With the Coronavirus (Covid-19) declared as a pandemic, there is literally chaos in the tourism sector in Turkey and around the world. It is reported that consumers have applied to tour companies to cancel their previously purchased tours and that there are almost no new requests for the upcoming tourism season. With the measures taken in hotels being insufficient, facility closure decisions have started to be taken. In this context, Hilton took the first step and closed its hotels in China. It is estimated that other hotel chains will also close their hotels in various countries, including Turkey.
With the declaration of Coronavirus (Covid-19) as a pandemic, a complete chaos reigns in the tourism sector in Turkey and the world. It is reported that consumers have applied to tour companies to cancel their previously purchased tours and there are almost no new requests for the upcoming tourism season. With the measures taken in hotels being insufficient, facility closure decisions have started to be taken. In this context, Hilton took the first step and closed its hotels in China. Other hotel chains are also expected to close their hotels in various countries, including Turkey.
In Turkey, tourists found the solution to postpone due to the large number of cancellation requests from consumers. Agencies, which expect the effect of the pandemic to decrease until the summer season, state that they give priority to consumers who have one month left for their vacation, and demand that consumers who make future purchases wait. Some tour operators, stating that they made agreements such as hotels and airplanes about a year ago, state that they will be able to pay refunds two months after the flight bans are lifted in line with the regulations made in the Airline Regulation published in the Official Gazette.
Firuz Bağlıkaya, President of the Association of Turkish Travel Agencies (TÜRSAB), stated that consumers can get a refund a month before the holiday or 1 day before the holiday, and called for ‘do not cancel your holiday, postpone it’. He stated that airlines can apply fixed prices to certain destinations and hotels can apply fixed prices up to a certain capacity, and agencies are working on selling it as a package by adding an expense up to their minimum expenses.
Legal aspects
While some legal experts say that consumers can cancel the tour they have already purchased due to the pandemic declaration and get the money they have paid refunded, some legal experts argue the opposite and claim that the pandemic decision cannot be considered as force majeure.
Minister of Culture and Tourism Mehmet Ersoy put an end to these debates with the letter he sent to the hotels and stated that practices such as the corona virus outbreak, postponement of the season opening of accommodation facilities or suspension of business activities, flight bans, restriction of entry and exit to and from the country are within the scope of ‘Force Majeure’. Thus, consumers may be entitled to cancel their reservations, as well as the cancellation of contracts/reservations made between tour operators/travel agencies and accommodation facilities and the refund of prepayments made within this scope.
Article 16 of the Package Tour Contract Regulation titled “Termination of the Contract” reads as follows: “In the event that the participant notifies the termination of the package tour less than 30 days before the start of the package tour due to a situation or force majeure that the participant cannot foresee and prevent despite all due diligence or force majeure, the amount paid by the participant shall be refunded to him without any deduction, except for the costs arising from compulsory taxes, fees and similar legal obligations and the costs paid to third parties that can be documented and cannot be refunded.” However, considering the problems experienced by agencies recently, a new regulation has been introduced stating that the refunds to be made to holidaymakers by tour operators will be made 2 months and 14 days (74 days) after the start of flights to the destination (destination) where the holiday was purchased.
Measures taken around the world
With the Coronavirus (Covid-19) being considered a force majeure, the main actors of tourism in the world, who are aware that the tourism sector and all the sectors it carries with it will take heavy blows, started to take many measures by taking state support with them. According to the joint decision of the European Union and states, tour operators in Germany, France, Belgium, Italy, the Netherlands and Greece have started to give coupons to customers who have purchased holiday packages to postpone their reservations to another date and destination, not cancel them.
In this way, it is stated that tour companies can postpone reservations until after the outbreak of Coronavirus (Covid-19) instead of canceling existing reservations. In France, vouchers are being distributed that allow existing reservations to be made after the Coronavirus outbreak and require a refund if no reservation is made within 18 months.
With these measures, tourism businesses have ensured that customers maintain their trust in the tourism sector and prevented tour operators from losing their existing customer portfolio. Thus, tour operators and hotels, which were already in a difficult situation, were prevented from falling into a worse situation and preserved their status.
Measures taken in Turkey
While the Coronavirus (Covid-19) outbreak is spreading rapidly around the world with the postponement of reservations and tickets instead of refunding them, Turkey’s Culture and Tourism Minister Mehmet Ersoy has introduced the cancellation of reservations. The Minister argued that with the cancellation method, travel agencies, tour operators and hotels have overcome the problems that will be experienced by hotels by providing loans from banks. The accommodation segment of the sector, on the other hand, believes that with this circular issued with the signature of the Minister, domestic and foreign tour operators have been unleashed on them.
Consequences for the consumer
The Ministry of Culture and Tourism has paved the way for the cancellation of holiday contracts and reservations within the scope of force majeure.
As a result of the amendment to the aforementioned regulation, vacationers will be able to receive a refund of their payments to tour operators if they request cancellation. Refunds will be made 2 months and 14 days (74 days) after the airline company starts the flight to that point.
In this case, for example; You bought a tour for Cappadocia, but flights to Nevşehir were postponed. If the flights start on June 1, your refund will be made on August 14 after the 74-day period. If you wish, a postponement will be provided instead of a vacation refund.
Travel insurance companies state that standard travel insurance does not cover Coronavirus (Covid-19) and recommend purchasing insurance that offers more flexibility and “the ability to cancel for any reason”.
Implications for tourism businesses
With the implementation of the cancellation of reservations by the Ministry of Culture and Tourism in Turkey, all domestic and international operators, even though they still have a large number of reservations apart from the canceled reservations, have started to demand a refund of all the early booking advances they have paid from the hotels due to this approach of the ministry.
It was also foreseen that the demands for the refund of the prepayments to be made due to the contracts canceled by the Ministry would also put financial difficulties on accommodation facilities, and it was reported that an agreement was reached with public banks on a loan package aiming to provide financial support to accommodation facilities to be used for the refund of prepayments and that six-month term loans will be provided to businesses. On the website of the Ministry of Culture and Tourism, the loan applications for the Early Booking Advances Refund Financing, which was previously announced as April 13, 2020, have been extended until the close of business on April 27, 2020. Applications for the 6-month term loan will be made to public banks through the Ministry of Culture and Tourism.
Who will benefit from the loan and how?
Accommodation facilities with a tourism management certificate or partial tourism management certificate from the Ministry of Culture and Tourism will be able to benefit from the loan in proportion to their creditworthiness.
The loan will be used to finance the refund of prepayments made by tour operators and travel agencies to accommodation facilities before March 27, 2020 for the 2020 summer season reservations.
Expectations and forecasts after Coronavirus (Covid-19)
According to the World Bank’s data, the sector that will be hit the hardest after the pandemic outbreak will be the Tourism and Travel sector.
It is estimated that people will not be economically strong enough to allocate much budget for vacation, and people will experience uneasiness about traveling. According to the findings, it is predicted that people will travel domestically rather than traveling between countries.
Following Minister Ersoy’s statement that the domestic market will be revitalized and the tourism season will open as of the Ramadan Feast, tour operators have started to prepare packages for domestic tourism, but it is stated that tourism businesses will be negatively affected as a result of early booking cancellations and the repayment of domestic tourism advances that have not already been canceled. Businesses that will repay the paid advances of existing customers with reservations will lose their existing reservations.
With the loan to be provided by the Ministry of Culture and Tourism, hotels will pay back their advances to tour operators and will also pay interest expenses. If tourism income is not at the desired level in the next 6 months, it is estimated that hotels will have difficulty in repaying the bank loans and interest they have received, and that it will take a long time for hotels that canceled all of their reservation savings for 2020 to recover when the pandemic passes.
