I have been in the industry since 1990. Many mark that time period in airline years: deregulation, commission cuts, commission elimination, airline bankruptcies and mergers.
I see dead companies: Club America, Far and Wide, Happy Vacations. Those were the days.
Travel agencies are not liable for the acts, errors or failures of tour operators; unless, of course, they make themselves so. It’s a fact of life: tour operators go out of business. Here is how to protect yourself when they do.
Firstly, make sure your client understands that you are not the party providing the travel services. This would seem self-evident, but the best practice is to have the client sign a disclaimer that clearly states that the travel counselor is acting as an agent in the transaction and is not a principle. As a general rule of law, agents are not responsible for a supplier’s failure to perform, provided the agent has revealed the identity of the principal. However, failures to properly disclose can find the travel agent liable. Likewise, at least one case has held an agency liable when the industry trade press was reporting on the probable failure of a particular tour operator and the travel agent recommended the failing supplier to a client.
Your agency’s itineraries and other collateral should indicate that you act as an agent, not a principal in the travel planning process. Reasonably, such a disclaimer should place clients on notice that the failure of a tour operator to perform is not your agency’s responsibility.
With all of this said, the best medicine is the one you never have to take. Pay attention to the postings on travel agent bulletin boards and communities. Months before either Joystar or Happy Vacations went under, agents were complaining about slow commission payments. Companies that value their reputations do not allow this type of rumor to spread unless they are powerless to prevent it, meaning they are a short time from failure.
By the way – the often repeated advice to only recommend USTOA vendors is wrong. USTOA is a great organization with exceptional suppliers. However, no good travel agent’s portfolio is complete without suppliers that would never meet the requirements of USTOA. Hence the importance of recommending, indeed insisting, that your clients purchase travel insurance covering tour operator default. Finally, payment by credit card gives the client a “fall back” position should the supplier default and fail to deliver the services promised.
A bit of planning goes a long way. Ask your agency attorney to review your boilerplate disclaimers. A few simple template sentences can save your agency a mound of pain.