ALARMING POSSIBILITIES FROM NEW PACKAGE TRAVEL RULES
14th May 2018
Intended changes to Package Travel Regulations could mean major changes for DMOs and toursm businesses goo.gl/UGwqEJ
Last week your President attended a briefing from the Tourism Alliance on numerous issues facing UK Tourism – funding, APD, transport, research etc were all covered but the most alarming briefing was on the intended changes to the Package Travel rules which could be implemented as soon as 1 July and which could require major changes for DMOs and tourism businesses. There follows a brief from Kurt Janson which we encourage all destinations to read and absorb. We will as always keep you updated on developments….
Two Problems with the Package Travel Regulations for Domestic Tourism Businesses
The New Package Travel Regulations are due to come into effect on 1 July and will bring with them two significant issues for domestic tourism business in the UK
The first problem is that websites that allow customers to add a collection of tourism related products to a shopping cart which is paid for in a single transaction could be deemed to be selling Packages. This means that the seller will be liable for the performance of all components of the package. While this measure was meant to be applied to companies like Expedia that specialize in dynamic packaging, it will also apply to DMOs that sell products on behalf of their members or as part of Discover England Fund projects.
It could even impact on individual businesses where some of the services and facilities have been subcontracted. So, for example, if a hotel subcontracted its restaurant, spa or gym facilities to a third party and the customer is able to buy these protects together on the hotel’s website, this will now constitute a package.
The second problem is that any domestic tourism business offering third party offers could be impacted by another change to the PTRs – the creating of a Linked Travel Arrangements (LTAs)
A LTA occurs when, as a result of the first booking, the customer is provided with an offer to purchase a product from a third party. This could cover offers such as “stay with us and get 10% off a meal at the local pub” or “when you stay with us, you get access to the local golf course”.
This type of offer, if taken-up within 24 hours of the accommodation booking, will constitute LTA. The good news about an LTA is that the primary seller is not liable for the performance of the third party product. The bad news is that the primary seller will be required to purchase Insolvency Insurance to be able to provide this type of offer. Very few (if any) insurance companies currently sell a suitable insolvency insurance product and it is thought that, if they did, the premium would be considerable.
The net effect of these new requirements will be to further reduce the ability for small domestic tourism businesses to work together to provide deals for customers, making the UK domestic tourism industry less competitive and increasing costs for UK holiday-makers. And the kicker is that these regulations provide absolutely no benefit to either tourism businesses or consumers.