On the Beach is urging rivals to return money refunds to customers who have received credits instead, in an effort to restore confidence in the ailing industry.
A white paper examining how canceled vacations have affected traveler confidence shows that there are £ 781 million in cash enclosed in these promissory notes.
They are essentially documentation that indicates the value of a canceled booking – but not a cash refund.
An estimated 851,000 consumers are still holding credits for more than a year after the pandemic began, according to data from YouGov for the online travel agent.
Currently, many travel companies have £ 781 million of consumer cash locked in RCNs or “IOUs”
An estimated 8.1 million people had to cancel a package tour due to Covid-19, with only half receiving a full cash refund.
The whitepaper notes that 43 percent – over a million people – who were credited or rebooked at the time of cancellation were not offered a cash refund, despite a legal requirement to do so.
More than half of the respondents were also unaware of their legal right to cash.
Millennials were hardest hit – fewer people in this age group received or were aware of their right to a cash refund than anyone else.
Today, On the Beach, who commissioned the whitepaper, formulated five recommendations to restore consumer confidence in the industry, including a call on vacation companies to proactively contact their customers who still have credits from 2020, to offer them a full cash refund.
The company, which said it always refunds in cash and never with vouchers, is encouraging consumers who currently have a promissory note and don’t want one to contact their vacation provider now and request a full cash refund – as their legal does Right is.
43% say their provider did not offer a cash refund when their trip was canceled
Simon Cooper, CEO of On the Beach, said: “Covid-19 shocked the travel industry and it was a challenge for everyone in the first few months to cope with the disruption and the volume of cancellations.
‘It’s been over 14 months now and yet the impact of refunds on consumer confidence continues to affect the industry.
“Even today, only a third of people say they would consider booking a green list vacation, so we have to do something to restore their confidence. Without them, the industry will continue to be in trouble. ‘
He said millions of people are still holding promissory notes, in some cases over a year later with very limited opportunities to go on vacation.
Cooper said this is because some travel companies have actively avoided offering cash and used their customers’ money as cash flow for future vacations.
“Nobody would expect to get a loan and not pay interest for so long, so why should these companies keep keeping their customers’ money for future vacations?
“In order to regain consumer confidence and industry confidence, we would like those with 2020 refund credits to be fully refunded in cash now.
“We also urge regulators to enforce that vacation companies and airlines keep their customers’ money in separate, regulated escrow accounts until the travel date.”
On the Beach said that unless consumers know that credits can be exchanged for cash, they are tied to a travel agent, meaning they don’t have their own cash in the bank to spend as they please.
Credits also deprive consumers of the ability to search for the best vacation deals and dates when they want to rebook, as 6 percent of all vouchers issued in the UK go unused.
However, an ABTA spokesperson said, “This research does not reflect our experience with ABTA members.
“Refund credits were originally introduced to ensure that customers’ money was financially protected by either ABTA or ATOL when tour operators were unable to quickly refund customers due to the scale of the pandemic.
“The issue of refunds is of course broader than refund credits, and it should be remembered that ABTA and our members believe that a refund should always be offered to customers whenever the FCDO advises against travel to a destination.”
Last month, the competition and market regulator threatened legal action against Teletext Holidays unless it issues reimbursements worth over £ 7 million.
Hundreds of people contacted This is Money with their own Teletext Holidays refunds for up to a quarter of a million pounds.
On the Beach made five recommendations in the whitepaper to restore consumer confidence in the travel industry.
1. Automatic Refunds: Automatically refund customers in cash when credits have been withheld for a year.
2. Proactive contact: Customers with 2020 credits should be proactively contacted, informed of their rights and offered a full cash refund.
3. New credits offered fairly: All new credits offered to customers with vacation canceled in the future must be accompanied by the alternative option of a full cash refund with the same meaning.
4. Financial security: Better protection for customers’ money with dedicated escrow accounts should be needed for all ATOL holders and airlines.
5. More transparency: Regulators must report the number and value of credits in circulation so that prospective customers can make informed decisions about who to book future trips with.
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