War Fears Change Cancellation Policies

Full refunds being offered by travel insurance companies, suppliers to ease traveler anxiety

By: R. Scott Macintosh

Travel suppliers, from hotels to cruise lines, are relaxing cancellation policies in hopes to ease apprehensions people may have about traveling under the treat of war and a sluggish economy.

By waiving cancellation fees, suppliers are trying to retain customers who want to travel, but may be hesitant to book if there is a chance they might be paying a price down the line due to unforeseen circumstances.

“There are concerns expressed by travel agents and their clients that if there is [a war], will my investment be protected,” said Patrick Clark, vice president of communications with Uniworld, a cruise line offering cancellation protection. “We’re helping them to make their decision.”

The travel industry continues to limp along, with the threat of war with Iraq compounding the slowdown of the last year and a half. Lodging was stagnant last year. Room demand increased less than one percent, and occupancy rates are still low. The cruise industry’s “wave season,” traditionally the strongest time of the year for cruise lines, is showing some softness just a month into the quarter. Royal Caribbean has reported that bookings have been lower than expected due to the possibility of war with Iraq and the economy.

Though travelers have had the option of purchasing travel insurance at an additional cost and insurance companies have been quick to create plans to cover the growing concerns of war and terrorism, suppliers rarely offer cancellation protection. Many hotels waived cancellation fees after September 11, especially those in New York.

But suppliers now view cancellation protection as a way to offer people a little peace of mind and some incentive to keep traveling.

Cancellation fees can be costly, however. Most cruise lines only offer partial refunds for cancellations less than 90 days before departure and many will not give a refund if the trip is canceled within a month of the departure date.

SeaDream Yacht Club is joining Uniworld to offer protection for their customers. But where Uniworld offers a total refund in cash and travel certificates, SeaDream is giving travel credit for future cruises that is good over a two-year grace period.

Changes in cancellation policies are not limited to cruise lines alone. Tour operators and hotels are offering deals to keep valued business.

Island Destinations, a luxury tour operator, recently debuted its “Peace of Mind” cancellation policy, which guarantees agent commissions even when clients cancel a trip.

Inter-Continental Hotels is also offering a break on cancellation and attrition fees in an effort to hang on to its coveted business clientele. Business travel and meetings account for roughly 35 percent of all of the hotel chain’s revenues. And cancellations for meetings of 30 to 40 people over two days can run from $10,000 to $30,000.

“It’s more of a proactive measure than anything else,” said Stephanie Bezner, a spokeswoman for Inter-Continental, about the change in policy. “It’s one thing we are trying to do to alleviate the anxiety many people are feeling.” Inter-Continental will offer the program at 44 of its hotels across the Americas, including the U.S., Canada, Mexico and Central America.