Some of Europe's largest travel companies are holding onto their customers' cash months after trips are canceled due to coronavirus.
Failure to deliver the money is a direct violation of the guidelines of the European and UK authorities. However, several tour operators have failed to refund their customers their money. For example, ski tourist Sunweb told customers that it was "financially not feasible" to pay cash refunds. Luxury tour operator Scott Dunn said it had fixed a backlog of refund requests during the crisis and has so far been refunding millions of pounds in cash.
"We recognize that this has not been as quick as we could have done in a non-global pandemic situation that has created frustration," Sonia Davies, chief executive of Scott Dunn, told MarketWatch.
Club Med has also failed to provide cash refunds to some customers, despite a spokesman saying the company plans to do so and administrative difficulties are holding back refunds.
European regulators decided earlier this year that tour operators will have to offer their customers refunds instead of vouchers for trips canceled due to coronavirus. The UK's Competition and Market Authority also criticized those who fail to give cash refunds.
Tim Van den Bergh, Sunweb's Chief Commercial Officer, said, “We fully understand that some of our customers would prefer a refund to a rebooking. Under normal circumstances, a refund will be paid within 14 days. But these circumstances are extraordinary. "
Also citing the unprecedented scale of the crisis, Davies said, “At Scott Dunn, we have processed customer bookings in the order of the travel dates as quickly and seamlessly as possible, given the huge backlog of refunds and the unprecedented situation we are in. "
Read: Tomorrowland Winter Ticket Holders receive “Corona Vouchers” and have to wait 18 months for cash refunds
A Club Med spokesman said it was not about holding back cash, but how we could physically do it in a timely manner. Nevertheless, at least one customer has given up hope of getting money back from Club Med. Steve Kemish, who had booked what he described as a "once in a lifetime" family trip to Brazil, part of which was booked through Club Med, said he had little hope of seeing his money back.
"The rules said the refund would be made within two weeks," he told MarketWatch. "It just feels like they are doing anything to hold onto the money."
Kemish said he paid Club Med more than £ 4,000 ($ 5,300). He said he had rebooked most of the vacation a year later with other tour operators and will no longer book with Club Med in the future because of the crisis.
Club Med announced on Twitter in August that all customers would receive a refund within 60 days of submitting their application.
The European Commission ruled in May that tour operator customers are entitled to a full cash refund within 14 days of canceling their vacation. In the UK, the Competition and Markets Authority announced in July that it had received 17,500 complaints of violations by tour operators since March. The CMA expects companies to abide by the rules that require airlines that cancel flights to offer a cash refund within seven days, while package tour operators are required to do so within 14 days.
Ben Cordwell, travel and tourism analyst at analytics firm GlobalData, said some companies are struggling to provide refunds to all customers given the scale of the coronavirus' impact.
"I wouldn't be surprised if companies went broke if they had to issue all refunds immediately," Cordwell said.
"It's no secret that companies are currently struggling financially. If the industry doesn't get back up and running soon, we will almost certainly suffer losses," he added.
Sunweb customer Dennis Skinner told MarketWatch he was "incredibly upset and disappointed" with the company's reaction after its package tour to the Tomorrowland Winter Music Festival in France's Alpe d & # 39; Huez ski resort was canceled.
Read: How the canceled Tomorrowland Winter music festival embroiled a private equity travel giant in a legal battle
Tickets for the festival cost up to $ 5,000 and include travel, ski passes, and accommodation for the event, which was scheduled for March.
Skinner received an email from a Sunweb representative who was seen by MarketWatch: “Although the European Commission knows that the survival of the travel industry is of unprecedented importance for all countries, it seems to have forgotten that the ruling will inevitably lead to bankruptcies will result in what our customers are ultimately the worst victims. "
Scott Dunn has also been criticized for delays in refunds on the TrustPilot review website and on social media.
A Twitter user said, “Has anyone succeeded in getting a refund from Scott Dunn? You are now outside of the 14-day refund period for us and breaking the law! Disgusting company and will never travel with them again. "
In a review on the company's TrustPilot site, a customer said he had reported the company to the CMA and would no longer travel with Scott Dunn.
But Davies said it saw pent-up demand, which boosted bookings for short-haul travelers. "Our guests have increasingly opted to exchange for cash lately," she said.
UK travel association Abta told MarketWatch that those who have weathered the crisis worse will lose as the crisis progresses, as better performing companies have built goodwill.
Members were also expected to process refunds. "Abta has always expected its members to reimburse customers immediately," said a spokesman.
A spokesman for the European Commission told MarketWatch: "Throughout the coronavirus crisis, the European Commission has repeatedly emphasized that consumer rights in the EU should always be protected in accordance with EU law."
It has launched infringement proceedings against several countries allowing companies to offer refund credits in lieu of cash refunds. "It deprives travelers and passengers of their right to choose between a cash refund or a voucher for the payment made on their excursion."