Who is canceling a reservation? How is the penalty?… Confusing both hotels and customers due to the ‘50% room limit’

Input 2020.12.24 06:00

The government announced that it will limit the use of accommodation rooms to 50% or less from the 24th to prevent the spread of coronavirus infection. However, it is pointed out that the government does not provide detailed guidelines for the cancellation of penalty fees or cancellation of existing reservations, increasing confusion among the lodging industry workers and reservation customers.

An official in the lodging industry said, “After the government’s guidelines to reduce the use of rooms in lodging establishments, we have been constantly calling inquiries about cancellation of reservations and asking if there is a penalty, etc.” “I am confused because there are no instructions.”

In principle, if the customer cancels the reservation, a penalty will be incurred. In a situation where social distancing is more than two levels as now, the Fair Trade Commission’s “Consumer Dispute Resolution Standards for Distancing Steps” applies, and only 50% of the penalty is paid. However, this guideline is merely a recommendation without legally enforceable.

If lodging establishments ask customers to cancel their reservations in order to comply with the government’s guidelines for room restrictions, there is a possibility of dispute over which party will be responsible for the penalty.

Ahead of Christmas and New Year’s holidays, room reservation rates are so high that it is difficult to find vacant rooms in accommodations near Seoul and tourist destinations. In the case of Seoul, most of the large hotels on Christmas Day have a reservation rate exceeding 80%.

Attorney Eom Tae-seop said, “The government did not give specific guidelines for the penalty reduction, so it became legally complicated in the event of a penalty dispute. The problem is that there is currently no legal basis to reduce the penalty that occurs when the contract law is terminated.”

Han Jin-soo, professor of hotel management at Kyunghee University, said, “The government must induce an agreement to waive the penalty during the period of the quarantine policy application through a method of promising tax reductions as compensation for lodging companies.”

Due to unprecedented government measures, lodging companies are also worried about which of the reservations will be canceled. An official at a five-star hotel in Seoul said, “Based on the order of reservation, we have established an internal policy to induce cancellations without penalty from the customer who made the latest reservation,” he said. “However, many customers complain that they cannot understand why they are subject to cancellation. “I’m in trouble.”

An official at a large resort said, “There was a lot of room reservations for people coming to see the sunrise during the year-end and New Year holidays, including this Christmas, but the government guidelines were suddenly released.” “The government did not give any guidance on the cancellation of reservation customers. Literally, the industry is experiencing’great chaos’.”