Czech Republic & LEX COVID & Measures for the Tourism Sector

By Vojtech Chloupek, Gabriela Skvarekova

05-2020

Tourism is one of the sectors hardest hit by the current coronavirus outbreak. The Czech Government has prepared several statutory measures that should help people and businesses in these challenging times (the so-called LEX COVID).

In the tourism sector, there are two major changes recently introduced by the Government, approved by the Parliament, and already in force. On one hand, tour operators should benefit from the law that will enable them to issue vouchers for cancelled package tours (referred to as Lex Voucher). Separately, effective control mechanisms, and health and tracing possibilities are among the proclaimed reasons for the implementation of the newly introduced disclosure obligation of certain online platforms. Let's have a closer look at these measures.

Vouchers for Package Tours

The first key measure brings conditions for refunds in vouchers instead of immediate monetary refunds, which should help tour operating businesses with their cash-flow issues caused by the current global collapse of tourism. This is also quite controversial as it will apply to package tours with a start date from 20 February 2020 (i.e., retroactively) until 31 August 2020.

Without this statutory measure, tour operators would have been obliged to refund all payments to customers (reduced by cancellation fees, if applicable) within 14 days of termination. Lex Voucher enables refunds in vouchers in two scenarios.

Firstly, if the customer or tour operator withdraws from the contract due to unavoidable and exceptional circumstances, a "protection period" for which the refund obligation is postponed will apply. The protection period will start running as of the delivery of the voucher to the customer and will last until 31 August 2021 (unless terminated earlier according to Lex Voucher). If the tour operator wishes to benefit from the protection period, it will notify the customer in writing and issue a voucher in the value of at least all payments made by the customer or on his/her behalf. The voucher will be valid during the protection period.

Special categories of customers, such as people older than 65 years, pregnant women and schools, may reject the voucher, in which case the protection period terminates as from the rejection of the voucher.

Using vouchers should proceed as follows. During the protection period, the tour operator will offer the customer, upon his/her request, a new package tour of the same or higher quality. If the new package tour is of the same quality, the customer will not pay any price difference. If the new package tour is of a higher quality, the customer will only pay the price difference if he/she was also offered a package tour of the same quality which he/she has not accepted. The tour operator's postponed debt will then be discharged by the use of the voucher for the payment for the new package tour. If the customer does not request a new package tour, or does not accept an offer for a contract, the tour operator will return all payments to the customer within 14 days of termination of the protection period. Also, if the tour operator does not offer a new package tour within 30 days of the customer's request, the protection period will terminate.

In the second scenario, if the contract is terminated with a cancellation fee, the voucher will be issued in the value of at least 10% of the paid cancellation fee within 14 days of the customer's request. The customer may request the voucher within three months from the contract's termination, and the voucher will be valid for at least 12 months.

In both scenarios, the voucher must be insolvency-protected and will be issued in a paper form, or electronically if the original contract was concluded remotely or the customer so agrees.

The tour operator must inform the customer about his/her rights under Lex Voucher in writing and in a clear and comprehensible way. It must do so at the latest as of the issuance of the voucher, or as of the contract termination with the cancellation fee.

Agreements that limit or exclude rights for the customers' protection will be disregarded. Obviously, the parties may still agree on conditions more favourable for the customer.

Disclosure Obligation of Online Platforms

The amendment to the Tourism Act introduces a new disclosure obligation that should enable state authorities to obtain information on certain tourism service providers (e.g., accommodation providers), the scope of services and other relevant details. Online platforms that intermediate contact of the tourism service provider and the customer for the purpose of concluding the tourism service contract will be newly obliged to provide certain information to the competent Trade Licensing Office within 30 days of its request.

The scope of information to be provided is rather broad and covers the following details:

  • number of tourism service contracts concluded in the relevant period;

  • the total price for the tourism services in the relevant period;

  • address of the tourism services provision; and

  • identification of the service provider with whom the customer concluded the tourism service contract and available contact details.

However, the platform will not be required to provide information that it does not possess.

As the aim of implementing this disclosure obligation is an effective control mechanism for the state, Trade Licensing Offices will also be entitled to provide the information obtained to other state authorities upon their request. This may lead to disclosure of information to administrative bodies for controlling purposes, and to courts. Thus, the information obtained should help the authorities with identifying unauthorised business activities or non-compliance with obligations in the area of accommodation services, building regulations or taxes. In relation to the current pandemic situation, the state authorities may also want to know locations of accommodation services for potential tracing.

Failure to comply with the Trade Licensing Office's request will constitute an administrative offence that may result in a fine of up to CZK one million, or publication of the decision on the administrative offence (which may have negative reputational consequences).

Last reviewed: 04 May 2020