Chargebacks Will Rise As Business Travelers Cancel Flights

Tuesday, October 26th, 2021

The travel industry is preparing for impact as the growing cases of the Delta variant drives business travelers to cancel their travel plans. 

According to the latest findings in a survey conducted by the American Hotel & Lodging Association, the closing of 2021 will see a staggering loss of over $59 billion in business travel revenue for the hotel industry, when compared to 2019.

This is troubling as the industry had already grappled with the loss of almost $49 billion in business travel revenue in just the previous year.

Here Are The Numbers

These results are largely unsurprising. In a survey conducted back on August 31, the American Hotel & Lodging Association reported that 67 percent of business travelers in the U.S. plan to take fewer trips. As many as 52% are planning to cancel any existing business trips, without rescheduling due to the rising numbers of COVID cases. 

Here are more findings:

  • 60% are likely to postpone travel plans
  • 67% are likely to take fewer trips
  • 68% are likely to take shorter trips
  • 71% are likely to attend fewer in-person events or gatherings
  • 67% are likely to have shorter meetings

This has completely rattled the hotel industry as they have been forced to relinquish jobs. Based on the association’s findings, it is estimated that by the end of 2021, hotels are expected to have shed almost 500,000 jobs, compared to 2019.

Chip Rogers, President, and CEO of the American Hotel & Lodging Association said:

“While some industries have started rebounding from the pandemic, this report is a sobering reminder that hotels and hotel employees are still struggling. Business travel is critical to our industry’s viability, especially in the fall and winter months when leisure travel normally begins to decline. Continued COVID-19 concerns among travelers will only exacerbate these challenges.”

Surprisingly, hotels are the only segment of the leisure and hospitality industry that has not received any direct aid from the government, despite suffering the most from the massive financial hit. 

In hopes of addressing the dire straits of the industry, Rogers and the lodging association are appealing to Congress to pass the Save Hotel Jobs Act. This legislation would offer grants and tax credits in order to assist hotel operators to pay their employees as well as call back laid-off employees.

Chargebacks Are Making A Comeback

The inevitable result of all these cancellations will be a massive wave of chargebacks. In 2020, when the pandemic hit, travel-related businesses, as well as airlines, cruise lines, and hotels, were the most severely impacted by chargebacks due to restrictions on a global scale. 

To prepare and protect merchants with card-not-present transactions, especially the illegitimate ones, Visa has updated its guidelines for travel-related consumer disputes. They will take effect until October 15, 2021.

When travel was suspended for an indefinite time back in March 2020, Visa observed the negative impact the chargeback process had on all travel-related merchants. There were instances where cardholders would receive duplicate refunds for a canceled trip, from the travel provider and the merchant (e.g. the airline and the travel agency). When this is multiplied across the industry, the costs can be devastating. 

With Visa’s new guidelines, issuers must wait 30 days from the date of purchase before a chargeback can be issued for any “Merchandise/Services Not Received.” This change allows merchants an ample amount of time to reschedule travel or issue a refund back to the card. This significantly lowers the instances of duplicate refunds. It will also prevent abuse from cardholders, usually after the purchase.

Tourism Industry Braces Itself For More Cancellations

Without a doubt, these surveys paint a grim picture for an already pummeled industry. Quarantines and travel restrictions have either been maintained or reinstated. Time will only tell what this fall will bring.

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