Protect your travel investment in new year
Here’s how to avoid losing money if you have to cancel
Between the promise of a coronavirus vaccine and the plethora of trips, cruises and lodgings on sale, travelers may be tempted to buy now for future vacations. But the crystal ball remains cloudy as to when you might be able to travel freely, given the frequency of virus surges, shifting quarantine requirements and border closures. Given weak bookings, will your travel provider even be in business by the time your trip rolls around?
“Travel will become expensive once we have a vaccine and life rebounds again,” said Stella Shon, the travel and credit cards expert at ValuePenguin, a personal finance website. “If you see a great deal, as long as you take the necessary precautions to protect yourself in the event of interruption or cancellation, it’s not a bad idea to book now, especially if you can change or cancel without penalty.”
Most experts agree the best deals to consider are those for the second half of 2021 and beyond, when travel and prices are expected to pick up. For some, travel planning is a psychological lifeline.
“I will some days book trips in the future because it does release endorphins,” said Brian Kelly, a loyalty rewards expert and the founder of the travel site The Points Guy, who has traveled to French Polynesia during the pandemic. “I do believe there’s joy in the simple act of booking a trip.”
For now, deals on later 2021 trips, if you can get them, are a reasonable bet as long as you take the following steps to protect your investment.
Lookforflexible terms
Hotel bookings have historically been easy to cancel without penalty within a day or two of arrival. Since the pandemic, airlines, too, have become much more consumer friendly by waiving cancellation penalties and allowing flyers to rebook their trips without fees.
“It’s important to look at the cancellation policy,” said Julie Ramhold, a consumer analyst at sales website DealNews.com. “If you’re getting anything back, what are you getting back, a refund or travel credit? Whendoes the credit expire and are there blackout dates?”
As the pandemic has gone on, airlines have shifted their deadlines for using credits. According to government regulations, airlines must refund a ticket if a flight is canceled or its schedule changes significantly. “Significantly” is not defined, however, and a recent Department of Transportation report shows that refunds are the top complaint about airlines today, drawing more than 5,100 complaints in September, the latest month for which data is available.
“It’s pretty easy to reschedule, but airlines have lost a lot of money because of the pandemic, so they’re not exactly jazzed to refund your money,” said Sara Rathner, the credit card and travel expert at NerdWallet, a personal finance website. “It’s best to book with the knowledge that you might have to reschedule and you might be left with a voucher.”
Paywithpoints
If you have loyalty points or frequent flyer miles, now is the time to use them, experts say. Not only will you avoid spending cash, you’re unlikely to lose them if you have to cancel.
“Most airlines are allowing you to cancel and get your miles and taxes and fees back,” Kelly said, noting that before the pandemic, airlines commonly charged a $150 fee to refund your miles on a cancellation. “Using frequent flyer miles these days is like booking a totally refundable ticket.”
Once travel resumes wholeheartedly, loyaltypoint hawks expect a deflation of point value as airlines and hotels bump up point thresholds for tickets and rooms.
Already, airlines have gone to dynamic pricing for award tickets, charging more during peak flying times rather than sticking to a point schedule.
Regarding the points required for a reward ticket, “I would expect to see a big spike next summer,” Kelly said.
Charge it andinsure it
Compared to cash or debit cards, paying via credit card offers financial protection. In the event a travel company goes out of business, and you’ve paid it through a credit card, you can dispute the charge with the credit card company, a process that usually takes time and persistence.
“If you put the purchase on a credit card and someone goes under, there’s a good chance you can recover it,” Kelly said.
Some credit cards, including the Chase Sapphire Reserve, which costs $550 annually, and the less expensive Chase Sapphire Preferred at $95 a year, also offer extensive travel protections, including benefits that cover trip cancellation, delays, interruptions and lost and damaged bags. In general, the more expensive the card, the more generous the benefits.
“The onus is on the consumer in all credit card insurance cases to prove anything,” said Leigh Rowan, director of special projects at UpgradedPoints. com. “If you really want insurance coverage, private insurance coverage is often easier to deal with.”
Some travel insurance policies will provide cancellation coverage for the financial default of a travel supplier, like a cruise line or tour company, but not a travel agency, according to Stan Sandberg, co-founder of the comparison website Travelinsurance.com.
If you’re concerned your travel provider is in financial trouble, call your insurer and ask if it’s on an exclusion list.
“If it’s well-known that a travel supplier is financially challenged, it may already be excluded from the coverage,” Sandberg said.
More than ever, you’ll need to do your homework to find the right policy, particularly one that covers COVID-19.
“With insurance, there are always loopholes,” said Brian O’Connell, an analyst with InsuranceQuotes.com, a comparison site. “Anybody looking at travel should read the fine print and find out what’s covered.”
Negotiate, andstayflexible
Don’t like the terms you’re offered? Try asking for a better deal. Depending on your powers of persuasion, diplomacy and enthusiasm, you might be able to negotiate.
In December, Kelly of
The Points Guy planned a trip to Kenya to a safari lodge with nonrefundable rates. Given the risk of travel during the pandemic, he called the lodge and stated his intention to book only if he could get a guarantee that the booking would be refundable should he need to cancel. The lodge, he said, agreed, and put the new terms in writing.
“The consumer is in the driver’s seat right now,” Kelly said. “If you don’t see something you like, everything is negotiable.”