Oliver Brendon, chief executive of Attraction Tickets, has made a series of criticisms of Abta. Here, he presents his argument and Abta chief executive Mark Tanzer and Abta chairman Alistair Rowland respond:
‘Did the Abta board think it not appropriate to cut running costs?’
Oliver Brendon, chief executive and founder, Attraction Tickets, writes:
In November 2022, I wrote an article for Travel Weekly explaining why my company had left Abta.
Abta had failed to cut any costs during Covid. It had retained its inflated salaries and passed the cost burden on to its members by changing the way it calculated subscriptions.
Membership subscriptions had always been based on turnover from the previous year. In 2021 and 2022, Abta based the membership fees on pre-Covid 2019 turnover levels despite still publishing the formula for calculating membership fees based on the previous year’s turnover.
During Covid, these rule changes cost my company over £100,000 at precisely the time we could least afford it. Other members who have contacted me since my article were hit even harder and are equally appalled at Abta’s stance on membership fees during Covid.
But since the alternative bond and financial failure insurance market for travel companies had completely dried up during Covid, there was no option other than reluctantly to renew our memberships.
I felt strongly at the time that Abta’s behaviour was immoral. Travel companies are not allowed to sell a holiday or travel product at a published price and then go back to the customer and say the price has increased by 500% and they cannot cancel. Any Abta member that did behave like that would be in breach of Abta’s strict code of conduct.
Abta can charge members whatever it likes and can disregard the published membership calculations so long as the board agrees to this
Yet this is exactly what Abta did to members during Covid. Members were anticipating they would have to pay 2021 membership fees based on 2020 turnover and 2022 membership fees on 2021 turnover, which would have reduced the cost burden by 80% or more. Abta changed the rules to fit its cost base.
Was this behaviour legal? When our lawyers and advisors initially looked at our accounts and the correspondence and documentation between us and Abta, they did think there was a potential claim for ‘unjust enrichment’. However, on further digging into Abta’s Articles of Association, they discovered that “every Member of Abta shall pay such fees as are set by the Board of Directors from time to time”.
In other words, Abta can charge members whatever it likes and can disregard the published membership calculations so long as the board agrees to this – a remarkably convenient position which is obviously not an option for Abta members who work and trade in the real world.
Consequently, the key issue with regard to the membership was whether the Abta board sanctioned moving away from the usual methodology for subscriptions.
In an email to me on May 10 2021 after I had complained about the subscription policy, Abta chief executive Mark Tanzer wrote: “The view of the board was that the most equitable way to split the costs of running Abta was to use the same split as applied in 2019-20.”
Did the Abta board think it was not appropriate to cut the organisation’s running costs? Did the board feel that the well paid Abta secretariat should not suffer some of the same pain members were feeling as they restricted salaries, stopped pension contributions and reduced overheads?
The Abta secretariat plainly attach more importance to self-preservation than to the interests of members
Given the board is comprised of travel industry professionals, I find it difficult to believe these suggestions weren’t made at that board meeting. At any rate the board apparently decided it was fair to pass the entire Abta cost burden on to members without Abta making economies itself, let alone offering any explanation or apology – and this at precisely the time when members were under the most extraordinary financial, operational and mental strain.
The Abta secretariat plainly attach more importance to self-preservation than to the interests of members. The Articles of Association are written to suit themselves. Their behaviour during Covid showed they will do whatever they want. And they ignore criticism: Abta did not respond to my first article.
I guess that the Abta board did consider fairer and better policies with regard to subscription fees during Covid but, for one reason or another, chose to back the chief executive and secretariat. Anyone could see the right course of action would have been to cut Abta’s costs, ensure the secretariat shared the pain of members and limit that pain by reducing subscriptions as much as possible.
In January, Abta published its latest accounts. During the previous financial year, Abta sold its investment property [the association’s former head office] for £19.65 million. The commentary in the accounts states the money will be used to fund “Abta’s ongoing operations”. Given Abta also made a profit of £1.1 million during the year and has a positive balance sheet of £27.3 million, £19 million of incremental cash to fund ongoing operations seems an excessive amount.
Interestingly, the website of the estate agent that managed the sale states that the proceeds will be used to “support members as the travel industry continues to suffer from the fall-out of Covid”. These are conflicting pieces of information, and it is difficult not to conclude that Abta sanctioned the property sale with the intention of helping members after charging inflated membership fees during Covid but then decided to keep the money once travel demand started to return and members were less financially stressed.
A membership organisation run for the benefit of its members would and should distribute excess funds to members, especially if that organisation had to rely on them during a crisis to keep paying salaries to its secretariat. Abta is the most-recognised membership organisation in the travel trade and has a very important role in representing this diverse and wonderful industry. It needs to behave with integrity, honesty and transparency, and to look after the interests of its members.
Recently, Abta commenced legal proceedings against my company to extract the second half of our 2022-23 subscription fees – a total of £28,000 – despite our having (thankfully) left the organisation last year. Since Abta’s Articles of Association allow it to charge whatever it likes to members, we had no choice but to pay.
Now Abta should use its £19 million windfall to partly repay overcharged members and utter the hardest word: ‘Sorry’.
Oliver Brendon, Attraction Tickets
‘Comments show a fundamental misunderstanding of how Abta works’
Mark Tanzer, chief executive of Abta – The Travel Association, writes:
When Travel Weekly put Olly Brendon’s comments to me, I wasn’t surprised – they follow a well-worn theme from Attraction Tickets and are nothing new. But I was disappointed to see them raised again as they show a fundamental misunderstanding of how Abta works, how we support members and the benefits we bring.
Let’s start with our Board. It is, with the exception of one non-travel director, composed of our members. The budget is reviewed, challenged, and finally approved by the Board. The directors make often complex judgement calls knowing full well that, if subscription costs rise, they will themselves have to pay more too.
They reach their decisions after considering what is right for Abta’s membership as a whole and walking the tightrope between agreeing what a fair subscription will be in return for the services members expect and sign up for.
To suggest that we haven’t shared any financial pain is nonsense
It was our Board which, on the leadership team’s recommendation, implemented a 50% reduction in member fees for the 2020-21 financial year. That cost Abta over £3 million, taken from our reserves – strong action to support members in unprecedented times. To suggest that we haven’t shared any financial pain is nonsense.
It was then also the same Board which agreed that payments should be staggered for members in 2021-22 and the following year, to support members’ cashflow.
All this was at a time when Abta’s expert staff worked harder than ever on behalf of members, themselves under intense pressure, not least in handling 50,000 customer claims.
The next decision on subscriptions will come soon and once more it will be a board of members making that decision on behalf of other members. The decision will have been made in the same way – by members for members, reflecting the cost of providing our services.
The article references we took legal action to ensure monies owed by Attraction Tickets would be paid. Our position is simple: if any member decides they will try to avoid paying subscription fees which they contractually owe – which is rare – we take action. Other members, who abide by the rules, would expect us to do so on their behalf. You can’t sign up to a contract and duck out half-way through when you change your mind.
I mentioned our services, and these are regularly reviewed among members. The last such project showed that there were no services Abta provides which the majority – or even a sizeable minority – of members wanted us to stop providing.
We are a very lean organisation
This environment makes it difficult to reduce costs even further from the level we already have. Providing good services costs money, not least in a world of double-digit inflation. We are a very lean organisation with some of our teams comprising no more than one or two people. If we cut that back, we soon won’t have an association capable of serving members well.
And to address our former property in Newman Street, this was a conscious decision to bring additional funds to provide a long-term source of investment income – not to slash fees as a one-off but to help ensure Abta is robust for the long-term, for the good of the travel sector. It has not provided us with additional income and we were not able to use it to reduce subscription costs.
It was right to sell the property at a time when we could expect a good return, allowing us to step away from being a landlord, freeing up more time to deliver member services.
Do others agree with Attraction Tickets? Some may. However, our member retention rates are extremely high, and we have new members coming in – including some who left during Covid and have come back.
Members know the benefits of aligning themselves with the Abta brand, with our independently conducted research regularly showing that people are much more likely to book a holiday with an Abta member than a company which is not.
None of this is intended to sound arrogant. But it is intended to be a robust defence against incorrect allegations from an organisation which some may view as having an axe to grind.
Attraction Tickets chose some months ago not to continue with its Abta membership. That is its right, of course, and we will always welcome constructive criticism. However, these latest comments go way beyond ‘constructive’. It’s time to accept that we should agree to disagree, leaving Abta to do what it has always done – strongly and solidly representing and supporting our members.
Mark Tanzer, Abta chief executive
‘There are no wallflowers on the Abta board’
Abta chairman Alistair Rowland writes:
The Abta board is anything but a rubber stamp. The level of the board – with representatives of Jet2, Tui, easyJet, Royal Caribbean Cruises (RCL), all at managing director or chief executive level – is such that even if Abta chief executive Mark Tanzer wanted to push a point across, he could not. In fairness, he does not and is supportive of board feedback.
There are no wallflowers on the Abta board. When the decision on members’ subscriptions was taken, most of the biggest members were around the table. It was a significant debate. The decision Abta made was to halve subscriptions for 2020-21.
The decision to base subscriptions on 2019 turnover was going to cost the board members’ businesses more, so it had to be the right decision. At the time, everyone was doing what they needed to for their businesses – most were mothballing operations. But Abta was at a peak of activity because of the pandemic. Most businesses going through Covid looked to 2019 as a base point. It made most sense to make 2019 the base point for subscriptions.
Abta tries to do everything in an equitable way. Whatever we did had to be fair. We reduced subscriptions by 50% for 2020-21, held rates at pre-pandemic levels the next year and, for 2022-23, continued to freeze the minimum subscription level for everyone. That meant the smallest category of member – the smallest agencies – benefited by more than the average.
The decision we made was to protect the infrastructure so that Abta could continue to provide services through and beyond the pandemic
The difficulty with any kind of move to take out fixed costs or pay everyone less salary for a period is the breadth of services Abta offers – everything from legal advice and bonding to government affairs, sustainability, customer mediation and claims, as well as the pure mechanics of running a membership association of about 1,000 companies. Abta is a flat organisation and taking resource out means a reduction in the services that members tell us they badly need.
These things were debated at length. The decision we made was to protect the infrastructure so that Abta could continue to provide services through and beyond the pandemic. We had to protect the breadth of functions, recognising how thinly staff are spread.
The value of Abta is the reason why agents and operators choose to renew their subscriptions
The target is to break even and return Abta’s income to members via its services. The association’s headcount was 5% lighter by the end of the year, but this was the right level to protect the work Abta does. The 50% reduction in subscriptions was the significant thing.
I don’t accept the suggestion that the Abta secretariat “attaches more importance to self-preservation than to the interests of the members”. The value of Abta is the reason why agents and operators choose to renew their subscriptions. Nobody has to be a member of Abta, but it is rare anyone leaves. If everyone was forced to use Abta it would be different. You don’t have to use Abta to cover pipeline monies, but most people do.
The fact that most in the travel trade operate within Abta is because they get value from the brand and what it offers.
On the sale of Abta’s former head office in Newman Street, the issue was the tenant was looking to exit and there was a need for capital to refurbish the building. Abta would have needed to borrow to do that, with no guarantee of a return on the investment when no one knew how long the pandemic would continue. That would have been wrong.
The decision was made to crystallise the value of the asset and invest it. To use it to pay back members’ subscriptions would have made no sense. The investment income offsets the real cost of membership.
Alistair Rowland, Abta chairman