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Having a fair and effective refund policy at your hospitality business will be an indicator of good customer service. Consumers have certain rights under the law, and your refund policy needs to reflect that. You can choose to stick to this legal minimum or provide extra service, depending on your business’ circumstances. You may also have industry-specific obligations that you need to meet. This article will cover the legal minimum regarding consumer guarantees and how this plays into the refund policy you should adopt in your hospitality business.

Upholding Your Consumer Guarantees

If you sell consumer goods or services, you must uphold various consumer guarantees attached to those services. ‘Consumer’ means that an average member of the public would buy these goods or services for personal or domestic use.

For example, the coffee you sell at your cafe would qualify as a consumer product.

The food you sell or the accommodation your business provides will likely classify as consumer goods or services. Therefore, you need to make sure that your products are:

  • fit for purpose;
  • the same as their description;
  • of acceptable quality;
  • reasonably priced if there is no predetermined price;
  • delivered on time; and
  • sold legally.

If you offer services, they must be:

  • done with reasonable care and skill;
  • fit for purpose;
  • provided within a reasonable time; and
  • priced reasonably if no predetermined price.

If you sell food, it must be fit for its purpose (consumption) and acceptable quality based on the circumstances. You also cannot take too long in bringing it out to serve. This will depend on the context and nature of your business.

For example, no one expects your small diner to provide Michelin-starred food. However, customers expect that your food will be well cooked and provided with professionalism.

You should outline these consumer guarantees in your refund policy so that customers know what their rights are. Display your refund policy where your customers can see it, such as on your website or a sign in your physical premises.

Providing a Remedy

If you fail to meet one of these consumer guarantees, then the law requires you to provide a remedy, likely in the form of a replacement or refund. If something happens on your end that interferes with a customer’s purchase, you usually have to remedy the issue in this way.

For example, if you serve a customer food that is undercooked, an appropriate remedy would be to bring out a properly cooked replacement meal. 

Do I Always Need to Provide a Replacement or Refund?

If a customer asks you to take their food back or asks for a refund on their hotel room, ensure that you maintain polite professionalism in dealing with their complaint. You do not have to provide a remedy in all situations. For example, you do not need to when a customer:

  • changes their mind;
  • does not like the food they ordered;
  • spills or ruins the food themselves;
  • causes an issue with their accommodation themselves;
  • does not follow your instructions; or
  • disregards your advice.

For example, if you serve wine that has gone off, then you need to provide a remedy. However, if a customer complains after receiving the wine they ordered because they do not like the type of wine, you likely will not need to.

It will be a good idea to include what situations you do not provide a remedy in the terms of your refund policy so that customers are aware of your conditions.

Cancellations

If you run a hospitality business, you will likely deal with customer cancellations.

For example, a customer could cancel their stay at your motel or cancel their dinner reservation. 

At this point, you have already entered into a contract with that customer to provide your service. If you suffer a loss because of that cancellation, you can still charge some of the cost.

Make sure to outline any cancellation policies in your refund policy, as well as any cancellation fees.

For example, a customer may incur a fee if they cancel within 24 hours of their reservation, but not if they cancel a week beforehand.

What Goes Into My Hospitality Business Refund Policy?

You need to make sure that you meet your obligations under consumer law, which you can do with a well-drafted refund policy. As long as you meet this legal minimum, then you are keeping within your requirements. However, you can choose to provide remedies in situations other than those prescribed by the law. Consider:

  • your business’ circumstances; and 
  • the kind of customer service you want to provide.

For example, if one of your waiters trips and spills a customer’s drink, the law would require that you give that customer a replacement drink. If the customer spills the drink, you do not have to. However, you may do so anyway, because that is the kind of customer service you want to provide.

Key Takeaways

Crafting an effective refund policy for your hospitality business indicates that you care about customer service and are committed to meeting your consumer law obligations. Make sure your policy is clear and easy to read and fair. If you would like more information or help with your hospitality business’ refund policy, contact LegalVision’s regulatory and compliance lawyers on 0800 005 570 or fill out the form on this page.

Frequently Asked Questions

What are consumer guarantees?

If your business provides consumer products or services, then you must abide by these consumer guarantees. These are promises that you make about what you sell, and if you fail to meet them you need to provide a remedy.

What is a remedy?

A remedy is what you need to give a customer if you break one of your consumer guarantees. For your hospitality business, this may be a replacement meal or a refund for their accommodation.

If a customer spills a drink, do I have to give them a replacement?

If a customer spills their drink then you do not necessarily have to give them a replacement, as the fault was not caused by your business. However, you may decide to do so anyway to maintain a certain level of customer service.

What does ‘reasonable care and skill’ mean?

If you provide consumer services, then you must carry these out with reasonable care and skill. What this means will depend on the context and the kind of business you run. For your hospitality business, this means that your food should be fit for consumption and follow through on any promises you make about quality.

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