in K2 Reports
COVID-19 Upends Passover Programs
Novel Coronavirus (COVID-19) has upended the global economy in ways that even the most prolific trend forecasters would have trouble imagining. While there are sectors such as grocery home delivery that have seen considerable increases in use, for almost every other business, the realities are immensely bleak. The travel category has been one of the hardest-hit industries. Specifically, in the Jewish world of Passover hospitality programs, there is a quiet storm brewing with significant consequences, potentially for the long term.
Many thousands of Jewish families planned on attending Passover programs in less than three weeks at either local or exotic destinations and paid substantial sums to go. In response to the increasing gravity of COVID-19, a majority of programs seem to have been canceled. As time progresses, the number of destinations no longer operating is only set to increase. After all, at the time of this writing, more states are implementing lockdowns. Also, a large number of countries have closed their borders, and airlines are slashing routes.
Full payment for Passover programs has generally already been made since the holiday is right around the corner (April 8-16, 2020). With the chaotic spread of the virus and subsequent last-minute cancellations, there is a growing chorus of complaints from customers about the lack of refunds and transparency. Program operators, in turn, insist they are in an unprecedented crisis, and that customer demands for complete refunds are unrealistic and potentially impossible to fulfill.
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The Increasing Popularity Of Passover Programs
Over the years, there has been a marked proliferation in the number of Passover programs. Estimations are that this year there were over 150 Passover programs on offer. Fundamentally, as the number of Jews able to afford these offerings has increased, so has the smorgasbord of options. The kinds of programs on the market range in geography and price range. There are local programs in the NY metro as well as those in exotic destinations like Thailand. Some cater to the budget-conscious crowd and cost just over $1,500/person, but some programs go well beyond the $5,000/person range. Regardless of the program, though, the drivers for the popularity of going away revolve around lessening work for Passover related cleaning as well as seizing an opportunity for a nearly two-week-long family vacation. As the industry has grown, there is an ecosystem that has formed around it. There is a service that helps consumers choose the right program, a review site acting as the TripAdvisor of programs, and a Passover luggage delivery service, to name a few.
Mistrust & Frustration Abound
As people’s lives are turning upside down during this pandemic, and with Passover being right around the bend, there is added pressure. For those who planned on being guests at Passover programs, there was money paid and plans made, and now there is a great feeling of uncertainty. Further exacerbating this feeling is the broad range of responses on the part of Passover program operators. In Facebook groups dedicated to the discussion of programs, there is the airing of how different operators are responding to this crisis. While some are promising full refunds, others are proposing lesser resolutions. Partial refunds offered range across the board, and we have seen reports of 25%-55%. We also see more programs offering credit for monies paid toward future years. At the opposite end of the spectrum, some operators are denying any refund at all or going incommunicado during this stressful time.
What has resulted from this ambiguity is a growing sense of frustration and mistrust. While many operators insist they are at a loss of vast sums of money paid to hotels and suppliers, customers seem to doubt this claim or believe the onus rests on the programs for any losses. There is a voicing of concern over owners who may be trying to retain as much money as possible during this tumultuous time, even if they are not actually in the negative. After all, often, operators rely on profits from their programs as their sole source of income, and full refunds will mean that they have no foreseeable way to support their families for the future. The chasm between operators offering a total return of money and those who are proposing a lot less is, exacerbating feelings of unfairness and betrayal. There is an increasing number of posts on social media comparing the degree to which programs are refunding. Those going the distance and providing a full return receive comments with a heaping of praise and promises of patronage in future years. As can be imagined, for those programs either unwilling or unable to offer such a complete resolution, there is the expression of dismay and even disdain.
Fundamental Question, Contract Claims & Force Majeure
While it still unclear what the prognosis and timeline of the COVID-19 crisis are, it is practically inevitable that there will be some dispute resolution needed for customers and operators once the dust settles. While many nuanced and even novel legal questions come into play when a pandemic affects contract performance, experts agree that much of the outcome depends on the fine print. For example, do programs have terms and conditions outlining obligations or lack thereof in the instance of a force majeure.
Also, it is hard to predict the share of people willing to pursue costly litigation that, in some instances, will need to be initiated in a foreign jurisdiction. Further, funds in dispute may, for some, be below the required “amount in controversy” threshold. While highly unlikely, we wonder whether a class is formed for collective legal action. The uncertainty and contentious nature of the current situation leave open more questions than there are answers.
The Future & Long Term Consequences
Coronavirus is wreaking havoc on practically every business and, worse, is putting many in hospital and killing tens of thousands across the globe. Passover operators are certainly losing profits, and many are going to be buried in negative territory because of this pandemic. Raphi Bloom of TotallyJewishTravel.com, a website that aggregates and advertises programs, outlined the calamitous effects on owners in an email.
He writes:
“Passover programs are at [sic] very real risk of losing EVERYTHING. In some cases, this can be businesses that have been built over many, many years. For others in their first year it can mean being saddled with debt of many hundreds of thousands of dollars. This can destroy the families who run Passover programs and have a devastating effect on their lives forever.
We ask customers to PLEASE consider this when judging Passover programs.“
There is no question that some programs will inevitably go under based on a combination of a ruinous fiscal position, gaining a bad reputation, or being so scarred by this experience that they will not embark on the adventure again. Some programs are trying to stymie their hemorrhaging losses by offering catering and delivery of food for Passover. While operators hope these efforts will help alleviate the financial pressure to some degree, the stark reality remains grim. For future years too, it likely that a segment of customers will not be ready to commit to programs, and the industry will undoubtedly see a retraction.
For many customers, there is a good chance that thousands of dollars will be lost with nothing received in return. There is also the sudden tension of having to orchestrate planning for Passover and securing food in an already strapped environment where panic buying is taking hold. With the varying responses and at times lacking communication, the confusion and frustration will likely build before clarity becomes possible.
Like most complicated things, the onus of refunds and associated responsibilities is probably not black and white. Some operators may very well not have the funds to provide satisfactory returns as the monies are in the hands of vendors. At the same time, unscrupulous programs might be holding funds to retain some semblance of profit. Regardless, in the microcosm of Jewish Passover programs, COVID-19 is upending a once burgeoning hospitality ecosystem with devastating effects on both customers and operators alike.
UPDATE APRIL 2, 2020:
DansDeals reports that despite the program contract having a force majeure clause that specified outbreak of disease, with the hotel to return all funds, as of yet, the hotel is refusing to issue a refund of the deposit.
