Measures to support tourism sector amid COVID-19 pandemic?
Croatian economy heavily relies on transport and tourism industries, the sectors that have suffered very severe losses due to COVID-19 pandemic. Even with the relaxation of the most health measures mandating a restriction of movement and with shops, schools and hair salons opening during the first weeks of May, the future of tourism industry in light of 2020 season remains uncertain. The Croatian Government’s economic support package introduced in April 2020 offered some relief to travel agents, enabling them to refund travelers who purchased a travel package for a trip after 1 March 2020 by issuing them a voucher – valid for a period of 180 days from the day of the elapse of special circumstances (essentially defined as a force majeure event). Any cash refunds by the travel agent are to be made within 14 days after the elapse of the term of the validity of issued vouchers.
The introduction of this measure opened up a debate on how to tackle the situation with cancelled travel plans in other segments of the tourism sector, such as the hotel and accommodation industry and boat and car rental agencies. Similar questions burden the transport industry, with airline carriers reporting an 86.9% reduction in flights (data on 27 April 2020 compared to 27 April 2019) .
There has been much discussion on this issue in Croatia, with proposals made by the hotel industry market leaders and the Croatian Tourism Association, advocating for an introduction of a voucher based systems for hotels and accommodation service providers refunds, as well as other tourism service providers in a scheme that would be set up in accordance to the French and Greek model, permitting tourism service providers to issue vouchers to their customers that would be valid up to the end of 2021 season, thus enabling those customers who are no longer able to or are reluctant to travel to use-up their bookings at a later date, i.e. in 2021 season. Customers who do not use their vouchers would be eligible for a cash refund after the period of validity of vouchers has elapsed.
No changes have been made with respect to the refunds on cancelled flights. Air passenger rights are governed by the Regulation (EC) No 261/2004 of the European Parliament and of the Council of 11 February 2004 establishing common rules on compensation and assistance to passengers in the event of denied boarding and of cancellation or long delay of flights, and repealing Regulation (EEC) No 295/91, which mandates cash refunds to passengers whose flights have been cancelled due to a Force Majeure event. A majority of airlines based in the EU, as well as those in the US are issuing vouchers as a primary refund mechanism, despite push-back from the European Commission which issued guidelines recommending all
2 refunds be made in cash – with voucher being permitted only if the passenger agrees. In a recent development the governments of 12 member states have on 29 April 2020 urged the European Commission to re-consider permitting a voucher based refund system, with four other countries subscribing to the initiative. As of the date of this article Croatian government has not added their signature to the joint letter.
Our legal team will be closely monitoring this issue and will keep you updated on all new developments.