16 March, 2020
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COVID-19 pandemic: Hospitality and travel industry – first on the front line, first to respond

Hospitality and travel are industries which will unavoidably be affected by the COVID-19 pandemic. Although Belgrade’s tourism sector was expected to grow in 2020, the global spread of COVID-19 is likely to make a significant dent in the sector’s prospects. In an official announcement on 10 March, Rasim Ljajic, the Serbian Minister of Trade, Tourism and Telecommunications, claimed that the 80% of all travel bookings in Serbia in February and March 2020 have been cancelled and that cancellations are also expected in April and May. Ljajic went on to say that the official estimate of expected losses will be discussed in the coming days.

 

The facts

On 11 March, the Serbian Government announced a number of precautionary measures to combat the pandemic, including the suspension of public gatherings of over 100 people in enclosed spaces. On 15 March, the measures were extended to suspension of gatherings of more than 50 people in enclosed spaces, and, later in the day, a state of emergency was declared.

While airports in Serbia remain open, airline schedules are subject to change.

As part of the measures imposed during the state of emergency, Serbia temporarily banned all foreign nationals from entering, with the exception of accredited diplomats and legal aliens. International freight transport vehicles are permitted entry for a maximum of 12 hours.

Additionally, many smaller border crossings with all neighboring countries have been closed to allow for more thorough border inspections at larger crossings.

 

Will Serbian hospitality industry overcome challenges posed by the COVID-19 pandemic? Hotel and restaurant business owners are positive.

Given that hotel owners and travel operators are already experiencing reduced revenues, they are also potentially facing significant increase in average guest costs, on daily, weekly or monthly bases.

Serbian Business Association of Hotel and Restaurant Industry (HORES) anticipates that their members’ income will fall by between 80% and 90%.

Representatives of the Serbian hospitality industry stressed that they could weather this crisis under one condition: if the Serbian Government provides them with an aid package which would among its measures include a reduction of the applicable VAT rate from 20% to 10%, reduction of property taxes, as well as preferential loans.

Another option for hoteliers and travel operators to soften the effects of the current circumstances, would be to switch to offering flexible booking policies as much as possible, such as the ones allowing customers to change their travel dates without a charge.

 

 

Can travelers cancel their bookings and receive a refund?

If travelers wish to cancel or amend their bookings, they should first contact their travel agency, or, in case they made the booking themselves, get in touch directly with their airline or hotel.

The outcomes of refund and cancellation requests depend greatly on circumstances surrounding travelers’ decisions as well as the relevant policies upheld by travel agencies, hotels and airlines. This means that, in practice, travel agencies, hotels and airlines generally make their own decisions about whether or not to offer their customers a refund.

Additionally, the decision on whether travelers are entitled to a refund depends on (i) travelers’ nationality; (ii) their government’s orders and advices; and (iii) measures taken by the state the travelers are visiting.

For example, the UK Government does not ban its citizens to travel to Serbia, while, as of 15 March 2020, the Serbian Government banned all foreign nationals, including British citizens, from entering the country. This means that if British citizens unilaterally decide to cancel their imminent travel to Serbia due to the emergency measures taken by the Serbian Government they may be entitled to a refund, even without prior agreements with their travel agencies, hotels and airlines.

On the other hand, if British citizens, who plan on travelling in a few months, unilaterally decide to cancel their travel to Serbia, without prior agreement with their travel agencies, hotels and airlines, they may not be entitled to a refund. The travelers who booked their travel for late spring or in the summertime will need to wait until nearer the time to see if the situation changes. If travelers decide to cancel their travel arrangements earlier, or outside of government advice, they may face paying a fee.

Finally, if travelers made bookings with travel agencies, hotels or airlines which allow refundable or penalty-free cancellations, they would be entitled to a refund, and would be allowed to cancel without paying fees. However, most penalty-free cancellation bookings stipulate dates until when travelers can cancel without being required to pay fees. In these cases, unless travelers depart from a place that has been officially declared to be unsafe, or are travelling to a place that has been officially declared to be unsafe, they would be liable to pay a fee for bookings which have not been canceled in due time.

 

For more information, please contact us via covid19@geciclaw.com