Diners warned to ‘read the fine print’ when making restaurant bookings

The Restaurant Association warns diners to "read the fine print" when making reservations after reports have emerged that some customers in the country's largest city are being charged a fee for cancelling bookings.

Auckland resident Jessie Chen made a reservation through Google at SkyCity's Huami for five people to have lunch on 4 July.

On the afternoon of 3 July, she fell sick and cancelled the booking in a phone call to the restaurant.

A day later, Chen was surprised to find that Huami had deducted $250 from her credit card, which had been saved on Google.

"I was like, 'I didn't end up eating at Huami, why was there a deduction of more than $200?' It's so strange," she said.

Chen phoned Huami for an explanation and was told the restaurant charged $50 per person to cancel a booking if the cancellation was made less than 24 hours prior to the reservation time.

She claimed not to have noticed any information relating to cancellation charges when making the booking.

She also claimed the staff member she spoke to when cancelling the booking didn't flag any charges either.

"Had they told me about the fee, I would have probably asked the other four people to go ahead with the meal ... or I could have asked others to help order some takeaway," Chen said. "I wouldn't let this money be deducted like this."

A SkyCity spokesperson said customers must click through terms and conditions that set out cancellation policy details at Huami when making a booking for five or more people via Google.

"Before the booking is finalised you must tick cancellation policy box," the spokesperson said.

The spokesperson said the cancellation policy clearly stated that "you will be subject to a cancellation fee of $50 per person which will be charged to the credit card details provided at the time of booking for any no shows or cancellations made less than 24 hours prior to your reservation time".

"However, given the diner made every effort to cancel the booking in advance due to sickness, as a gesture of goodwill and without any admission of liability, we will refund the diner's $250 cancellation fee," the spokesperson said.

"We are also reviewing how we display our cancellation policy to ensure customers are clearly aware of this fee."

Another diner, Cici Guo, made a reservation to have dinner at SkyCity's MASU by Nic Watt in September last year.

She made a booking for two people via Google at noon for dinner on the same day but cancelled the booking 15 minutes later after her friend suggested another place.

Guo was upset when she discovered the restaurant had deducted $100 from her card.

She claimed not to have noticed any information relating to cancellation charges when making the booking but did find the policy outlined on the restaurant's website later.

"I was mad," Guo said. "If I had seen this clause earlier or if I had known it was like this, I would have gone there to eat, right?"

She called for the cancellation fee policy to be displayed more prominently.

The SkyCity spokesperson didn't make further comments on Guo's case.

Discretionary cancellation fees

Sahar Lone, communications and campaigns manager of Consumer New Zealand, said restaurants were entitled to charge a fee for cancellations or "no shows".

"However, any cancellation terms must be reasonable and must be clearly disclosed to customers when they make the booking," she said.

Lone said Chen "ideally ... would have received a courtesy reminder when cancelling by phone".

Lone said businesses should also "provide a mechanism for people to edit or cancel their bookings in a timely way".

"Making a booking with a restaurant creates a contract which places obligations on both parties," Lone said.

"If you don't turn up, the restaurant can legitimately claim you have broken the contract and caused it to lose business.

"If you realise in advance, you won't be able to make it, let the business or service provider know. They're unlikely to charge if you tell them within a reasonable timeframe."

Cancellation fees not uncommon

Marisa Bidois, chief executive of the Restaurant Association of New Zealand, said it was not uncommon for restaurants, particularly higher-end venues or those handling large group bookings, to charge cancellation fees.

Bidois said cancellation policies should be clearly communicated at the time of booking, whether online or over the phone.

Cancelling at late notice often meant there was little opportunity for restaurants to fill the empty seats and recover costs.

"Fees are typically only charged when the restaurant has incurred costs in preparation for the booking, such as ordering premium or perishable ingredients," she said.

Many restaurants were compassionate and could waive or reduce fees depending on circumstances, so it was worth a polite conversation, but people needed to remember that there were often costs associated with cancellations for the business, Bidois said.

"Restaurants work on very tight margins, and last-minute cancellations or no shows can have a significant financial impact," she said.

"We encourage diners to always read the fine print when booking and, where possible, give as much notice as they can if their plans change."