out to the clients before money is exchanged — even if you mother bites it while driving you to the airport you will pay my fee ;-) If they want to badmouth me for it — so be it — but we treat everyone the same, regardless of the reason for canceling — that the fair way to do it — I don’t play I like you so I waive it but you I don’t like — BTW I charged my mother one — you can have her as a client if you want — she’s badmouthing me to her church ;-)

  • Anonymous

    I know you mean well. I will follow DCTAs advise. Call it a service fee, it sounds better. :-)

  • Kevin

    Looks like we’re done ;-) Nothing to see here people move on —- who are we kidding they moved on 20 posts ago — but anyone that comes here and discovers this on the web in the future — just buy the travel insurance and go through a good (real live) agent we all (ok most) work our butts off to make sure you have a great trouble fee trip and we will fight for you to make sure you get treated fairly — even if we do charge a service an/or cancel fee. Talk again soon BFF.

  • Mindy Milliron

    I do have a cancellation fee – this is designed to ensure that I do receive SOME payment for my work in the case of cancellation. This is in addition to the initial, very modest, service fee. BUT I will note that I rarely actually charge the cancellation fee if the client has purchased insurance – the insurance will cover that for me. So yes, in one sense I do have an ulterior motive to selling the insurance…just saying before someone states the obvious.

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