Travel advisors were taken aback last week by an article in USAToday that lumped them together with tour operators and online travel agencies (OTAs) as it accused the industry of being “a Ponzi scheme” that defrauded consumers.
“Travel Deposits Become Shell Game in Pandemic,” the headline declared.
“The coronavirus has exposed a secret underbelly of the travel business,” wrote authors Nick Penzenstadler and Josh Salman. “Many travel agencies operate Ponzi-type schemes in which one traveler’s deposit pays for a previous traveler’s tickets and accommodations, and so on. Everything ran smoothly as long as bookings continued to roll in.”
The full-page article describes the plight of a couple forced to cough up thousands of dollars at checkout at the Grand Palladium in Punta Cana after Book-It went out of business.
It cites three educational tour companies, NAWAS, WorldStrides and EF Tours, along with BookIt and Expedia.com, noting 24,000 consumer complaints for “travel-related scams” reported to the Federal Trade Commission—“far more than any other category of corona virus-related fraud complaints.”
“While customer deposits are supposed to be passed on to vendors, travel experts say companies have lengthened the time between receiving and releasing the funds,” it said.
So What Does That Have to Do with Travel Advisors?
Professional travel advisors were appalled by the article, which lumped them in with OTAs and tour operators in one big inaccurate and negative picture.
“This is just so wrong and misinformed… infuriating!” said MaryAnn Fusco at MSW Travel in Miller Place, NY.
“Ugh! This headline and some of the statements in this article are so irresponsible!” said Corina Johnson at All Points Travel. USAToday “did a mis-service by claiming that large tour operators and OTAs are travel agents. Had these people actually had a travel advisor in the mix, their outcome would have most likely been different. To claim this equivalency is like saying shopping at Walmart.com is the same as consulting with a personal stylist.”
“I’ve been ticked since receiving a copy of the article from a client this morning,” said Jeni Chaffer of Journeys Travel Inc. in Bourbonnais, IL. “All agents are not created equal and all agencies are not the same. The public needs to know that ‘agencies’ such as Expedia.com, BookIt, and Cheap Caribbean are nothing more than call centers, and so are Travel Clubs like Costco, Inteletravel, Sams and Staples. All ‘agents’ are not created equally either; many are hobbyists who do not have any training in travel or business. Professionals are a different segment entirely. Most of us are small, independent business owners, do this as a career, spend every free hour and dollar on training for all aspects of our business AND take great pride and concern with our clients’ vacations and business trips. We have worked tirelessly through COVID, spending 40-60, or more, hours a week fighting for our clients to be refunded money, making sure clients made it home before borders closed and moving special events like destination weddings and honeymoons—all while not earning any income.”
“Oh my, this makes me so p$ssed off!” said Avril Winkle, owner of Destinations Travel Service. “My health has suffered over the past seven months because of the hours and time I have spent tirelessly helping my customers, and the stress and lack of sleep from getting up extra early to try and escape the long hold times. I personally take great offense to the article.”
“Sadly, there is so much that is factually untrue in this article it is difficult to unpack it all,” said Signature Travel Network president & CEO Alex Sharpe. For starters, despite the magnitude of the COVID crisis, “travel advisors have long-term relationships with suppliers and hence clout to advocate for their clients, as opposed to those who book directly or through an online portal. Consumers who booked with a travel advisor were in an exponentially stronger position when negotiating for refunds.”
But Marisel Aleman, VP of Cruise Elite Inc., went a step beyond—she sent her complaint directly to the authors of the article. “Our customers’ deposits are processed directly with the tour operator or cruise line. Money is never left in house,” she wrote. “If clients had paid us directly, as soon as funds were received, those funds went right out to our clients.”
“Thanks for the note, Marisel,” responded Josh Salman, one of the two authors. “We don’t doubt there are thousands of conventional travel agents and advisors that have done right by their customers. We do, however, see in the records from consumer complaints that hundreds have experienced problems—and have taken their complaints to attorneys general and the FTC. Appreciate the feedback.”
Just the Facts, Ma’am
Even beyond the difference between travel professionals and OTAs, many noted, the article contains many factual errors.
“How dare they categorize Travel Professionals as Ponzi schemers?” said Stepping Out Travel Services owner Donna Carlin. “We are required to deposit and pay for our clients’ vacations before documents are issued. If some businesses don’t follow legal or ethical procedures then they don’t deserve to be in our business.”
“My company’s business model is to charge clients’ money directly to the cruise line or tour company; the paper trail is clear,” says Fay Dehaas at Kreativeworldtravel, LLC dBA Cruiseplanners.
“My Florida Seller of Travel license says I cannot collect payment directly from clients, I have to pay vendors directly with client credit cards so this type thing doesn’t happen,” said Rae Travels owner Rae Augenstein. “And travel agents are not out here making up to 30% on hotels and car rentals. Marriott says we’ll take 8% and like it; Hertz pays what, 3%?”
“I find it ludicrous that Expedia.com was sued by travelers for not more aggressively pursuing refunds. They do not set the refund policy,” agreed Canadian travel advisor Paul Barton. “More importantly, the article shows a complete lack of understanding about the differences among travel agencies, travel providers, and OTAs. The author clearly has no idea and fails to mention the millions of satisfied consumers or the work done by agencies rescuing stuck clients when the world shut down travel.”
In fact, should an agency keep a portion of your deposit, notes Arleta Cosby at Cosby Travel Consultants in Alexandria, VA, please consider their side of the issue. Travel advisors “have spent days, months or years working with you on those travel plans. Through no fault of theirs, or yours, a pandemic occurred. Many travel agencies have already paid suppliers. Doesn’t the time and effort the travel agent spent have value? No business can stay afloat without earning something for their efforts. Please let us be fair about this situation. It is unreasonable for anyone to expect someone else to work for free.”
Finding a Professional Agent
Before handing over thousands of dollars to any agency, consumers should do a little research to find a true professional, many said. TravelSense.org, sponsored by The American Society of Travel Advisors, lists reputable member agencies; look for one that has earned Verified Travel Advisor (VTA) status, certification from IATAN or CLIA, or CTA and CTC certification.
Then, “Ask questions! Ask who will be processing your information. Ask who the payments go to and who the booking is being booked through,” says Heather Di Pietro at TravelSalesGroup in Mooresville NC. And no matter whom you book with, “purchase ‘cancel for any reason’ travel insurance whenever possible.”
To be sure your deposit goes directly to the supplier, “ask how the payments are handled; what should you see as the name on the credit card receipt? Some vendors provide the agent with a link to share with their clients to make the payments themselves, avoiding any discrepancies. A good agency is transparent in its business practices,” says Susan Wolf at All About Travel in Alexander, IA.
Finally, adds Teri Hurley at Endless Love Travel, “ask the pointed question: Are they sitting on money or are they passing it through upon full payment, or even later? When are reservations transferred to the supplier, destination, resort, etc.? Are those suppliers US registered companies so that we have the protection of US laws?” A professional travel advisor looks for suppliers “that welcome the agent supplier relationship, that support agents and our mutual clients. We look at their principles and practices, their longevity in the business, how they operate when there are problems.”
The best way for consumers to protect themselves, says Internova Travel Group’s J.D. O’Hara, is to use a reputable travel advisor who can provide references from clients. “All of our companies have web sites where consumers can search for an advisor by specialty or location and read about their background and experience, as well as consumer reviews. One such site is https://internova.com/advisors. Consumers also need to work with their professional travel advisor tounderstand the terms and conditions of their purchase and buy the most comprehensive travel insurance they can afford.“
That’s why,”notwithstanding the disinformation in this article, travel advisors will be in even greater demand post-pandemic as customers look for expert help in navigating this new world and for someone to have their back when things go wrong!” says Alex Sharpe.
Cheryl’s 40-year career in journalism is bookended by roles in the travel industry, including Executive Editor of Business Travel News in the 1990s, and recently, Editor in Chief of Travel Market Report and admin of Cheryl Rosen’s Group for Travel Professionals, a news and support group on Facebook.
As an independent contractor since retiring from the 9-to-5 to travel more, she has written regular articles about the life and business of travel agents for Luxury Travel Advisor, Travel Agent and Insider Travel Report. She also writes and edits for professional publications in the financial services, business and technology sectors.