COVID-19 has had a huge impact on the travel industry. Before the onset of the pandemic, for much of the industry, business was booming. After it hit, most were just struggling to survive. We have since turned a corner and business is beginning to pick up once again. The general population has grown tired of hibernating in their homes, and leisure travel is starting to grow dramatically. In fact, demand will most likely reach all-time highs, according to industry leaders.
To facilitate greater growth, some companies home in on specialty niches while others aim to expand on a wide-scale basis, soliciting business outside the U.S. While doing so may help a company grow, it also creates many other challenges. Since travel companies may be unfamiliar with laws or regulations in foreign jurisdictions, it can create headaches for U.S. companies, greatly increasing their risks and responsibilities for their new foreign customers.
As a travel company in the U.S., when you sell to citizens or residents of the U.S., you are generally shielded from liability for the negligent acts, errors, or omissions of your vendors and suppliers that may cause death or injury to one of your customers. You are also, generally, not responsible for the bankruptcy or insolvency of one of your suppliers. In order to receive this protection, you are required to demonstrate that you exercised reasonable due diligence and vetting in the selection of your suppliers and that you have disclosed to your customers at the time of the transaction that a third-party supplier or vendor provides the services that caused the injury, claim, or other problem. In the event of the bankruptcy or insolvency of one of your suppliers, you will also, in most cases, avoid liability, unless it can be shown that you knew or should have known at the time of the booking that the supplier was under financial distress.
However, when selling travel services to anyone in the U.K. or a European Union country, you will completely lose those protections. There are laws in these countries that will make your company responsible for anything that happens during your clients’ travels, including any refunds to customers in the event of the bankruptcy or insolvency of a vendor that you have hired and paid but is no longer in existence. These laws are loosely referred to as Packager of Holiday laws or, more formally, The European Package Travel Directive (“the Directive”).
The Directive applies to both European tour operators and foreign parties selling travel services directly to European travelers. It may also apply to a U.S. company, even if your American company is selling those services through a European retailer. The laws in Europe consider “packaged travel” to be the combination of any of the following two services: passenger transportation, hotel or accommodations, and all other travel services, such as excursions and guided tours.
