A new European Union law came into force on 1 July 2018, changing the definitions of what a package holiday is. This law is not only significant to the travel industry but potentially to all businesses, coaches, clubs and societies. The EU Package Travel Directive applies to all sales from July 2018.
The new EU directive effectively closes all ‘loop-holes’ when selling elements of travel separately. They also now embrace many firms who would previously have escaped the regulations. This can include hotels, clubs, societies, coaches, event organisers, hospitality providers, etc.
The new regulations explicitly place liability for the performance of the travel services included in the package, on the organiser. This is irrespective of whether the travel services are performed by third parties. Liability is not only what is generally understood in insurance terms but also means any lack of conformity; and travellers will be entitled to compensation for damages and loss of enjoyment.
Packages must be financially protected and consumers must be given statutory information.
Tom McMorrin, Business Development Manager at Yellow Jersey explained “Many businesses are completely unaware that they ‘package’. They need to know that they are exposed to these new regulations. The consequences for failing to adapt their business to the new regulations is not only facing liability claims but now also a number of criminal offences.”
Offences might include:
- Failure to satisfactorily provide pre-contractual information
- Failure to satisfactorily provide a contract or confirmation of contract and prescribed information
- Failure to put in place compliant insolvency cover
- Obtaining release of monies held on trust for insolvency cover by false statement
- Failure to put in place compliant insolvency cover or provide pre-contractual information for LTAs
Tom McMorrin continued, “At Yellow Jersey we can help explain the new regulations and how businesses can protect their exposures with tour operator liability insurance, professional indemnity and director and officer insurance.”
A package is now generally defined as the combination of two or more different types of travel services, which are combined for the purpose of the same trip.
There are now four types of travel services under the directive:
1. Carriage of passengers
3. Vehicle Hire
4. Any other service
Item 4, any other service, can include admission to a race/sportive, guided rides, as well as rental of any sports equipment such as bicycles, wetsuits etc.
There are now six categories governing the circumstances in which travel services combine to create a package:
- Category 1 – single contract (usual package scenario, where Travel Services are sold at an inclusive price).
- Category 2 – sold in single booking process, where Travel Services from different suppliers are combined within one booking.
- Category 3 – sold at an inclusive / total price, where Travel Services from different suppliers are combined within one transaction.
- Category 4 – sold as a ‘package’ (or under a similar term), where the words for instance ‘combined-deal’, ‘all-inclusive’ or ‘all-in arrangement’.
- Category 5 – contract allows subsequent choice, where a trader sells a product that allows a traveller to select different travel services after they have concluded the contract will also count as package.
- Category 6 – sold through linked online booking process, where the traveller’s name, payment details and email address are sent from the first trader they purchase from to the second and a contract is concluded.