German Tourism: Higher costs from new EU Package Travel Directive

A draft law bringing the new EU Package Travel Directive into German law “threatens the existence” of travel agents, tour operators, hotels, coach operators and other travel firms by imposing higher costs and new legal liabilities.

After weeks of critical public comments, the German Travel Association (DRV), the online travel retailers association VIR and other industry representatives met justice ministry officials on Tuesday (August 23) to demand changes to the current draft law that would transpose the EU Package Travel Directive into German law.

The 2015 Package Travel Directive extended consumer protection from traditional package holidays to other forms of ‘combined travel’, such as online sales of a flight and a hotel or car rental. The concept of a ‘travel package’ was broadened from ‘pre-arranged packages’ (traditional package holidays) to cover ‘customised packages’, under which a traveller buys a selection of travel components from a single business (online or offline).

On the issue of legal liability, the directive makes the package ‘organiser’ responsible for dealing with any problems with the package. According to the EU Commission, “in addition, Member States may decide that also the retailer (travel agent) is fully liable”.

Joint letter

But the German tourism associations declared in a joint letter to justice minister Heiko Maas: “The draft could write business history because it endangers the existence of hotels and guesthouses, holiday home rentals, the camping sector, travel agents and tour operators, coach companies, and regional and local tourism organisations.”

The associations, including the DRV, independent agents association ASR, hotel associations IHA and Dehoga, coach operator associations BDO and RDA, and the Germany Tourism Association (DTV), criticised the draft law’s “vague and incomprehensible regulations” and unclear legal definitions, and demanded three specific changes:

- A practical legal definition of “package travel”
- Exclusion of sales of individual travel products
- A definition of “combined travel services” to ensure the seller of different travel products does not become a tour operator

The DRV’s main concern is a clause which could treat travel agents as legally liable tour operators if they sell customers two or more travel products (such as hotel accommodation, airline tickets or car rental) at the same time. This means they would be forced to take out expensive insurance against hotel or airline insolvencies, such as tour operators are already obliged to.

DRV president Norbert Fiebig criticised this clause as “completely impractical” and “unacceptable”, and warned it threatened the future of Germany’s 10,000 travel agents by increasing workload and costs, and impacting on customer satisfaction.

The only apparent alternative would be for agents to sell different products one at a time and to invoice them separately in a complex and time-consuming new procedure that would leave consumers having to make at least two different payments.

DRV survey

According to a DRV survey of 700 German travel agents, combined sales of individual travel products (as opposed to package holiday sales) account for more than 50% of sales for about 40% of travel agents. An overwhelming 90% of agents believe the law would impact them negatively and that customers would not understand any changes to booking and payment procedures, about 80% fear higher costs and more than a third said they might not offer the combined packages that customers want.

Michael Buller, president of the VIR, pointed out that online travel agents with their call centres for bookings also face the same problems as traditional travel agents under the draft law.

Similarly, Otto Lindner, chairman of the IHA hotels association, criticised the plan to treat individual travel services such as hotel bookings in the same way as package holidays as “a false understanding of consumer protection”.

In response to the industry criticism, the justice ministry signalled readiness at the meeting to discuss these problems at a workshop in order to find acceptable solutions, the DRV said.

EU member states must adopt the Package Travel Directive into national law by January 1, 2018, and make it applicable from July 1, 2018.

Read more here.

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