Our economy has been likened to a Formula One race! Companies each travelling at high speed around the business circuit trying to beat one other.
Occasionally, and as we are now experiencing, an unwelcomed and unplanned downturn appears and at this point, the economy decelerates, and we all pull into the pitstop.
However, what can make the difference to those that come out of the pitstop first and ultimately win the race are the adjustments that are made and the fine-tuning that takes place during this downtime.
The travel, tourism, aviation and hospitality sectors have been hit hard by the ongoing pandemic. Probably harder than most.
But, lessons can be learned from the unwanted effects of this experience and if used wisely, the time that has been created and that many businesses would not ordinarily have the luxury of can place these companies, if not in a stronger position then in the best possible position to be on the winner's podium when the economy begins to move forward again.
One particular part of the UK travel industry which is suffering badly by virtue of the unique regulatory regime in which it operates is tour operating.
Unlike almost any other consumer-facing subsector, as a result of EU and ultimately national legislation it has been placed in the unenviable position of having to fully refund customers for package holidays which have been cancelled as a result of the travel restrictions and the impact of Covid19 at overseas holiday destinations. This is irrespective of payments having been made in advance to suppliers of the components that make up the customers holiday, typically flights, accommodation and transfers. It is difficult to imagine any other business which is constrained to operate in this way and incur what ultimately amounts to uninsurable losses.
Before society returns to some semblance of normality and has the confidence and the ability to travel again there is little doubt that some of these businesses will fail. Some steps and measures can be taken not only to help to manage the expectations of customers that continue to travel where they are able.
But also, to help to protect tour operators from the financial consequences of the current situation continuing or unforeseen circumstances the same or similar to, the current pandemic appearing in the future. For those customers travelling now as well as in the future, whatever that may look like, it is worth tour operators remembering that what has been described to customers in both online content and hard copy brochures may be different from the new reality.
The Package Travel and Linked Travel Arrangements Regulations 2018, the legislation which provides a legal framework that tour operators must comply with, imposes a number of obligations upon them. Failure to adhere to these obligations can lead to not only claims for compensation being brought by customers but also potentially prosecution in the criminal courts with unlimited fines.
The information contained online describing the main characteristics of holiday and potentially, inadvertently promising through marketing puff, a holiday which may no longer be deliverable under restrictions imposed arising from the pandemic should be reviewed. This may form an integral part of the holiday contract with the customer and through inadvertently misdescribing what the correct and up to date position is can expose tour operators to claims.
This “downtime” can and should be used to review what is included in the destination information and to ensure that systems are in place for updates, amendments and errata’s.
Where the information is provided by overseas destination management companies or other suppliers, then it is important to make them aware of the need to regularly update the destination information they have provided, both in terms of descriptive photographs and the services available in resorts.
If tour operators are relying upon their overseas suppliers, it is important to ensure that those suppliers are contractually obliged to perform this service and that any failure to do so is protected by contractual warranties given by those suppliers providing recourse to compensation by the tour operator and indemnities in respect of any claims made by customers arising from those failings.
The Regulations provide for a host of other requirements that the tour operator must comply with including, upon the request of a customer the provision of precise information as to the suitability of their needs.
It is conceivable, in the new world of Covid19 that customers may have pre-existing conditions which would make them more susceptible to infection from Covid19 and may, if for no another other reason than to ease their own anxiety, seek information from a tour operator as to the safety measures in place to protect them from this eventuality occurring.
Both at a civil but also criminal level being able to demonstrate due diligence through a documentary audit trail, not only in respect of risks arising from Covid19 but also general risk assessments and product information, will place travel businesses in a stronger position than they otherwise would be.
A review of the processes and procedures that are in place for the auditing of suppliers and an audit document trail will help to support this.
The lesson that has been learned by many tour operators following cancelled holidays and obligations to refund customers where customers money has already been paid to suppliers, is the importance of robust contracts with those suppliers and where possible up to date force majeure clauses which include a provision for pandemics such as Covid19 but additionally include, as far as possible, corresponding obligations on the supplier to refund the tour operator in the event of circumstances arising where the tour operator is obliged to refund their customer.
Another important piece of maintenance during this pitstop is a review of such contracts and where they do not already exist then to ensure that they are put in place for the future.
In addition to UK tour operators being required to comply with their own regulatory framework, their obligations to their customers also include their contractual booking terms and conditions.
From a legal perspective, it is important in any event to ensure that these are legally compliant but additionally, it is important to ensure they are no more onerous than they need to be.
Inadvertently, through failing to match the products that are being sold with the legal requirements applying to those products, unnecessarily onerous terms and conditions have led to some tour operators accepting greater responsibility and liability than they need to.
The “Regulations” will only apply to a combination of products defined by those Regulations. If a travel business is not selling products that fall within that definition or combining them in a way that creates a package, then the Regulations and the requirements to refund in circumstances such as those that are being experienced by the pandemic may not exist.
Another useful exercise to be undertaken during the pitstop!
These are undoubtedly difficult and unprecedented times but every challenge presents an opportunity and taking the opportunity to review important operational aspects of a business can ultimately lead to your business winning the race!
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