Former Hotelplan boss Hugh Walton sets out his alternative option
I believe that the trade’s approach, led by Abta, to refunds on holidays cancelled because of the Covid-19 outbreak will turn out to be a unmitigated PR disaster and destroy all the good work that has been done over the years to build up confidence in the industry and the Atol scheme.
I am retired after 50 years in tour operating. Now, I’m just a client trying to get a refund on a cancelled holiday of a lifetime. So I can see the situation from both points of view.
I fully understand the Ponzi scheme-style of most tour operators’ finances, whereby future bookings pay for next weekend’s departures. Once those future bookings dry up, the whole system comes to a grinding halt. Most operators now simply don’t have the money to refund customers and are pinning their hopes on clients accepting Refund Credit Notes (RCN’s).
I do find it somewhat strange that Abta, which in the past has been accused by the industry of being a consumer champion, is now backing a proposal which would allow operators to legitimately withhold clients’ hard-earned money for months on end. If the operator needs that money to pay wages and other costs now, are we not in effect merely putting off the evil day when the tour operator fails anyway?
The theory, of course, is that once the pandemic is over the public will be rushing to book a holiday abroad. I’m not so sure. People have long memories and I’m sure that Mr and Mrs Average will want to know they will be safe on holiday and, to me, that won’t happen until we have proper testing, until a vaccine is available and they are confident that there isn’t going to be a second or third wave of the coronavirus. Airlines may restart flights, but that doesn’t mean people will want to travel on them.
Allowing operators to hold on to their money for up to a year simply isn’t fair to the consumer. There are people out there who will now be depending on getting that refund to pay bills and put food on the table. Many currently being denied refunds will have families affected by redundancy and in need of financial assistance. Forecasts this week predict a huge downturn in the economy, with unemployment rising to more than two million. And, like many ‘silver travellers’, my pension fund has plunged by far more than the refund due in just the last few weeks. I am not at all sure we will be able to travel until the pension fund recovers, which isn’t going to be any time soon.
I’d like to suggest an amendment to Abta’s proposals.
Assuming customers don’t want to re-book, tour operators should refund 75% of the booking value within 28 days. They would be allowed to issue a RCN for the 25% balance, which would be financially protected but redeemable for cash if not used, at a future defined date – but within six months.
This would allow operators to retain a large chunk of clients’ money and, at the same time, return to clients a significant proportion of their money. Most people understand these are difficult times for companies, but holding on to 100% of their money just isn’t acceptable.
Some of the industry’s great and good are calling for government bailouts. Looking at it from a detached and unemotional point of view, why should we expect chancellor Rishi Sunak to favour the travel industry over, say, the retail fashion industry?
The furlough scheme alone is going to cost £50 billion. It may be that some weaker companies fall by the wayside, which is very sad but probably inevitable anyway.
Finally, the travel insurance companies seem to be predictably getting away scot-free.
My policy has full cancellation cover, with no pandemic exclusions, but I’ve been directed straight back to my tour operator whose website in turn directs me back to the insurer.
Thousands of people in similar positions will be going through the same thing, so we need to come to a solution that understands the needs of the customers, not just the industry.
Hugh Walton retired from his role of executive director of Inghams parent Hotelplan in 2015 and remains a non-executive director.
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