Throughout World Travel Market the talk of the town has been tour operators’ liability after the regrettable “Corfu Tragedy”. Some of the main travel consortia and large agencies have indicated that from January they will require UK bed banks to supply overseas holiday accommodation as a principal and not an agent or broker for an overseas supplier. The rationale behind this is mitigating potential liability in the event of death or injury.
The retail agent does not want to be faced with having to pursue a potential claim against an overseas accommodation provider, despite the assistance of the UK sales agent/representative. If that UK accommodation supplier is not a principal, they will look elsewhere for their supply.
At first glance it does appear that the consortia/agency have the needs of their members and the consumer uppermost in their minds. However, is this really the case? The reason bed banks act as an agent for the overseas supplier is to mitigate TOMS VAT. Therefore if they have to revert to being a principal then there is little doubt that EC destinations will be more expensive to the agent and consumer by about 15% due to the uplift in VAT payable by the bed bank. Additionally, has the consumer really been taken into account in this matter? After all, the hotelier carries responsibility with regards to the care of their customer while staying at the hotel and should have appropriate insurances. Does therefore adding further responsibility to a principal UK accommodation supplier provide more protection? One supposes it would be easier to sue a UK company in the event of a claim rather than an overseas supplier. But the real issue surely rests with the agent and/or its consortia. Dynamic packaging is now the by-word amongst most agents, who now, after ABTA’s recent Appeal victory, can lawfully sell a dynamic package by “splitting” the holiday into components, selling the flight, accommodation and other facilities (such as transfers) separately as a retail agent albeit for a total but not inclusive price. Who covers the consumer between the facilitation of each component? Who covers the consumer if he/she is badly injured between the airport and the transfer or between the transfer and the hotel entrance? You cannot have your cake and eat it too!
Todd Carpenter, the CEO of the TTA has been a lone voice in his repeated warnings that ABTA’s recent Appeal victory and surfeit of dynamic packaging by agents will end in tears when a liability claim is heard in a UK Court. The bed bank being a principal will not solve this problem.
In summary, by pushing the bed banks to become principals rather than agents will increase the price of an EC holiday bed and will give little more protection than is already in place. Rather agents should be looking to their consortia to give them clear and concise advice on potentially where consumer liability sits. My advice is to talk very carefully to your insurance broker and ensure that your Tour Operators & Travel Agents Liability cover is carefully reviewed to insure against every eventuality. Making the bed bank a principal does not solve this problem for an agent selling dynamic packaging components but it does push up the price!