Package Travel Regulation 2018, implementation issues
The new EU Package Travel Regulation (PTR) came in to force in the UK on 1 July. Despite best efforts the 2018 PTR now covers a much wider range of circumstance, activities and business types than the previous 2005 version. Critically for destination management interest the regulation will for the first time embrace a significant number of SME and micro accommodation and other businesses, many of whom will be blissfully unaware of the potential implications of undertaking certain seemingly innocuous activities or offering what may well be relatively minor additional services for the benefit of their customers.
Badly handled, as it is already in danger of being, the introduction of the PTR could cause panic among operators, generate unnecessary additional costs, cause operators to drop added value service and discourage others from ever offering new customer focused benefits in the future. We had hoped that the PTR could be shaped in such a way that it help encourage low-level local initiatives and business cooperation that made the UK domestic offer more appealing and competitive. As currently framed and without urgent remedial action, PTR could well serve to curtail added value initiatives.
Partly because I was on holiday when the official guidance was issued (unbelievably late in the day relative to 1 July) and partly because of the concerns above and my desire to try to offer possible solutions (detailed below) rather than just add to the problems, I delayed circulating the available guidance until I understood it better and had time to consult with colleague, including importantly some in the financial services sector.
The guidance consists of the official BEIS guidance notes covering the full PTR, the associated statutory instrument that the BEIS notes liberally reference and a separate guidance note from the Tourism Alliance for small businesses that helpfully attempts to summarise and draw out key issues for the UK industry for SMEs and micro businesses. These 3 sets of notes can be accessed via Britishdestinations.net at:
Destination managers do need to try to get to grips with the gist of regulation themselves, which is not easy as there is a lot of it and much of it is open to interpretation or is subject ultimately to legal opinion and/or as yet to be established case-law. For some managers it will be necessary to understand the regulation in order to assess whether your own online and any physical sales or information activities now constitute package sales or linked travel arrangements covered by the new regulation. If they do then you will need to have the requisite indemnities (bonding, insurance or trust funds) and you will need to comply with the relevant notification on your sites and in any communications with your customers/consumers. As larger professional bodies your activities are likely to be scrutinised long before those of your individual SME partners.
Destination managers may also wish to consider how to ensure that all their local partner businesses are fully aware of new legislation. However, in doing so it is important (vital?) to stress that:
- BEIS have said that they have issued guidance/instruction(?) to Trading Standards, who are responsible for enforcement, that a light touch is required and that the Government’s intent is not to target or penalise small operators undertaking minor activities (yet?).
- Local Trading Standards are only likely to react immediately, if there are obvious serious damaging breaches, or after there have been a (number of?) valid consumer complaints that warrants enforcement action.
- Clearly if the industry doesn’t understand the full requirements yet, then the public, for the time being at least, are going to be even less aware of their new consumer rights and are not going to complain about perceived breaches. At some point that will of course change.
- The introduction of the PTR is due to be reviewed after the first 6 months and again 12 months (?) later. Therefore, compelling local evidence and examples of problems, errors and unintentional consequences needs to be gathered from now onward for presentation to BEIS in January 2019. Waiting until they consult to start gathering evidence would be unwise.
- Whilst we can’t condone real or technical breaches of any new regulation, in the first instance, we could and should encourage operators to record and report issues and problems encountered in the initial introductory period, rather than taking knee jerk remedial actions to correct them immediately. Clearly there are risks involved for business in doing this but I believe that they are likely to be very low and that demonstrating that evidence was being gathered during this first 6 month period would serve as mitigation.
- Depending on the nature of your DMO and local relationships it may well be worth destination managers speaking to local Trading Standards officers to get an accurate local picture of how they intend to deal with any new PTR issues now and in to the near future. Understanding the local enforcement regime’s intent should give local businesses the information needed to assess the risk involved in initially recording issues, rather than immediately and unnecessarily trying to remedying them.
Beyond urging you to communicate with your trade partners I also urgently need your assistance in assessing whether there is any appetite for a cost-effective commercial solution to the SME issues and if so on what scale.
Significant parts of the new regulation are not going to go away however hard we lobby. I have been in discussion with contacts in the insurance industry and they are confident that a very simple annual insurance-based product, available online, could be produced that would at a stroke take care of the new liabilities and provide the certification needed for the duties to inform customer, for most SME and micro accommodation providers.
Dependent on market size and likely take-up this could be offered for as little as, say, £20 a year for a typical B&B. It is very much a chicken and egg scenario and in order to get the product off the ground I need to get some sense of whether there is market for it (I am pretty sure there is) and an idea of what scale that could be, locally and by extrapolation nationally, and what the likely take up might be, if it was available at a truly “affordable” cost. For larger enterprises the price would need to be higher but not markedly so. Initial thoughts are that it could stepped based on turnover above or below £y, £x or £z.
Keeping the cost low is a function of numbers and of avoiding, where possible, the temptation to add at each subsequent stage commissions and fees. Finally, I also need to know whether enough of you would be prepared to promote such a product to your partners, preferable as a service rather than as a minor income source. As far as I am concerned this is about us jointly stepping up to the mark to protecting local business interests and in doing so help encourage the provision of more added value services and partnering initiatives by even more local businesses. Any views or direction you can give me would be greatly appreciated. If sufficient members are interested there are also options to look at a cost-effective indemnity/insolvency scheme for DMO websites caught up by the PTR.
Meanwhile I will continue to work with trade colleagues, independently and through the Tourism Alliance in order to try to get some of the more obvious anomalies corrected. For example, does booking bed and breakfast in a hotel ,where breakfast can be bought separately by anyone else, really constitute a package (but not in a B&B where breakfast is seen as an intrinsic part of the offer)? And if so, was that the intent of the original directive or is this simply a function of typical UK “gold plated” interpretation?
It is this type of problem that might be rectified at the 6-monthly review. The wider definition of what constitutes a packages and new linked travel arrangement and the consequent new duties and liabilities for many more businesses aren’t going to go away and therefore the impacts are still going to have to be managed and mitigated whether we like it or not. Hence my desire to get on and find some practical solutions that can be implemented relatively soon, rather than to simply continue lobbying for hoped for change.