Package travel regulations
The European Community Package Travel Directive was published on 13th June 1990 with the aim of offering better consumer protection to holiday makers. The provisions were embodied into UK law as the Package Travel, Package Holidays and Package Tours Regulations on 23rd December 1992. The following text provides some guidance on this important topic.
To whom do the Regulations apply?
When is “a package” made?
What is a tourist service?
My members write two separate cheques, one for the hotel and another for the coach. Have I avoided creating a package?
My trips are only offered to members of my club. Am I still “selling or offering for sale”?
How can I avoid creating a package?
How do I become the ‘principal contractor’?
If I act as the principal contractor, have I fulfiled my responsibilities under the Regulations?
What are the basic requirements of the Regulations?
How can I secure my member’s payments?
How can I operate with a trust account?
Must I produce a brochure for my trips?
What other information I should provide?
Is there any information I should provide before the journey?
What information must I put in the contract?
Is there anything else I should consider?
Sources of Further Guidance
To whom do the Regulations apply? The Regulations are aimed at all those who supply holidays and packaged travel facilities and apply to “the person who, otherwise than occasionally, organises packages and sells or offers them for sale, whether directly or through a retailer”. No definition of “occasionally” is given, but there is general guidance that this term could relate to the regularity as well as frequency. Note also that no distinction is made between those who organise packages in the course of business, and those who organise on a voluntary basis (like many GTOs).
When is “a package” made? Under the Regulations, a package is defined as a prearranged combination of at least two of the following elements: transport, accommodation or other tourist services not ancillary to transport or accommodation and accounting for a significant proportion of the package (e.g. an admission charge to a museum, theatre tickets, or a guided tour), which are sold or offered for sale at an inclusive price and when the excursion lasts for more than 24 hours. If, for example, a hotel to which guests all make their own way provides a free courtesy bus from the railway station, this would not constitute a transport or tourist service element, but a programme of visits using it would. Where a facility is available to all (e.g. a hotel swimming pool), then a package is also not created by linking it with accommodation. However, where a facility is restricted to those who have booked or paid in advance (e.g. access to a local golf course), it becomes a tourist service and creates a package for whoever organised it.
What is a tourist service? Not all services are tourist services. For example conference services are not tourist services, so the combination of conference services and accommodation would not create a package. But if the conference included a significant proportion of tourist activities (visits to attractions, for example) then a package could have been created. An educational service would not be a tourist service provided it is taken with a view to obtaining a recognised qualification. Packages of an educational or business nature which include both transport and accommodation would, in general, fall within the scope of the Regulations. However, those educational packages which are organised as part of a course of education (e.g. a geology field trip) would be unlikely to be sold in the normal sense of the word and would probably therefore not fall within the scope of the Regulations.
My members write two separate cheques, one for the hotel and another for the coach. Have I avoided creating a package? No, you have still created a package. The regulations specifically state that “the submission of separate accounts for different components shall not cause the arrangements to be other than a package”. The important point is that the hotel and coach have still been pre-arranged.
My trips are only offered to members of my club. Am I still “selling or offering for sale”? This would depend upon the circumstances. If members of an organisation not carrying on a trade or business (or any other group of people) come together to share the cost of a package which they have decided to undertake and organise themselves, and they appoint one of their members to put the package together, that member is unlikely to be selling or offering for sale the package. A surplus may be retained by the organisation to be disposed of as the members may decide.
How can I avoid creating a package? You can avoid creating a package by getting someone else to create it for you. The Regulations allow for three categories of involvement. The organiser puts the package together and sells or offers it for sale, either directly or through a retailer. A retailer sells the package put together by the organiser, as in the case of a travel agent selling an off the shelf package. A travel agent may sometimes be an organiser if, for example, he puts together a number of components to create a customised package. The third category is that of the consumer who may be the person (such as a GTO) who purchases the package from an organiser on behalf of a group (in which case the GTO would be the “principal contractor”), or he may be the end user of the package (the individual members of the group).
How do I become the ‘principal contractor’? If, for example, you are buying in a package from a wholesaler (or other trade supplier) to be offered to your members, you must make it clear at the time that you want the wholesaler or supplier to act as the package organiser and that you wish to act as the principal contractor. Most wholesalers will be happy to do this, but you must agree that status before booking. However, if you buy in components from the organiser and repackage them yourself, you are likely to be an organiser under the Regulations. Whether the wholesaler would be regarded as the organiser could depend upon the extent to which the GTO or wholesaler has specified the package. For a package to be created, the consumer must be required to make a choice from a range of services put forward on the advice of the organiser (which may or may not be from a brochure). It would be unreasonable to hold that organiser responsible for the proper performance of an element over whose choice that organiser had no influence. When this is the case, it is unlikely that a package will be created by the wholesaler because there is no element of pre-arrangement on his part. Whether the GTO would be regarded as the organiser would depend upon whether the package was sold or offered for sale.
If I act as the principal contractor, have I fulfiled my responsibilities under the Regulations? In the example of the GTO acting as the principal contractor, though you are responsible for negotiating the contract on behalf of the members of your group, any claims made in regard of the trip from group members would be directed at the packager. However, it seems sensible that responsible GTOs should familiarise themselves with the Regulations and ensure that the packager is complying. It may be preferable to have the freedom to act as organiser.
What are the basic requirements of the Regulations? The regulations require three principle areas of compliance. The first requires organisers and retailers to provide evidence of security for the protection of pre-payments and for the repatriation of consumers in the event of insolvency. The second refers to what information must be given to the consumer and when. This includes what needs to go in the brochure (if one is provided) and what should be included in the contract with the consumer. The third area makes “the other party to the contract with the consumer”, i.e. the organiser and/or retailer liable for the performance of the contract.
How can I secure my member’s payments? The Regulations provide for three approved methods of providing evidence of security for the refund of money paid over in the event of insolvency. The first of these, bonding with one of seven approved bodies (including ABTA and the CPT’s Bonded Coach Holiday Scheme) is probably not suitable for the vast majority of GTOs due to its cost and complexity. The second method is one which many GTOs use – insurance protection. This involves taking out an insurance policy for each individual’s payment and can also be combined with repatriation cover. Several companies offer this kind of policy and it is a simple matter for GTOs to add on a small amount per head to cover this cost. The third method, that of appointing a trustee to hold all monies paid over, is the one which most group organisers have chosen due its minimal cost. The rules regarding the use of money held in trust are different when the organiser is acting “otherwise than in the course of business”, and here it should be noted that, depending on the circumstances, a volunteer organiser can be considered as acting in the course of business.
How can I operate with a trust account? A trust account is simply a separate account into which all monies received for the trip must be placed and from which no monies can be drawn without the consent of the trustee. Monies can generally only be withdrawn after the completion of the trip, though there are exceptions e.g. when a trip is cancelled. Also, those who are organising “otherwise than in the course of business” are permitted to draw on the account, with the consent of the trustee, for necessary pre-payment of components of the package. No guidance is available as to what ‘in the course of business’ means. The Regulations do not specify who the trustee should be and it would be possible, therefore, for the organiser to be the trustee. However, Department of Trade and Industry guidance is that the trustee should be a third party not connected with the organiser. Anyone considering taking on this role should be aware that the usual provisions of trust law apply and acquaint themselves with what his duties will be. It is probably more straightforward to keep the monies in a separate account though the key requirement is that they are held on trust.
Must I produce a brochure for my trips? No, there is no legal requirement to produce a brochure, however, you may already unknowingly be producing one in which case you should know what to include! The Regulations in respect of brochures relate to “any brochure in which the packages are offered for sale”. Advertising material which does not try to give comprehensive description of the components of the package is unlikely, therefore, to be a brochure. Any brochure must contain in a legible, comprehensible and accurate manner, the price, and where relevant, adequate details concerning: the destination, means and characteristics of transport used; the type of accommodation, its location, category or degree of comfort; the meals which are included; the itinerary (which must include overnight stops and any other “significant” breaks in the journey); passport, visa and health requirements; the deposit required and when the balance should be paid; the minimum number of passengers required (if applicable) and the deadline for informing them of the cancellation of the trip; and the arrangements for security of money paid over and repatriation in the event of insolvency (which must be one specified within the Regulations). Additionally, the brochure must include the arrangements (if there are any) which apply if consumers are delayed at points of departure (e.g. provision of refreshments, overnight accommodation). If some of the information might change before the contract is concluded, the brochure should contain a statement to that effect. Any changes which do take place must be pointed out before the contract is concluded.
What other information I should provide? The Regulations also require certain pre-contract information i.e. information which must be given before the contract is made and which must be given “in writing or some appropriate form”. This information must include: general information about passport and visa requirements for British Citizens (including the length of time it is likely to take to obtain the appropriate passports and visas); information about health formalities required; and the arrangements for security of money paid over and for the repatriation of the consumer in the event of insolvency. In addition, the terms and conditions of the contract must be communicated to the consumer and supplied, in writing, before the contract is made. In practical terms all this information would usually be conveyed by way of a brochure. If a brochure is not produced, a GTO might provide this information separately with a booking form which could set out the terms and conditions of the contract on the reverse.
Is there any information I should provide before the journey? Yes, certain information must be given before the start of the journey including: the times and places of intermediate stops and transport connections (e.g. a ferry), and the place to be occupied (e.g. a two berth cabin); the name, address and telephone number of a company representative on location (if there is one) or similar details of an agency in that locality on whose assistance a consumer in difficulty would be able to call (if is no such representative exists, a telephone number or other information which will enable the consumer to contact the organiser); and except where passengers are required to take out a particular cancellation, medical and repatriation insurance policy, information about a suitable policy. (In practice most GTOs will have arranged a group policy at a favourable rate.) In the case of a package taken by a child under 16, information enabling direct contact to be made with the child or person responsible at the place where he is to stay. This is intended to apply to children on, for example, school or similar trips and not to children who go on holiday with an adult who is not acting on a professional basis, even if that adult is not the child’s parent or guardian.
What information must I put in the contract? As with the previous requirements, the elements that must be included in the contract are fairly straightforward and are very similar to the information requirements for brochures. In addition the following elements are required to be included (if relevant): where periods of stay are involved, the relevant dates; the dates, times and points of departure and return; any visits, excursions or other services which are included in the price; the name and address of the organiser, retailer and insurer; the price, and if it is liable to revision, how that change will be calculated (the Regulations require the organiser to bear the first 2% of any price increase, and state that no price increase may be made within 30 days of departure) plus an indication of any taxes or fees payable (such as tourist or airport taxes); the schedule for, and methods of, payment; any special requirements which have been agreed between the consumer and organiser; and finally, the periods within which any complaint about the holiday are to be made must be quoted. As the Regulations deal with other occurrences such as the transfer of bookings, significant alterations to essential terms, significant proportions of services not being provided and liability of the organiser when failures occur, consideration will need to be given to the inclusion of appropriate terms and conditions. Although not mentioned in the Regulations, GTOs could also consider clauses on passenger conduct, luggage limits and smoking rules.
Is there anything else I should consider? You should also be aware that the organiser is legally responsible for the correct performance of the package. Although it is not a requirement of the regulations, you may wish to consider taking out indemnity insurance to cover yourself in the event of a claim made against you by one of your group members.
SOURCES OF FURTHER GUIDANCE
There are three principle sources of guidance for GTOs:
Trading Standards Officers – enforce the Regulations. Contact them through your county council, London Borough, Metropolitan Borough, Scottish Reagional Councillo, or in Northern Ireland the Department of Economic Development. The Department of Trade and Industry – can give general guidance on the Regulations and produce a set of guidance notes for organisers and reatilers. The DTI’s address is: Consumer Affairs Division 2 Department of Trade and Industry Room 4 G26 1 Victoria Street London SW1H 0ET