The travel shutdown has exposed the delicate balance of the travel ecosystem, with many suppliers struggling or just declining to offer customers refunds on trips that the companies have been forced to cancel.
While large, long-established tour operators such as Collette, Tauck and Globus say they are making good on requests for refunds from customers whose tours have been canceled, many small operators say they have been unable to because money paid in by customers has often already been paid out to vendors and partners.
Others, such as G Adventures, say they are simply sticking with their long-standing policies against offering anything but future credits on canceled trips, because that not only helps them and advisors hold on to customers through rebookings, it also supports the global supply chain that, like everyone else, is suffering.
“The local communities are really struggling through this,” said Ben Perlo, managing director of U.S. operations for G, a small-group, adventure travel company that was founded with a strong social mission of sustainable travel and support for developing countries.
By sticking to its policy of credits only, he said, “our hope … is that we can get travelers back to traveling to those locations, to get back to what our original mission was: wealth redistribution.”
As with commission payments, many companies have tweaked their refund policies as the shutdown has dragged on. Others have stopped announcing blanket cancellation dates, as their policies require them to make refunds only on trips they cancel.
The confusion around differing and sometimes changing polices prompted ASTA last month to call on suppliers to offer full refunds.
But a recent poll by WeTravel, which processes payments for some 3,000 tour operators and their partners around the world, showed that making good on such a demand is complicated.
Almost half of the poll’s 592 respondents, mostly multiday operators with fewer than 20 employees, said they have managed to give full refunds to their travelers, while 27% are first waiting for refunds from their vendors.
At the same time, only 39% of vendors said they were willing to give full refunds to tour operators, while 11% of vendors were not willing to refund at all or even reschedule.
“The general theme is [operators] want to give refunds, but unfortunately, a lot of them just don’t have the money,” said Lucas Ennis, head of sales for WeTravel. “Not because they have spent it on their staff, but because they have given it out to different partners.”
While companies have emphasized that future travel credits (FTCs) help the agents hold onto commissions, travel advisor Tom Baker, president of Cruise Center in Houston, said such policies are disconcerting.
“What initially started as refund or future travel credits, almost all the tour operators have rolled over to FTCs and no refunds, which leads us to believe they don’t have the cash assets to start refunding this much money, which is scary itself,” he said. “I’m concerned about anyone’s viability at this juncture. There’s too much we don’t know. I advocate for any clients that possibly can to take the refund. I’m being honest and I’m saying, ‘Think about your money.'”
However, Hicham Mhammedi Alaoui, CEO and owner of the luxury destination management company Experience Morocco, said advisors have been some of the biggest advocates for their credit vs. refund policies.
“Maybe we’ve just been lucky, but most agents we work with have been remarkably understanding,” he said. “The whole industry is uniting around this message of postpone, don’t cancel.”
He explained that most relationships in the travel space are based on prepayments. Once travelers commit to a trip, he said, the bulk of their money is prepaid to hotels, guides and other local suppliers.
“We have confidence that all our suppliers are going to be around,” he said. “So effectively, that money isn’t lost, it’s just with our partners to be used whenever you travel.”
G Adventures’ Perlo said transparency, communication and consistency were key.
“My worst nightmare … is to go out with a policy and then retract that policy,” he said, adding that G has “gotten a lot of positive feedback” about its openness.
Still, bigger, long-established operators say they have and always will honor requests for full refunds on trips they are forced to cancel, regardless of whether customers have purchased insurance.
At Collette, for instance, executive vice president Jeff Roy said that while the company encourages customers to rebook instead of canceling by offering a 105% credit, when a customer wants a refund they give back all of their cash without passing on any penalties from airlines or other suppliers.
“We’ve been in business for 102 years,” he said, adding that after 9/11, Collette made more than $30 million in refunds, and “this is much bigger.”
“The bottom line is we try to put the customer at the center of everything here,” Roy said. “We try to take care of our customers first, then negotiate with our partners to make us whole.
Tauck and Globus are also sticking to their refund policies, while also offering incentives to rebook.
“Our focus has been to provide options for any departures we suspend that include either a refund or the ability to move the original booking on any other date or Globus family of brands’ product via our Peace of Mind letter of credit and rebooking bonus,” said Steve Born, vice president of marketing for Globus. “And when that Peace of Mind option is taken, we’re paying commission up front.
“The other thing that’s in high demand right now is time,” Born added. “With each move on our operations status, we’ve created a communications path and timing window of three full weeks to activate the option. And moving forward, our aim is to stay ahead of upcoming final payment dates with decisions about future departure operations.”
Tauck said that in instances where it has canceled a trip, it will give refunds but is encouraging guests instead to shift their funds into a Tauck Travel Wallet for future use by providing an additional credit of either $500 per traveler for reservations that are paid in full or $250 per traveler for reservations under deposit.
The funds in the Tauck Travel Wallet never expire, while the credits can be applied toward any 2020 or 2021 Tauck land tour or cruise.
“The Tauck Travel Wallet program has been very popular with our travel advisors, because it provides a strong incentive for their Tauck clients to travel with us once they’re able to,” company spokesman Tom Armstrong said.
News editor Johanna Jainchill contributed to this report.
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