Booking travel in 2021? Here's how to protect your investment

Look for Flexible 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? When does the credit expire and are there blackout dates?”

As the pandemic has gone on, airlines have shifted their deadlines for using credits. For example, American Airlines has extended its credits for tickets expiring between March 1, 2020, and March 31, 2021 (and purchased by Sept. 30) through year-end 2021.

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.”

Like the airlines, tour companies have altered their cancellation terms to entice bookings. Active tour company Backroads is offering deposit refunds on new 2021 reservations, if canceled by April 1 (or whenever final payment is due, if earlier). PADI Travel, which specializes in scuba diving vacations, worked with dive operators to come up with a group of dive travel packages that require only a 5% deposit, with full payment 17 days before the trip and full refunds on cancellations up to eight days before the trip. Normally the fee schedule collects 30% upon booking, 30% 90 days before the trip, and full payment 30 days before travel, many with nonrefundable deposits.

There is much more variation in cancellation policies among home rental services, so read carefully before you book. Airbnb includes a listing’s cancellation policy as part of the top-line description of a rental.

Hotel-affiliated rentals may offer more flexibility. Homes & Villas by Marriott International has extended its free cancellation policy up to 10 days before arrival to most reservations through March 31, 2021. Hotel company Accor just launched a new Apartments & Villas collection that offers flexible cancellation and rebooking on refundable rates.

Pay With Points

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, loyalty-point hawks expect a deflation of point value as airlines and hotels bump up point thresholds for tickets and rooms.

“It’s a great time to use points because these deals won’t last forever,” said Alex Miller, founder of UpgradedPoints.com, a website devoted to maximizing rewards points. “It’s looking like things are going to get better, and the airlines have a lot of ground to make up.”

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.

Many travel-rewards credit cards offer hefty sign-up bonuses in points based on meeting initial spending requirements. If that’s a strategy you’re considering for next summer’s travel, apply for the card soon.

“We recommend people think five months ahead,” Rathner of NerdWallet said. “It could take three months to hit the spending minimum and take a billing cycle to show up in your account. This is a long-term strategy.”

Charge It and Insure 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, and Stay Flexible

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.

This month, 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.”

For far-horizon trips, the likelihood of changes in things like flight schedules or cruise ship ports of call increases as travel companies set dates and rates long before the pandemic is over. Alongside taking money-protecting steps, prepare yourself to stay flexible.

“Get yourself into the mentality that things will change,” Rowan of UpgradedPoints.com said.