ABTA bedbank ruling – Do we stay or do we go?

Saturday, 05 Oct, 2009 0

TravelMole Guest Comment by Youtravel.com sales and marketing director Paul Riches

So the votes have been cast (all 200 of them!) and the ABTA member bedbanks now find themselves fully responsible for ensuring that all bookings made through their ABTA agent partners are honoured, should the agent fail whilst holding the customers money.

There are many reasons why this new ruling has been passed, most noticeably the substantial number of claims made against the credit card companies, due to the collapse of Freedom Direct.

Whilst we as a supplier support the notion that any product purchased through a ABTA agent, should be fully protected, how is a supplier expected to supply a product that they have not been paid for? Try explaining that one to a Spanish or Greek hotelier!

The current trading relationships between bedbanks and agents mean that in the majority of cases the customers monies are held by the agent until the product is delivered. The amount of pipeline monies is therefore considerably higher than when agents deal with a bonded tour operator.

So should bedbanks require a bond? Should a requirement of the commercial relationship between the agent and the bedbank be that the monies that are paid to the agent are secure until they are paid to the bedbank?

In our view, this would have been a better starting point to consider and discuss, rather than rushing through the unworkable solution we now have.

So, what will be the outcome? At present of the five major resort accommodation only suppliers, three are ABTA members. Two of us act as prinicipals and the rest agents.

It would take up the rest of this website to try and explain who is responsible for customers’ accommodation, once booked and paid for, with ABTA, ATOL, TTA and many other bodies taking an amount of responsibility, depending on how the customer booked their holiday and through whom.

I do not profess to have an immediate solution but what I do know is that the majority of bedbanks terms and conditions state that the hotelier will not be liable to supply the accommodation, if he has not been paid.

I appreciate that the threat of agency law could come into play in the future but who will enforce this? Certainly not ABTA (as most of the bedbanks will probably have resigned by the time you are all reading this) or the CAA.

I would imagine that it may fall back onto the credit card companies, who have no doubt put pressure on ABTA to push through the new resolution but now potentially find themselves in a worse situation.

There will not then be the £100k buffer that is currently given as part of ABTA membership, so it will all fall back onto the credit card companies (unless the accommodation is sold as part of a package, when theoretically the CAA will pick up the bill).

The way we now buy and sell holidays has changed dramatically over the last few years and we need to work together to ensure that customers monies are protected as much as possible – I’m just not convinced that this latest ruling starts to address this issue at all.

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Phil Davies

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