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A Refund Policy Example for Tour & Activity Operators

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January 11, 2022

A Refund Policy Example for Tour & Activity Operators

After a prospective traveler books your tour or activity services, the last thing you want to think about is a cancellation. But in these uncertain times, travelers are more likely to cancel bookings. When they do, they expect to have some if not all of their money refunded.

From family emergencies to COVID-19 outbreaks, travelers are looking for more flexible refund policies in the companies they book with. It’s important to show your customers that you value their safety and comfort. That being said, it can be hard to find the right balance between what’s best for your customers and best for your business. If your refund policy is too open-ended, you could be leaving yourself open to a flood of last-minute cancellations.

So how can you build a refund policy that offers flexibility while still safeguarding your business? Here are a few tips — along with a refund policy sample — to help guide you through the process.

Putting Together the Perfect Refund Policy

If you don’t already have a cancellation and refund policy in place, it’s time to write one. Even if you already have a refund policy, it could benefit your business to review and refine your terms.

With a spike in cancellations after COVID-19, flexibility is more important than ever. But that flexibility can come at a cost. Let’s explore how you can strike the perfect balance and construct the best refund policy for all parties involved.

1. Consider the Resources Required

Not all tours are created equal. Think carefully about your services and the resources it takes to put everything together. The more resource-intensive your services are, the less flexible your refund policies should be.

In some cases, you may be working with third-party companies to build your tour experience. This means it can be even more expensive to accommodate cancellations. If you accept cancellations on more expensive tours, consider recouping your costs by offering only a partial refund after a certain date, or charging a cancellation fee.

2. Think About the Time Frame

The time frame is one of the most important factors in a cancellation policy. For example, you may need to set a 24, 48, or 72 hour cutoff for cancellations, at which point a customer can no longer request a refund.

For longer-term tours or trips, this can also look like a sliding scale, where they can get a full refund up to a certain point — after which it becomes a 75% refund, 50% refund, 25% refund, and so on.

It’s important to consider how long it would take you to secure a new booking. If a customer cancels too close to the departure date — and you’re unable to fill that spot with another traveler — issuing a refund would mean losing money.

3. Adjust Pricing to Offer More Flexibility

While it’s important to consider the time frame, resources, and money lost when building a cancellation policy, that doesn’t mean you should be overly strict. After all, many travelers are dealing with uncertain schedules — and emergencies may come up. If they see a strict refund policy, they’re more likely to start shopping around other tour experiences.

Designing a more flexible refund policy could boost your bookings and your reputation with customers. To protect your earnings, however, you might need to make slight adjustments to your pricing.

Consider the hotel industry, for example. If you look at a hotel’s booking website, you might notice that the rooms offering full refunds are often priced slightly higher than those that don’t have flexible refund policies.

This can look the same for your tour and activity business. If you’re offering a more flexible refund policy, you can adjust your price structure to compensate for this.

4. Consider Alternative Refund Options

Offering a flexible refund policy can benefit customers, but it can seriously impact your cash flow. If too many customers are canceling last-minute, you’ll lose the money you’ve charged a customer and lose out on the possibility of a future booking.

To remedy this, you can always consider alternatives to the traditional refund. For example, you can:

  • Offer a voucher that’s equal to the amount of their purchase, valid for anywhere between a few months to a few years
  • Provide the chance to reschedule the tour or activity to another date
  • Recommend transferring the booking to a friend or family who may be looking to visit in the future

Refund Policy Sample: How It’s Done

It’s easy enough to read through these tips, but it’s a lot hard to actually put them into practice. What does a good refund policy actually look like?

Here are a few examples to help you write an effective cancellation and refund policy.

1. Full Refund of a Day Tour

For all bookings of day tours operated by (Name of Company), a minimum of 24 hours' notice prior to your scheduled tour departure is required in order to receive a full refund. If a cancellation is made with less than 24 hours' notice, no refund is given.

2. Full Refund With Limited Seating

Due to limited seating, we require that you cancel at least 48 hours before your departure time. This gives us the opportunity to fill your seat. If you choose to cancel before the 48 hours, we can offer a full refund or a voucher of equal value for a future experience with us. If you do not cancel prior to the 48-hour deadline, you will not receive a refund or voucher.

3. Staggered Refund

Cancellations made seven days or more in advance of the tour departure will receive a 100% refund. If cancellations are made within three to six days, a 20% fee will be taken out of the refund. Cancellations made within 48 hours will incur a 30% fee. To make sure bookings are available for other clients, no refunds will be permitted within 24 hours of departure.

4. Offer for Alternative Refund

At (Name of Company), we understand that unexpected changes can occur. We will do our best to accommodate your needs. If your cancellation is at least 24 hours in advance of the event, you will receive a full refund. If your cancellation is less than 24 hours in advance, you may receive a voucher to attend a future event, or you may transfer your ticket to a friend. This voucher must be used within 90 days.

Make Your Refund Policy Official — and Streamline It

Once you’ve ironed out all the details of your retail policy, it’s time to publish it. Making sure that your refund policy is easy-to-find and uses simple, clear language can ensure you and your customers are on the same page about expectations. It can also protect you legally against potential chargebacks.

With a simple and reasonable refund policy, prospective travelers can book your tour and activity with confidence — and you can rest easy knowing that you’re safe from potential disputes.

For many tour operators, the process of cancellations and refunds can be complicated. But your customers value companies that are flexible and understanding, so defaulting to a strict cancellation policy could end up hurting your business. Our booking software allows you to easily make cancellations, issue customer refunds, and design a more flexible policy to boost your bookings. Customers can enjoy a seamless booking process, as well as a cancellation process if they can’t make their expected tour date. Learn more about our booking software or sign up for a demo today!

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