Private equity investors have been told to put their hands in their pockets to pay refunds and warned that making customers wait up to a year to receive their money back is unacceptable.
Speaking on a Travel Weekly Webcast, Oliver Brendon, founder and chief executive of attraction tickets specialist ATD Travel Services, agreed firms should be given more time to refund.
But he said Abta’s recommendation that refund credit notes should contain expiry dates linked to bonding periods up to March next year risked doing enormous damage to the reputation of the association and of the wider industry.
Brendon said he agreed that the 14-day PTR refund rule was “unrealistic” and not designed for the current crisis and that customers should show some patience as firms process claims.
But he added: “A year for refunds is going to do enormous damage to Abta, to the industry and trust within it, almost beyond repair. You just listen to customers.
More: Comment: Firms should make tough choices to put customers first on refunds
“I do wonder how many customers Abta have actually spoken to. I speak to customers every single day, and there are heartbreaking stories involving healthcare staff and groups who’ve lost a family member.
“I’ve had customers who have gone through the trauma of having their previous holiday cancelled because of the Thomas Cook demise, and now have had this holiday disrupted.”
He added: “People want their money back, and to wait a year for it is just not acceptable.
“You can’t say you want to preserve consumer confidence and be lobbying for a year delay in refunds. Those two things are mutually exclusive, they do not work together.
Brendon said he understood that Abta had told firms to refund “without due delay” and not wait until the last moment their guidance allows, but he said it was unrealistic to expect all firms to comply.
“Yes, some companies will abide by their guidance and refund without undue delay. But there is a big group of companies who are simply ignoring the law as it stands,” he said.
“Those companies are not going to look at the law, the legal system, and see the last day for refunds is March 31 and suddenly think ‘actually now we’ll start following the Abta guidance and refund without due delay’.
“It’s just not realistic, it’s not the real world of how many companies are trading. There is a big group of travel companies just choosing to ignore the law.”
He added: “They are ignoring the tough choices, they’re ignoring the mistakes and the greed of the past.
“They’re leveraged with debt. They got greedy on the multiple when they sold to PE [Private Equity], they’ve paid huge dividends with, it turns out, customer money, and those shareholders need to put their hands in their pockets.
“They are big enough to raise equity, to raise debt or capital by equity sales. And to those PE houses, sorry, but welcome to the travel industry. It is risky, it’s volatile, and customer cash is not your cash.
“They need to be repaying those dividends, they need to have gone out to debt markets. They are big enough and ugly enough to do it, they’re just choosing not to.”
Jo Rzymowska, EMEA vice president for Celebrity Cruises, and Paul Carter, chief executive of Ingham’s parent Hotelplan UK, said they had sympathy for Abta’s position in trying to balance the rights of consumers with supporting members to stay in business.
Rzymowska said: “There’s a difficult balance that they’re trying to find. I don’t think there’s any kind of maliciousness. I think they’re trying to balance what’s best for the consumer at the end of the day. The consumer wants a refund, they absolutely have to get a refund.”
Rzymowska said, due to huge logistical challenges, Celebrity parent Royal Caribbean is currently processing refunds for those customers who choose not to accept a credit note, in 30 days.
“A key thing is the frustration that, in the case of a lot of companies, you can’t get hold of people,” she said. “So there is a balancing act. What we’ve got to be careful about is that the consumer could be in a worse position if the organisation isn’t there.
“A year does seem like a long time, but from Abta’s point of view that’s the date up to which the consumer can claim that refund credit note. However, if people do play the system that’s not great.”
Carter said: “Abta has a very difficult job. They are representing consumers, but they’re also representing the industry. A year is a long time.
He added: “I’m looking for some clarity because I work for a European organisation and my boss in Switzerland is asking why is it different in Germany? Why is it different in other countries?
“The challenge has been expectation, that a number of operators have been waiting for that clarity to come from government, so they can stand legally behind this and that’s the piece that everyone’s waiting for.
“Our businesses is owned by a co-operative, so we’re not playing with customer money, we’re trying to do the right thing…but we’re also trying to preserve cash, so we have a business that is sustainable, that can support customers in years to come. Pragmatism has to take precedence.”
