Monday 27 April 2015

[Straits Times] Find fairer way to handle wedding banquet cancellations

THE Consumers Association of Singapore has disclosed that wedding banquet cancellation fees at some hotels could hit $50,000 ("Case looks into wedding banquet cancellation fees"; March 16).
It seems that customers are held to ransom while hotels incur little in the way of actual losses.
Wedding banquet cancellations are unfortunate occurrences that deserve sympathetic consideration. A more equitable solution must be found.
If a cancellation occurs sufficiently ahead of time, hotels still have the opportunity to advertise the date to other prospective customers, while allowing current customers to find a replacement, to reduce the liquidating penalty.
Another solution would be to draw up fairer guidelines, based on opportunity losses against a countdown timeframe, limited to a maximum 60 per cent penalty.
Suppose an individual were to sign a contract with a hotel 18 months in advance, for a $40,000 wedding banquet.
Under this new system, a nominal deposit would be payable at the 18, 12, six, three, and two-month marks with, for example, 10 per cent ($4,000) at the 18-month mark, 20 per cent at the 12-month mark, and so on.
Thus, by the six-month mark, $12,000 would have been paid, and at the final marker - one month - $24,000 or 60 per cent of the package would have been paid.
The one-month mark could be the final date to make or break the contract, with transparent liquidating damages stipulated.
The shorter the notice of cancellation, the greater the deposit forfeited as a cancellation penalty.
In the event of a cancellation, the customer would be given the opportunity to find another party to take over the contract, thereby reducing damage liability by half, while the hotel can keep the remaining amount as extra profit.
If the customer were to persuade an external party to take over his contract one month before the due date, his damage liability would be restricted to 50 per cent, or $12,000.
This approach is fair and simple, while allowing both parties an amicable exit strategy.
Paul Chan Poh Hoi