In brief

The CMA has begun to take action against businesses operating in the holiday accommodation sector that it considers are failing to comply with the law.

This follows the CMA guidance in late April on consumer cancellations and refunds, and the announcement that it would be focusing on the sectors against which it had received the most complaints. On 9 June the CMA press release stated that “following CMA action, a major holiday lets company is now offering refunds for cancelled bookings, while others are facing further scrutiny over their policies”.


Contents

CMA action against the holiday accommodation sector

The CMA has announced that, following a CMA investigation opened on 13 May 2020, Vacation Rentals (a popular holiday let business operating Hoseasons and Cottages.com) has formally committed to make changes to its policies and has agreed that it will:

  • offer a full refund to customers who booked holiday homes but were unable to stay in them due to lockdown restrictions;
  • communicate its new policy clearly on its website and via social media; and
  • provide the CMA with monthly reports on how many refund offers have been made and accepted.

However, the CMA’s press release indicates that there are likely to be other holiday lets firms which fail to comply with the law. For example, by refusing to provide full refunds or only offering vouchers instead of cash refunds.

The CMA notes that is has received around 4,500 reports in total about UK holiday rental companies and that its investigations will continue, which may ultimately lead to court action against those companies which fail to comply. Andrea Coscelli, CEO of the CMA gave a stark warning that “…Consumer protection law exists for a reason; businesses must observe the law or face the possibility of enforcement action.”

The CMA’s position on consumer refunds and cancellations

The CMA’s recent announcements regarding action against the holiday accommodation sector should be considered in the broader context of the recent statements made by the CMA.

As detailed in our previous article, the CMA’s COVID-19 Taskforce reported back in April that it was receiving an increasing number of complaints regarding consumer cancellations and refunds coming out of the COVID-19 crisis, in particular in relation to the following sectors: (i) weddings and private events; (ii) holiday accommodation; and (iii) nurseries and childcare providers. The CMA has since also expanded its focus to include package travel.

In parallel to the COVID-19 Taskforce’s findings, the CMA also issued Guidance reaffirming how the law operates in relation to cancellations and refunds for both goods and services during the outbreak. See here for further detail around how businesses should be handling consumer requests for refunds and cancellations, and how retail businesses have reacted to consumer refunds and cancellations in light of the outbreak.

How should businesses in the holiday accommodation sector and beyond respond?

With the CMA’s repeated warning of forthcoming enforcement action for non-compliant refund and cancellation policies, and its continuing investigations, businesses should review their policies and activities and consider how best to adapt during these unprecedented times.

Whilst the CMA’s focus remains on businesses operating in what the CMA considers to be priority sectors, it is clear that businesses operating in other industries may also come under scrutiny in time and should consider taking action early to ensure compliance.