When is a Refund in Order?


    when is a refund in order for vacation rental guests?Complaints and requests for refunds are always a touchy subject among vacation rental owners. No matter how much we mull over the subject and consider the different reasons for when to compensate a guest, it doesn't make the answer any less ambiguous.

    Because this is a common question we receive, we've attempted to provide some basic guidelines for when a refund might be in order and when it may not be necessary.

    Was the problem within your control?


    Although issuing refunds really needs to be determined on a case-by-case basis, one overall commonality is whether the problem was within your control.

    When your guests report a problem, your first priority should be to fix it immediately. If you can't, then it’s time to consider some form of compensation. Here are a few examples of valid reasons for issuing refunds, from a partial refund to an entire stay.

    Partial Refund of Rental Rate or Minimal Compensation

    • Broken ice maker If your ice maker breaks during your guests' stay, this would really just be a mild inconvenience. Instead of offering them some arbitrary figure for their troubles, simply refund them the cost of buying ice all week.
    • Cleaning problems If your guests arrive after the scheduled check-in time and your vacation home has not yet been cleaned, you can offer to refund their own cleaning fee. (The important distinction here is their time of arrival. If they arrived before the agreed upon check-in time, the situation has become out of your control.)
    • Swimming pool is closed If the pool at your home or complex is a main draw for bookings, but you find out that it will not be available during your guests' stay, it's up to you to disclose this information to your guests as soon as possible. You might want to issue a partial refund for a couple of nights or provide some other form of compensation if no other pool will be available for them. Extending this type of goodwill might help you secure a repeat booking in the future.
    Full Refund of Rental Rate or Total Compensation

    • Required to vacate the property - If your pipes freeze during the winter or anything happens that renders your home uninhabitable, your guests will end up needing to vacate your property. When guests are forced to leave your home and make other arrangements for their accommodations, a full refund of unused nights is likely in order.
    Was the problem outside of your control?

    Any homeowner can attest to the fact that things will inevitably break or go wrong, but most problems can be fixed or at least addressed, in some form or another, rather quickly. However, if you are not given a chance to rectify the problem, or the issue is simply an "act of God," you are likely not obligated to issue a refund or compensate your guests. Here are some examples where it's probably okay to stick to your guns.

    • If the guests send a complaint about the refrigerator being broken after they have already checked out, you have no proof of when the problem actually started, and you were given no chance to call a repairman. Because this problem could have been addressed rather quickly, you may choose not to offer a refund.
    • If the guests choose to vacate because of their particular comfort issues (hard beds, for example) the problem has become out of your control. You simply cannot find the perfect bed for every type of sleeper! To further protect yourself, you should include a no-refund policy in your rental agreement for when renters choose to vacate the property.
    • If the guests called you right away about a problem and you were able to address it quickly, let's say within a few hours, you may not have to issue a refund (depending on the severity of the problem.) If it was something like the Internet, cable or A/C not working, and you rectified the situation right away, that is generally not grounds for a refund. However, if the issue leads to significant discomfort, you could consider a partial refund or some other form of compensation to appease your guests.
    • If your guests have to leave your home or cancel a trip altogether because of a weather-related incident, you should be protected if you have an Act of God clause in your rental agreement. This is also another reason to encourage your guests to purchase travel insurance. If your guests are already in your home, you should do everything in your power to make their stay comfortable, but you should not have to compensate them for something that is clearly out of your control.
    Check out this article for creative ideas on compensating unhappy guests without refunding.
    *All information in this article is meant to be a suggestion, you are not required to do any of these things.
    *Last Updated April 11, 2018

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