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TravelManagers set for future but absence of universal consumer protection remains a concern

August 20, 2014 Headline News, Mobile travel consulting No Comments Email Email

egtmedia59TravelManagers’ business model, harnessing the power and expertise of hundreds of travel agents working largely from home or from small local offices, could never have existed prior to the internet and can endure only with the right technology and continuing investment in technology.

The group’s current position, future strategy, brand refresh and current challenges were outlined on Sunday at TravelManagers’ conference in Singapore by the group’s chairman Barry Mayo, who emphasised that TravelManagers was “as much a part of the future as online travel agents such as Webjet, Wotif, Expedia and other online booking agents”.

TravelManagers chairman Barry Mayo

TravelManagers chairman Barry Mayo

“The online booking agents are all about commoditised product, while we concentrate on delivering highly personalised bespoke service,” Mayo said.

For all travel agents, the business environment was shifting, Mayo said. As a result, TravelManagers was carrying out a risk assessment of suppliers, and grading them accordingly.

“The environment in which travel intermediaries operate – whether traditional bricks and mortar agents, online travel agents or remote home-based travel agents – changed on 1 July 2014. This and its consequences have yet to be understood by the industry, let alone consumers and the media.”

TravelManagers was concerned about the loss of universal protection for consumer funds following the effective closure of the TCF. It considers the likelihood of travel agent financial failure has increased, “without licensing to ensure that new entrants have the necessary experience and a record of good character”.

Mayo said the absence of TCF financial oversight of licensed travel intermediaries was another concern for the group. While limiting failure, TCF oversight had not stopped the collapse of companies like the tour operator Kumuka, and two recent collapses on the NSW Central Coast, at Toukley and Woy Woy.

“The point is that while TCF oversight didn’t stop all collapses, no consumers were out of pocket,” Mayo told his audience.

“In the case of the Toukley collapse, the shortfall was reported to be AUD 530,000 with about AUD 100,000 of that covered by credit card chargebacks, so the remaining AUD 430,000 was paid by the TCF. Most of the clients of this particular agency were retirees and, without the TCF, at least one couple would have lost AUD 29,000.”

Media coverage of that event has been non-existent, Mayo said, because nobody suffered.

“This will not be the case with future travel agency collapses,” he warned, which would likely result in loss of consumer funds and travel arrangements.

The lack of any TCF and mandatory compensation would likely lead to adverse media coverage, which could in turn trigger loss of consumer confidence in dealing with travel agents.

The announcement this week of TravelManagers’ collaboration with Gow Gates in developing Travel Agent Client Trust Account Fidelity Insurance (TACTAFI), and subsequently purchasing the first policy, was insurance for the future, Mayo said.

“This now enables you, in the event of a travel intermediary collapse, to be able to assure your clients that not only does TravelManagers operate an audited and dedicated client trust account, whereby the clients funds are held in trust, but we have taken out insurance not too dissimilar to the protection formerly given by the TCF.

“Therefore, regardless of what your clients may read or see in the media, their money is safe with TravelManagers.”

Travel agent collapse occurring in future posed an additional risk to the industry if it created a perception that the travel agency industry was not to be trusted. TravelManagers agents should be prepared to counter this by citing TravelManagers TACTAFI.

Mayo stressed that TravelManagers was not opposed to ATAS: “Our position on ATAS has been that for the good of the industry, it needs to be robust and provide universal consumer protection. ATAS is only as strong as its weakest link.”

He revealed that TravelManagers was currently undertaking a risk assessment of all suppliers and rating them from high, through medium, to low. Mayo conceded that this wasn’t an exact science and couldn’t be done in a few weeks or even months.

The objective is to discuss some form of insolvency protection from those suppliers it rates as high or medium term risk.

“In the meantime and for the long term, we have our general travel insurance product, with Allianz Global Assistance, which gives protection against insolvency of end suppliers such as airline, hotel operators and cruise companies and you should be offering this to your clients at every possibility.

“Our position post-TCF is a work in progress and our objective is to prepare for a possible worst-case scenario which we hope will never occur.”

Written by : Peter Needham

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