My hotel promised a refund, but my travel agency refused

Serban Constantinescu’s Scandinavian tour didn’t get off to the best start. He missed a flight connection from Cleveland to New York because of bad weather, and was a no-show for his hotel in Copenhagen.

But when he phoned the Quality Airport Hotel Dan, it let him off the hook. “We will cancel the reservation and will not charge a cancellation fee,” a representative told him. He even was able to get their promise in writing.

So where’s his refund?

As it turns out, Constantinescu made his reservation through an online travel agency called Otel.com, which has its own refund policies. And it is keeping his $282.

“We are really sorry,” a representative wrote to Constantinescu. “As much as we want to issue a refund, we are bound by the hotel’s terms and conditions so we do not have any control over the charges associated with the reservation.”

Constantinescu is upset. “I feel scammed,” he says.

Fortunately, this was an open-and-shut case. He’d asked for, and received, a written assurance that the Quality Airport Hotel wouldn’t charge his credit card, which is the equivalent of a letter of credit. Taking that correspondence to your credit card company virtually assures you can dispute the charge – which is exactly what he did.

There’s a lesson in here for all of us. If you want a travel company – or any company, for that matter – to make an exception to its published policies, get it in writing. The company can later deny that it made such a promise, but a credit card company will interpret it as a letter of credit. And it will act accordingly.

Constantinescu’s case brings up another question: What happens when a travel agency policy conflicts with that of an airline, cruise line or hotel’s? For his trip, the hotel had agreed to a refund, but Otel.com refused.

Whose rules apply?

I’m sure there are some well-meaning agents out there who believe their travel agency policy trumps that of a supplier. Telling a customer, “tough luck” also allows an agent to protect any commissions and bonuses earned through the booking, and after all, agents are running a charity, are they?

But I believe that if a hotel is refunding the money to a travel agency, then the agency has an obligation to send the refund back to the customer’s credit card. I can’t imagine any scenario under which an agency (online or otherwise) should be able to pocket a hotel rate or even a cancellation fee.

A full refund should be processed immediately.

Constantinescu’s credit card dispute went in his favor, of course. But others might have taken Otel.com’s denial as the final word, and let it keep his $282.

Don’t be that person.

(Photo: Kim Erlandsen/Flickr)

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    If Otel were acting as a consolidator, where it purchases blocks of rooms from the hotel and resells them to the public.  Think Hotwire or Priceline.

    That’s the position that John Baker is advocating.

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    Good question.

  • Anonymous

    Consolidators are agents, too. For as long as they act as an intermediary between the buyer and seller (i.e. airline or hotel) they are agents. Otel booked the reservation for Constantinescu with Quality Airport Hotel Dan. If they were not an agent, then they could not do that.

  • http://twitter.com/niltiac Caitlin Fitzsimmons

    I won’t use Otel.com, that’s for sure!

  • http://twitter.com/niltiac Caitlin Fitzsimmons

    It is pretty elementary that you are not be bound by a contract when the other party has agreed not to enforce the contract. Obvious, really.

  • Anonymous

    Thanks Linda for assisting in explaining all this.  Now if Chris would change the title.  But we know how travel writers like to bash travel agencies and lump everyone together.  Sorry Chris but you are not being fair.

  • Anonymous

    But that manager may not have been impowered to do that based on the contract.

  • http://twitter.com/niltiac Caitlin Fitzsimmons

    Wow!

  • http://twitter.com/niltiac Caitlin Fitzsimmons

    Well, maybe so but the credit card company found in his favour. By going to the hotel, he got his money back. If he’d gone to Otel.com he probably wouldn’t have. So he did the best thing, even if it’s not the technically correct thing.

  • Anonymous

    ASTA has a membership program for tour operators and wholesalers.

  • Anonymous

    The individual hotel may not be the one on the contract, but the head office.  We deal with this all the time with tour operators and the vendors they have contracts with. 

  • Anonymous

    This could still be reversed if Otel.com fights it based on their contract.

  • Anonymous

    It’s extremely rare for a hotel manager not to have full discretion to refund a full amount for any reason. They have to in case of all sorts of things like overbookings or situations where the room provided is clearly unacceptable.  If they don’t have full authority to override their policy or contract, then what happens if there’s a case where they can’t provide a room?

    I’m pretty sure any hotel manager has the authority to refund any prepayment or cancel a future billing.

    If Otel won’t play ball and negotiate some sort of settlement, I don’t blame the cardholder for disputing the charge.  They could have worked something out but cited a strict “contract” which probably netted them both the refund and their normal cut.

  • Anonymous

    Tony, they are a wholesaler, not travel agents.  They also should be registered with the various states that have the Seller of Travel and I see no registrations posted, as required.

  • Anonymous

    Actually if it is a contracted rate, the manager would have to deal with their sales office and they inturn talk with the wholesaler or tour operator.  Back when we sold commissionable nonrefundable tickets, the airlines use to refund but we couldn’t and we were protected because of the ‘contract’.  The airlines would give the client back their full amount but we never gave the airlines back our commission and ARC backed us up on this. 

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    Is that part of the contract between the TA and the customer or is that merely industry practice?

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    HI Tony

    I’m using the term agent in the general legal sense of the word, not in the industry standard sense

  • Anonymous

    Hi Carver, me, too. I am using it in the principal-agency relationship
    context. No matter what a selling or marketing outfit labels itself when
    it sells hotel rooms, they always act as agents of the hotel and
    customer because they act as an intermediary between the buyer and
    seller.

  • http://twitter.com/johntbaker John Baker

    TonyA is Best Buy an agent for Panasonic? Target for P&G? No, because they purchase the goods and then resell them.

  • Anonymous

    Best Buys is either a distributor or reseller for Panasonic. They do not represent Panasonic. An agent represents the principal. Travel  agents represent airlines and hotels when they book seats and rooms for  travelers. 

  • Anonymous

    In a simple world this should have been an open and shut case. The seller (Quality Airport Hotel Dan) agreed not to charge the buyer (Mr. Constantinescu) for the no-show caused by bad weather and any intermediary or agent for the hotel should respect the hotel’s decision. But for some reason, the intermediary feels so empowered to change the basic contract between the seller and the buyer. Something is really wrong if that can happen.

    Hotels sell [or distribute] their rooms through different channels. But all these channels only act as agents for the hotel. The hotel still dictates the terms and conditions of sale. And, one of those conditions is how refunds for cancellations and no-shows are handled.

    So why is there so much confusion in this board about whether the OP should or should not get a refund? Perhaps some are confused about the role of the agent that provides booking services. Let’s talk specifically of how Otel and its mother company MetGlobal operates.

    The way I understand it [I can be wrong in my reading], MetGlobal and its affiliates have net-rate merchant discounts and room allotments from hotels and make them available for other travel agents to book using their HotelsPro system. Otel and DHR dotcom are MetGlobal’s retail travel agencies. Yes, they display the ASTA symbol or logo.

    When one books a room through Otel, payment is either due immediately upon booking  or  paid at the hotel when one gets there. It is important to understand that how one pays does not alter refundability of the room rate. The different methods of payment was neccissated by the the different pricing models. Let me explain.

    In the traditional “agency” model, the hotel collected the money and then sent a 10% commission to the agent. Obviously the traveler paid at the hotel.
    In the net-rate “merchant” model, the hotel allowed the agency to remove his commission (customarily 20-30%) from the published room rates, then markup up the rate himself. Obviously in the “merchant” model, the agency had to collect the traveler’s money and then give him a confirmation voucher that he has to show the hotel to prove that he has paid the agent for his reservation. The hotel collects the voucher then bills the agency later.

    It is important to understand that the customer (the traveler) does not really know the difference between the “agency” and “merchant” models. As far as the traveler is concerned his counterparty is the hotel and the travel agency is only an intermediary between them. For him, the hotel is still responsible for his stay, rates, rules and regulations. So, it is perfectly reasonable for the traveler to assume that when the hotel says he will not be charged for a no-show, that it is 100% true. If you don’t believe me just take a look at this post between an agency and MetGlobal -
    http://www.travelweekly.co.uk/travelhub/forums/metglobal-hotelspro-gtahotels-not-gullivers-4948.aspx

     

    We have a direct B2B xml link for hotel reservations with the above company for sometime.
    It has come to our attention that they are very slow refunding  any noshows /cancellations although they are obliged to according to terms of the bookings. 
    Is there anybody else in the group experiencing the same problem?

    Furthemore, take a look at a sample prepaid accomodation voucher from MetGlobal here
    http://www.hotelspro.com/xs_voucher.php?processid=GG-89261725
    Note that the hotel’s cancellation and refund policy is actually printed on the voucher – a clear sign that the hotel’s policy is in control of the deal.

    So how did this become such a horrible experience for the OP? Well, to answer this just follow the money.
    In the “merchant” model, the agency collects money from you [through your credit card company] and gives you a crummy piece of paper [the voucher]. The agent holds your money.
    You then go to the hotel and give them the piece of paper and then the hotel bills the agent. Logic tells me that if the hotel does not want you to pay, it simply does not bill the agent.
    But since your money is in the hands of the agent, then the agent needs to return it to you. The agent cannot keep your money because the hotel authorized the refund.
    In this light I agree with Carver and LeeAnne 100%. The agent has no right to keep the OP’s money.

  • http://twitter.com/elegant_erica Erica

    How shocking. I had always preferred to do business directly with the hotel, mainly because if there is an issue I have one place to turn. I’m fortunate that the slight savings through Expedia have never been that much of a draw.

    Now it certainly never will.

  • http://pulse.yahoo.com/_V2IYC4TC6NDYG5GJJMQBMQ3HYQ Linda Bator

    Each agency has the option to charge any service fees/cancellation fees it chooses, so long as those are pre-disclosed to the client.  Just for the record, we do have a cancellation fee, but in cases such as this one, we would have waived it as a matter of course.  A standard no show or change of mind, we would have enforced.  Its a matter of being paid for the services you provide, balanced with what is right for the client in each individual circumstance. 

  • http://pulse.yahoo.com/_V2IYC4TC6NDYG5GJJMQBMQ3HYQ Linda Bator

    Absolutely incorrect – any wholesaler or tour operator acts as an AGENT of the hotel or HOTEL CHAIN (which I think is where the problem lies here).  The individual hotel may have agreed to refund his monies, but if OTEL’s contract is with corporate, then the agreement is moot, as the corporate contract is the one which is enforceable – we see this often in the industry, just most travellers here in the US are unfamiliar with this unless they have used an agent who uses wholesalers in the past.

  • http://pulse.yahoo.com/_V2IYC4TC6NDYG5GJJMQBMQ3HYQ Linda Bator

    Unfortunately, if you check ASTA, you will see Tour Operators, Consolidators and other such sellers of travel can ALSO be members – not just travel agents/agencies.  It gets a bit confusing.

  • Anonymous

    That’s sad because that could have been a “Good Housekeeping” Seal that consumers should look for.
    But now, it means nothing if wholesale and consolidator agencies can also display the same sign.

    I wonder what the OP saved by buying through Otel.
    He wrote he was charged $282. I looked up the hotel from my Travelport Worldspan GDS. Below are the rates. They look lower than what he paid and NON OF THEM ARE PREPAID. So he could have avoided his problems all together by using a real person travel agent.

    **HOTEL SOURCE**
    QI QUALITY HOTEL AIRPORT DAN
    LN RATE DESCRIPTION
    01 218.14G 2T NO SMOKING SUPERIOR ROOM
    02 120.60G 1D NO SMOKING STANDARD ROOM
    03 209.28G 1D NO SMOKING 1 BEDROOM SUITE
    04 280.22G 2T NO SMOKING 1 BEDROOM SUITE
    05 120.60G 2T NO SMOKING STANDARD ROOM FREE INTERNET
    06 173.80G 2T NO SMOKING SUPERIOR ROOM FREE INTERNET

  • http://pulse.yahoo.com/_V2IYC4TC6NDYG5GJJMQBMQ3HYQ Linda Bator

    AMEN!  Even booking direct would have been a better option!

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    Linda

    I have never seen a scenario where, regardless of the rate, Corporate overrules a local hotel and enforced a charge against a customer

  • http://pulse.yahoo.com/_OEPJGQPIEB75YYDE5CJY6R3VFE Carver Clark Farrow II

    Tony
    I think the Priceline model that causes the confusion.  When I purchase travel from Pricelines, the hotel has no further say regarding the room. If I want to cancel it, I have to go through priceline.

  • http://profiles.google.com/fox1066 Susan Fox

    I booked once through Otel.com for a room in New York. The next day we got a call from the fraud dept. of our credit card issuer. They wanted to confirm that we’d made the charge since Otel.com is, or was at the time, based in….Turkey. I made the trip and stayed in the hotel and all was fine. But it seemed like it was asking for trouble to book through them again and I haven’t. And now I’m REALLY glad.

  • Anonymous

    Carver, they are not using the Priceline model. What they are doing is offering the group or tour company discounted room rates PLUS MARKUP to INDIVIDUAL travelers. From what I read in the internet they have a travel company in Turkey and teamed up with Miki Ltd of the UK. That’s why they have access to discounted room rates.

  • Anonymous

    Carver, also please read this link from Expedia
    http://developer.ean.com/faqs/Product_Info#1b
    Note the difference between Merchant property versus GDS property.

    If customers and travelers only know the cancellation protection benefits they might lose when they book hotel rooms under the merchant model, then they probably will run away and not buy. The problem is customers do not understand the difference.

    This is one area where Chris Elliott can do some consumer education.

  • http://pulse.yahoo.com/_7JRPERPML6PGEK75ABURVVROJM Shukhrat

    I guess those who voted “Yes” in a poll are hoteliers

  • summer hathway

    this is a interesting post to read it.