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August 2001 Vol. 27, No. 8   RSS Feed for Undercurrent Issues
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When A Travel Agent Sticks To “Its Rules”

“standard” business practice is lousy business practice

from the August, 2001 issue of Undercurrent   Subscribe Now

You’re one week away from a dream dive trip when you learn your flight’s been canceled due to a political uprising at the other end. Then you find out you can’t even get all your money back. Sounds like a nightmare ... but nightmares, like dreams, can come true. Just ask Undercurrent reader Tony Moats of Boulder, Colorado .

Last spring Moats booked a diving/kayaking trip to the Solomon Islands through Great Expeditions, a Longmont Colorado dive agency. Moats’ dive buddy, Alexander, had just charged nearly $5,200 on his credit card for the two, when Air Pacific canceled its flight to Fiji, as well as the connection to the Solomon Islands. You see, violence had closed both airports.

At that point, Moats began negotiating with Great Expeditions owner Marjanna Helwig for a refund, though Alexander had signed a booking form containing a disclosure that read, “Once reservations are paid in full, entire package is NONREFUNDABLE.”

Negotiations dragged on while Helwig attempted to recoup the money she’d forw a r ded to various suppliers. Several months later, after being fully reimbursed herself, Helwig wrote to Moats and Alexander: “Despite our written policy that all services are non-refundable once paid in full, under the circumstances we were able to credit back the majority of your trip costs. Per our policy a 20 percent fee has been retained. I regret I am unable to offer a 100 percent refund for the unfortunate circumstances that caused your cancellation. However, Great Expeditions cannot be financially responsible for whatever circumstances that may cause a loss of service for travelers.” The 80 percent refund was processed directly to Alexander’s credit card.

Moats felt 20 percent was excessive, but when he complained, Helwig explained that this was a standard practice to cover out-of-pocket costs such as credit card overhead and staff time spent planning the custom itinerary. Even so, nowhere was it written in Great Expeditions’ material. She did suggest that if Moats were to book another trip with Great Expeditions, she’d be willing to apply half the withheld money to the new booking.

Scheduling problems and a generally deteriorating relationship led Moats to look elsewhere when booking his next trip. But he didn’t stop asking questions, such as: “What IS ‘standard industry practice’ regarding refunds in such cases?”

Reader Ken Hares of San Jose has raised similar concerns following his experience with International Diving Expeditions of Murietta, CA. After booking a trip to the Malaysia Underwater Photo and Video Contest through IDE in 1999, he was so delighted with his visit to Sipadan and Mabul, that he, his wife and two friends put down deposits for the September 2000 competition as well. Then, after the kidnaping at Sipadan that April, he read State Department advisories warning Americans not to travel there in large groups. He asked IDE if the Malaysian government could ensure the group’s safety by providing a military presence during the event, and when no assurance came, he canceled his reservations in May 2000.

IDE owner Nadav Joshua pointed out his company’s cancellation fee policy: If a booking is canceled between 90 and 180 days before departure, the fee is one-third of the entire trip price (NOT the deposit amount). Hares and his party of four had each put down deposits of $500, or 15 percent of the $3,000 trip price, so their entire deposit was forfeited. Joshua tells us he did offer to refund the entire deposit if Hares were to re-book the same trip the following year, and 50 percent if he booked a different trip through IDE. But Hares felt entitled to a full refund, and eventually negotiations broke down .

When Moats and Hares got no satisfaction from their agents or the major travel trade organizations, they turned to Undercurrent. As we learned, there is no simple solution.

Linda High, director of consumer affairs for The American Society of Travel Agents (ASTA ) , confirms that cancellation policies vary from agent to agent, and concedes “there’s not a lot of regulation of the travel selling business.” In fact, she s quick to point out that ASTA, a voluntary trade association made up of about 50 percent of U.S. travel agents, is not a regulatory agency, exercises no control over its member agents, and has no legal or enforcement clout .

High advises that an agent’s disclosures constitute a two-way contract — obligating both the agent and client to certain responsibilities. When a client signs a booking form, a check, or a credit card slip after receiving the agent’s disclosure statement, it shows acceptance of all the terms and conditions. Yet as Tony Moats and Ken Hares learned, written policies can be softened at the discretion of the agent or tour operator.

ASTA’s website carries a 13- point code of ethics that only calls for refunds due to substantial changes in itinerary, services, features or price that is within the control of the operator. After reviewing Moats’ negotiations with Great Expectations, High opined that Moats “did better than he had any right to expect.” Further, she adds, “Just because you’re uncomfortable going to your destination doesn’t mean there won’t be a penalty,” if you cancel .

The United States Tour Operators Association also issues “standards of integrity” for the industry and consumers. According to USTOA, acts of war, rebellion, strikes and natural catastrophes outside the control of the tour operator fall into a legal basket known as Force Majeure. USTOA’s position is that “Under ordinary legal principles ... the traveler is not entitled to recompense from the tour operator or supplier of a tour component” if a tour is fully or partially disrupted by such events.

Withholding 20 percent seems not only excessive but also imprudent. In a competitive customer service business
the smart thing would be to give the client’s money back every time, despite one’s written policies.

Theoretically, then, clients don’t seem to have a leg to stand on. But in practice, the picture isn’t as clear-cut. We ran these cases by other industry experts, and got mixed reactions. Travel columnist Ed Perkins feels “a 20 percent penalty isn’t out of line with the policies of other operators.”

However, Ken Knezick, president of Island Dreams Tours & Travel, disagrees. He points out that the premium charged to agents by credit card companies (about 3.25 percent) only applies to actual charges, and should have been reversed when the credit was issued. So withholding 20 percent seems not only excessive to Knezick, but also imprudent. “In a competitive customer service business,” Knezick points out, “the smart thing would be to give the client’s money back every time, despite one’s written policies.” Because “you only make money in this business when the customer travels and comes back happy. ” Knezick believes it would be worth losing $1,000 rather than ticking off a client, losing a potential long-term relationship, and risking the agency’s reputation among a tightknit customer base.

Jenny Collister of Reef & Rainforest, says that “while each trip has its own set of circumstances, I try to do the right thing when a trip is canceled due to circumstances beyond the client’s control.” Although Reef & Rainforest’s terms and conditions state that deposits are nonrefundable, Collister credits the full deposit toward another trip, once she’s been reimbursed by her suppliers. If that just isn’t feasible, she’ll generally refund the deposit, minus a $100 cancellation policy to cover administrative costs. “After all,” she points out, “we sometimes put in 50 hours planning a trip.”

Great Expeditions advises in its disclosure: “It is your responsibility to inquire about and fully understand the change and cancellation policies regarding your travel arrangements. Travel insurance is highly recommended.” But the travel insurance offered by Great Expeditions, Tripguard Plus, specifically excludes coverage for losses caused by or resulting from “war or any act of war” whether declared or not. (If the U.S. Congress can’t define what an “act of war” is, what is Tripguard’s criteria?)

On the other hand, CSA Travel Protection DOES cover losses due to terrorism, which it defines generally as acts of violence intended to overthrow or influence the control of any government. However, CSA corporate secretary Claudia Fullerton points out that “everyone in the industry is struggling with definitions like this,” and that decisions are made case-bycase.

All the more reason for every traveling diver to read and understand the terms and conditions put out by the travel agent, tour operator, and travel insurance carrier. But beyond the fine print, do business with firms you can trust to do the right thing. If you’ve got such an agent already, stick with that company. If you don’t, check other divers, shops, or clubs. Prepare a list of the questions that concern you, and don’t sign anything until you get answers you understand and can live with.

And keep in mind the old bromide, “caveat emptor,” coined in the sixteenth century — let the buyer beware.

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