ABTA plans to force bed bank members to assume liability in the event of an agency failure.
The proposal involves a change to ABTA rules and will come as a blow to some accommodation suppliers. It would mean that bed banks that are ABTA members would have to honour bookings if an ABTA agency fails, even if they have not been paid.
The clampdown enforces existing agency law, said ABTA, and follows recent agency failures, which highlighted confusion over who is liable for clients’ money. It is also likely to spark a reaction from non-ABTA bed banks that may fear a fall-off in bookings from ABTA agents if the proposals are agreed.
On Holiday Group, which is not an ABTA member, has criticised the association for directing consumers to bed banks to recoup money following the failures of Freedom Direct in April and Harvey World Travel in June.
But ABTA chairman John McEwan said it was vital consumers were protected when booking through ABTA members. “This enables us to put a message out to consumers that says: ‘When you buy travel through ABTA members you are protected’,” he said.
He added: “Some bed banks say they act as intermediaries between the agent and hotel and do not have responsibility to consumers. This is inconsistent with what operators do.”
Customers left out of pocket by Freedom Direct’s collapse approached their credit card companies for reimbursement, increasing card companies’ costs and resulting in them taking a tougher line with agents, added McEwan.
He admitted the change could not be forced on non-ABTA members, and that ABTA agents would still be free to book through non-ABTA bed banks. “We cannot influence those outside ABTA, and it doesn’t close the door completely from a customer’s point of view. But agents need to be aware their customers would not be protected.”
McEwan stressed the proposals would not need to be enforced if bed banks decided to change their business models – taking payment earlier – to become more akin to operators.
Members were sent letters about the plans this week, while bed bank members, including Med Hotels, hotels4u.com, hotelconnect.co.uk, and somewhere2stay.com, will be contacted separately.
The change will be put forward at an extraordinary general meeting on October 2, and is one of three proposed to ABTA’s articles of association.
The other two proposals are to change the membership qualifications so applicants would be subject to greater scrutiny if they have been directors of failed companies, and further restrictions on the use of trading names associated with failed companies.