A November 2015 summary & insight from ITLN member Kelemenis & Co regarding the position on three travel & leisure related issues and what the position is in Greece at the moment – 1) Allotment & Guarantee contracts, 2) Time-share contracts & 3) the Package Travel Directive.

Kelemenis & Co, Athens, Greece

1) Allotment and guarantee (commitment) contracts

Decision 503007/29.11.1976 of the General Registrar of EOT (Contracts Regulation) regulates the relationships between (a) hoteliers and individual clients and (b) hoteliers and travel agents. The Contracts Regulation has been formally ratified by article 8 of statute 1652/1986. According to article 5 of this statute, any issue regarding allotment contracts that is not specifically set out in the Contracts Regulation, is governed by the general provisions of the Greek Civil Code.

Allotment contracts, i.e. contracts entered into between hoteliers and travel agents for the booking of a number of beds for a specific period, must at least contain the following provisions:

  • the agreed price for overnight stay, the price for a bed & breakfast (BB) stay, the price for a half-board (HB) stay and the price for an all-inclusive (AI) stay;
  • the type of rooms (single, twin etc.), the exact duration of the allotment and the agreed maximum and minimum allotment for every month;
  • the agreed breakfasts and double-dot meals must be offered at a price and according to the standards of the applicable market rules;
  • hotels within premises where no restaurants or canteens operate may not conclude allotment contracts on a BB, HB or AI basis;
  • restaurants and canteens within hotel premises may not be leased or subleased to persons other than those running the hotel business; therefore, the responsibility for the operation of the business must extend to all departments of the hotel unit.

The hotelier may request a down-payment of 25% of the entire amount payable by the counterparty on the basis of the allotment contract. In case the hotelier breaches the agreement, he/she/it is under an obligation to immediately refund the down-payment plus interest. Such breach may also result in administrative penalties being imposed on him/her/it by EOT. In case the travel agent does not cover the minimum allotment in a month, the hotelier is entitled to compensation which is calculated on the basis of the agreed price for a one-night stay and amounts to half of the minimum uncovered balance of the allotment.

With regard to cancellations, a travel agent may cancel part or all of the agreed allotment without bearing an obligation to compensate the hotelier if the hotelier is notified of such cancellation at least 21 days prior to the agreed arrival of the guests (release period). Nonetheless, with its decision 38/1997 the Supreme Court has ruled that in case the travel agency does not cover the minimum allotment, it must compensate the hotelier for half of the minimum uncovered balance of the allotment, regardless of whether it has notified the hotelier 21 days prior to the agreed arrival of the guests. The hotelier also has the right to be released 21 days prior to the agreed arrival in relation to bookings for which he/she/it has received no confirmation by either a voucher or a rooming list. If the travel agent makes use of its cancellation right, pursuant to the above, during the low season, the hotelier has the right to proportionally limit the allotment of beds during the high season without, nonetheless, falling below the minimum allotment of the relevant month.

The Contracts Regulation applies not only to allotment contracts but also to guarantee (commitment) contracts. As is well known in the leisure industry, the main difference between allotment and commitment contracts is that in the case of commitment contracts the agreement refers to a specific number of beds during a specific time period, i.e. it does not provide for a maximum and minimum number of beds. In the case of commitment contracts, if the travel agent cancels the agreement for part or all of the agreed beds, it still has to pay the price for all the beds it has booked, unless it has notified the hotelier 21 days prior to the arrival of the guests (release period).

2) Statute 1652/1986 on time-sharing contracts

Time-sharing contracts are regulated by statute 1652/1986 “Leasing agreements and regulation of relevant issues”, as it has been modified by Presidential Decrees 182/1999 and 293/2001. In the case of time-sharing contracts, the lessor undertakes the obligation to supply the lessee with the use of the accommodation for a specific period every year together with certain relevant services and the lessee undertakes to pay the agreed rent.

Time-sharing contracts include elements of several types of contracts, although those of a leasing agreement prevail. This is the reason why statute 1652/1986 provides that the articles of the Civil Code regulating lease agreements are applicable in addition to the provisions of the statute. Time-sharing contracts may have a duration of between 3 and 60 years and must be concluded with a notarial deed which must subsequently be registered with the competent land registry. The observation of such formalities aims at protecting both the lessee and third parties who can thus gain knowledge of the long-term restrictions of such properties.

3) Presidential Decree 339/1996 on package travel

Package travel is regulated by Presidential Decree 339/1996 “On package travel, in compliance with Directive 90/1314/EEC on package travel, package holidays and package tours”. The aim of the Directive was to harmonize national legislations on package travel with regard to consumer protection. Whilst Directive 90/1314/EEC regulates the content, execution and termination of a package travel contract, it does not regulate civil liability issues that may arise thereof; these are regulated by the particular legislation of member states. The regulation of package travel contracts by Decree 339/1996 is limited because it almost immutably transfers the rules of Directive 90/314/EEC into the Greek legal framework, without addressing issues that are not regulated in the directive. Thus, in order to cover legislative gaps (e.g. contractual liability) certain provisions of the Greek Civil Code are applied.