Anybody who doubts the value of the UK Package Travel Regulations should look at the chaos that comes without this protection, says John de Vial, head of financial protection at Abta
Thousands of tourists were left stranded by the failure of two tour operators in July – not UK operators but Russian. However, the impact is still felt by all.
One of the economic realities travel providers have to deal with is competition for beds and other services. This comes not just from other UK companies but from other nationalities.
Countries around the Mediterranean are especially attractive destinations, drawing millions of northern Europeans. In recent years we have seen an addition to this annual exodus, with hundreds of thousands of Russian holidaymakers heading to the eastern Mediterranean. This has given a welcome boost to business in destinations, but has also added extra competition.
Holidaymakers stranded
Rapid expansion can give an economic boost to destinations, but it can also bring serious challenges. The failure of two of Russia’s oldest and best-established tour operators – Labirint and Neva – demonstrated this perfectly. Labirint, alone, left 30,000 Russian holidaymakers stranded in Greece with unpaid hotel bills and charter tickets.
This placed local suppliers in a dilemma, with pressure on them not to evict holidaymakers for whom they had not been paid and for whom the plans for repatriation back to Russia are still not complete. The problems will have been compounded if the stranded visitors were still in Greece when the next wave of holidaymakers arrived.
Reports coming out of Russia blame these failures on a significant downturn in business caused by the unstable political climate, the crisis in Ukraine and the imposition of sanctions by the EU.
The rouble has fallen against the euro by almost 20% and the lack of a resolution suggests there may be other failures in the pipeline which would further dent confidence.
Protection’s value
A worrying aspect of the failures is that there does not seem to be a legal requirement to protect package holidays in Russia. Discussions centre around making clear the lack of protection. The best brands, including some within our member groups, offer insurance solutions to individual consumers.
Anybody who doubts the value of the UK Package Travel Regulations (and European Package Travel Directive) might well look at this example and the chaos that ensues without the protection these regulations afford. Ensuring businesses are regulated and financially protected is of obvious importance to safeguarding and sustaining consumer confidence; it is also critical for destinations themselves.
So, while regulation brings cost and must balance growth with regulatory requirements for financial fitness, good regulation may also deliver balance and stability, which builds confidence and is an essential part of any sustainable and profitable market.
It seems emerging markets are destined to repeat our mistakes and then perhaps to reinvent our solutions – while our consumers now take for granted the protection they enjoy.