With the summer season getting underway, travel firms are braced for what is likely to be the busiest time of year.
However, ongoing global instability is causing more uncertainty around the journeys that people may have once taken for granted.
It may be that the Package Travel Regulations (PTRs) have more of an effect on your firm this year, so it is worth understanding how they work from a financial perspective.
What are the Package Travel Regulations?
Designed to ensure protection for both pre-arranged and custom-built travel packages, the PTRs define liability for a trip’s performance and aim to provide financial security for a customer in the event that something goes wrong.
If a holiday lasts more than 24 hours or includes an overnight stay, then it will be covered by the PTRs, provided it also features at least two of the following:
- Vehicle hire
- Transport, excluding local airport transfers
- Accommodation
- Tourist services
What are the financial implications of the Package Travel Regulations?
As your travel firm is legally required to guarantee customer funds and ensure repatriation in the event of bankruptcy, many of the PTRs have a core financial element.
You will need to have a valid Air Travel Organisers’ Licence (ATOL) to offer additional security when establishing holiday packages and advise customers on their rights when booking.
It may be effective to create a trust account or use dedicated insurance policies to establish financial security rather than relying solely on the income generated from customers.
Even if your firm remains solvent, you will still be beholden to many aspects of the PTRs.
Should there be some unforeseen or extraordinary reason why the package has to be cancelled, then you will need to process a refund within 14 days.
This can often complicate financial matters for travel firms, as you may face delays in getting recompensed from external providers, but cannot delay in providing funds to your customers.
As such, seeking professional financial support is vital for staying compliant with the PTRs.
Our expert team can support you in ensuring that you can sufficiently provide refunds by helping you to manage how funds are stored within your accounts so that there is an emergency refund fund available to you when you need it.
You will also need to be ready to handle the sudden failure or insolvency of the providers of any services you have offered as part of the package.
In that case, you are the one responsible for covering the cost of a substitute service, so knowing how to budget for this is vital.
It may be wise to conduct more rigorous due diligence checks on suppliers to mitigate this risk, but even then preparations must be made for unforeseen circumstances.
Changes in quality of service must also be passed along to the customer unless that change is due to something the customer did or was caused by an unforeseeable third party.
There is a lot to keep in mind from a financial perspective, so having an expert to support you in this process may be the most effective way of ensuring you are legally compliant without hurting your budget.
Understand the full financial effect of the Package Travel Regulations by speaking to our team today.
