There is no question that the longer the COVID-19 pandemic continues, the worse the outlook becomes. The future scenarios change daily, the narrative is fluid. This means that open communication between every player is more important than ever.
The new/proposed/adopted EU ruling (not yet ratified by the EU)
Some governments in Europe have made legal rulings around transactions. No government has made any law change on penalties.
What this means is that the overseas tour operator (wholesaler) does not have to refund the consumer (yet). They can offer the consumer a credit or voucher (which remains the money of the consumer). This can be redeemed at a later stage against any holiday. If they do not take it up within the stated time period (differing by country it seems), it will be fully refundable at the end date.
Governments in mature travel markets have made/will make law changes to support their outbound tour operators. The sole purpose of the amendment is to keep the industry fluid and alive. The consumer is still protected and if he wants the full refund, he just has to wait longer to get it.
There are pros and cons for the Southern African travel industry:
Pro – our customers (overseas wholesalers) are more likely to stay in business.
Con – our battle to support postponement over refund is now MUCH harder as the customer may choose the refundable credit over postponement with conditions.
The world seems to now be supporting future credits for the consumer rather than encouraging postponement. We are seeing increasing volumes of requests to cancel rather than to change dates.
Even if the overseas tour operator can now offer a voucher to the client, there is no certainty that South Africa will be the chosen destination.
We are percentage profit-driven businesses. Every refund means that we make no profit. First and foremost, we are 100% promoting postponement of bookings. We have had some success with this (70 to 80% of bookings). However, this is becoming and will become tougher, as mentioned.
Looking forward, we will receive overseas payments even later than before. The client will be hesitant to pay deposits (thus commitment) or final balances until much nearer to travel date.
Even when the overseas tour operator receives the balance, they will try to conserve any payment balances in case of supervening impossibility; especially with regard to costly international payments.
Any DMC now knows that he (or she) will have no guarantee of final payment from his overseas tour operator unless the holiday proceeds. European governments have not amended their laws to protect South African businesses. Only their own businesses.
The pre COVID-19 terms and conditions do not serve us as an industry, and certainly won’t in our new future.
DMCs may have to convert all confirmed bookings to provisional, at least for the next few months of uncertainty or the suppliers must issue new and/or temporary COVID-19 terms and conditions that allow us to keep confirmed bookings in place at no penalty until much closer to the time of travel.
We would prefer the latter, as would suppliers. We call upon suppliers to develop T&Cs that allow us to work through this period with the minimum of disruption and needless admin.
No one knows if any client will be able to travel in the next few months. The client will not pay his final payment. The overseas agent will not pay the DMC. Thus, the DMC cannot have a prevailing contract/terms and conditions whereby they are liable for 100% at 45 days out! (to cite but one example).