By Philippe Richard Decornet, Co Founder & Co Owner Easia Travel
I’m sure we all now fully understand the full scope of the challenging situation we’re facing with Covid-19. Our collective reality is that all markets and destinations are totally isolated and incapacitated. Europeans, Americans, Chinese – no matter which continent travellers are from, no-one is free to travel. Europe and North America are entering a period of strong quarantine and restricting outbound travel to help stop the spread of the virus. Some countries who originally managed to control (and even decrease) the presence of the virus fear its return, are closing their borders to inbound travellers.
Our legal environment was conceived to protect the final consumer in case of cancellation or major unforeseen events. Therefore, throughout Europe and North America, travellers can legally request tour operators or travel agencies to refund their trips in full without fees. In a normal environment, this measure is very positive and is accepted by all the stakeholders of the industry: tour operators, travel agencies, DMCs, hotels, airlines, restaurants, guides, etc.
But the situation we face now is not normal. As well-intended as those regulations are, they were not designed with these circumstances in mind. We are experiencing an unprecedented and extraordinary moment in history; a pivotal moment in the travel industry that requires cooperation and flexibility to survive. The current laws and regulations are not adapted, nor suitable for this unique situation and desperately need to be reviewed.
Certain stakeholders have adopted selfish behaviour that could impact the entire industry. On one side, most tour operators want to respect the law and maintain the objective of pleasing their customers. They do their best to obtain refunds from their suppliers. In most cases, that money returns to the final consumer at the expense of all other stakeholders in the chain. As a result, those stakeholders are now seeing their incomes decimated, and are watching the finances they need to survive disappear. Airlines, hotels, DMCs – all businesses have fixed costs that are impossible to postpone. Every company has obligations to pay their staff. Each member of staff has a family to feed and bills to pay.
Some tour operators have even decided to keep the clients’ money and not to pay their DMC in cancellation cases. No matter the reason they happen, when cancellations occur (especially last-minute), each DMC is still liable and obliged to pay local suppliers that do not allow cancellation without fees – the hotels, the transportation companies, the domestic airlines, the guides; they all depend on this income to survive.
The DMC – who have already lost current and future revenue from the loss of bookings – are faced with the challenge of self-preservation and to risk relationships with its partners by not paying the fees, jeopardizing the sacrifice of long-standing relationships, and damaging its reputation in the destination. The other option is to pay all the local suppliers anyway, despite not recouping anything from the tour operators, which may result in the DMC going bankrupt. Either way, in the long run the final result will be the same: the local suppliers will not get paid.
Other selfish acts come from local suppliers that do allow postponement and/or cancellation without fees. They attempt to optimize their situation as much as possible. They demand local DMCs to pay them, regardless of whether they manage to recoup these fees from the tour operators or not. In this case, the losses are again on the DMC and partly on the tour operators.
In all cases, if we fully respect the law all stakeholders of the industry will suffer major losses in the coming months. In this perfect storm of unprecedented global travel restrictions – a truly worst-case scenario – the first company that goes bankrupt will certainly make others fall after them. This domino effect can be totally unpredictable, and could irreparably damage the industry beyond recognition.
In fact, there is only one possible solution, which has already been adopted by the Italian government, who have decided to freeze all refunds to travellers. Instead of refunds, travellers will all receive a voucher (valid for one year) to travel at the value of their original purchase at no extra expense. This solution will allow all stakeholders of the industry to manage their cash flow enough to face the expenses incurred and meet the obligations they have to their suppliers and employees.
Only this solution ensures everyone at every level will recoup some income and be able to survive this crisis for a few more months.
Therefore, we are asking you to consider contacting your Tour Operator Associations and your governments locally to try to convince them to freeze the European and North American travel legislation and review the implications, so we can do our collective best to protect the industry worldwide. If we don’t act together now, we all face another unprecedented moment – the possible extinction of an entire industry. If we act together, we can give ourselves a real chance to continue altogether: clients and suppliers should we be partners or competitors!
We need to stop refunding final customers to avoid a very big crash: let us postpone without fees but not refund!
