Tour operators could begin to insist that travel agents’ customers pay them directly after cashflow problems emerged after a run of successive crises.
Legal advisor Alan Bowen said the Association of Atol Companies set up a working group after the collapse of Thomas Cook last year to look at the relationship between tour operators and travel agents.
He said it found that about 70 tour operators selling through Thomas Cook lost “either hundreds of thousands, or millions of pounds”.
Bowen added: “We were facing the reality that this year they’re having to provide holidays for which they won’t get paid, but at least they were going to save the commission that they wouldn’t have to pay – then things got doubly worse when they had to cancel and give the full value of the holiday back in cash that they’d never received in the first place.
“We were beginning, in November last year, to look at the possibility of saying to some agents ‘we require you to get the customer to pay us directly and we will pay you back the commission’ – because what we found with Thomas Cook was that they were collecting payments up to a year in advance s the losses were 10-15 times greater than people were expecting.
“The option of paying direct to principal is one way – it’s what they use in the US. It’s certainly used by a lot of cruise lines after they lost a lot of money here in the UK after the collapse of a large cruise agency. The alternative is to look at getting more protection against the failure of the agent.”
Bowen said extra protection could include credit insurance “which is not cheap now” or “looking at Abta”.
“Tour operators, particularly now, can’t afford to lose any more money,” he said. “The reality is that they may well do if more smaller chains of travel agents fail. We’ve got to look, not very far in the future, to the end of furlough at the end of October, when a lot of agents are going to have to look and say ‘can I afford to keep the business going’.”
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