People might be turning away from traditional bricks and mortar travel agents, but they are still flocking to online travel and tour booking services.
Regardless of whether you prefer to book directly with the provider or use an agent or service, you need to be aware of how best to protect yourself in the event of that business going bust.
If it starts to look like your dream holiday and hard-earned money might vanish quicker than a sunset on a tropical beach, act fast for the best chance of getting your money back or finding another way to still travel.
If you’ve received your travel itinerary and confirmation, contact the providers, such as the airline, tour companies or accommodation, directly to check if the agent already paid in full. It’s good news if they have as you should still be able to take your trip.
If full payment hasn’t been made, explain the situation and see if the provider will still honour your booking or give you a credit note for any money already paid so you can use it towards booking directly.
Some travel agents will allow payment by direct bank transfer or cash, but ask yourself if it’s worth it just to save on a credit card surcharge? If the business collapses, you are unlikely to get your money back but if you have paid by credit card then you can ask your bank for a ‘chargeback’ to recover your funds. Act quickly on a chargeback as time limits apply.
Some travel agents, both online and physical, have their own insolvency insurance and you may be able to get your money back this way. Before you book your holiday, check the T&Cs or ask if they’re insured in the event they go out of business.
Finally, your last hope of getting money back is registering as an unsecured creditor with the administrators who are handling the insolvency. If there is money left after paying secured creditors such as suppliers, and then any employees – you as the consumer are the last in line to be repaid. You may only get some of your money back or nothing at all.
What about travel insurance? Unfortunately, you’ll be hard pressed to find a policy which will cover you when a travel agent goes bust. In 2023, consumer group CHOICE looked at travel insurance policies and could not find any that provided cover for insolvency of a travel agent. Only a handful of the policies covered insolvency of a travel provider, such as an airline or tour company or accommodation.
If you’ve been given travel gift cards and credit notes, it’s always a smart idea to spend them sooner rather than later, just in case the travel service goes out of business.
If you are caught in a situation where the agent is in financial trouble, you’ll likely lose the value of your gift card or credit note, though sometimes the business continues trading. In this case the administrator may put conditions in place such as having to spend an equal dollar amount to the gift card in one transaction. For example, a $100 gift card means you need to make a $200 purchase. If the travel business is sold as part of the administration process, the new owners can choose whether they honour outstanding gift cards or credit notes.
To avoid booking with a travel agent that will cause heartache use businesses you already know and trust or that friends and family recommend.
Keep an eye out for travel companies offering holidays at too-good-to-be-true prices as this can be a sign they are on the verge of collapse.
If you are booking with an Australian travel agent or tour operator, check they are accredited under the Australian Travel Accreditation Scheme (ATAS). It’s a voluntary scheme where the applicant must be solvent and not have a director or close associate that has been involved in another company that did not pay what it owed and caused a significant loss to a consumer. You can search www.atas.com.au for registered businesses.
Some large online travel service providers have chosen not to be accredited under ATAS. In these cases, read independent online reviews checking for cases where consumers comment on the agent being hard to reach, website not working properly or trips being cancelled last minute. These can be signs a travel business might be about to go bust.
If you need advice call Consumer Protection on 1300 30 40 54 or learn more from the easy read fact sheets – https://www.consumerprotection.wa.gov.au/travel
