OurAfrica.Travel 2020 , a new virtual meeting platform for the travel trade will be launched in August to fill the void left by the cancellation of all African trade shows this year.
The platform sets out to connect global buyers with African suppliers via pre-scheduled one-on-one, face-to-face virtual meetings. Exhibitors representing travel products from all over Africa are signing-up to connect with African specialists from around the world. The exciting, hi-tech virtual ‘travel show’ will take place over 16 days in August 2020 and is scheduled within geographical regions to accommodate time zones.
The platform is cost-effective with an easy-to-operate appointment calendar to book and confirm 15-minute virtual meetings between members of the African tourism community and Tour Operators, Travel Agencies and MICE organisers all around the world. Buyers and exhibitors have the opportunity to be introduced to new markets and products via a sophisticated filtering system and matchmaking based on their profiles.
MEETING DATES OurAfrica.Travel 2020
(‘Global’ dates will allow for overflow appointments that could not be accommodated within the exhibition schedule)
A small team of well-known travel industry experts are the driving force behind the OurAfrica.Travel 2020 initiative. Rudi Wagenaar and Allie Hunt (Inspirational Places) have joined forces with Storm Napier (Atmosphere Marketing) in their mission to ‘take Africa to the world’.
‘We are travel ready. This forum has been created as a gathering of the most passionate, determined and resilient people across the travel industry. In the wake of the pandemic, we want to re-unite, re-connect and re-commit by establishing new relationships and help exhibitors and buyers to do business’, Hunt says.
The number of exhibitors will be limited, with participation fees from only R899 (early-bird payment by 15 July 2020), on a first-come, first-served basis. On-line calendars to book appointments open on 1 August 2020 and exhibitors will be able to upload marketing collateral and browse all buyers.
For buyers, participation in OurAfrica.Travel 2020 is hassle-free and affordable, with no travel costs and free admission for up to three persons per company, and R249 per person thereafter.
Post-COVID, what will we do differently to strengthen tourism and hospitality’s position as a vehicle for economic recovery? What role will Higher Education play in shaping and reigniting Africa’s tourism economy?
The School of Tourism and Hospitality will unpack these topics and more in a webinar on 15 July from 14h00 to 15h00.
The webinar will take the form of a panel discussion between:
To register for the webinar, click here.
SATIB – Update on Western Cape High Court Judgement by Dewald Cillie, Executive Head
As the first case relating to Business Interruption related to the tourism and hospitality industry to be heard in court in South Africa, many of you may be following the matter between Cape Town restaurant, Café Chameleon and Guardrisk Insurance Company.
The judgement, which was released yesterday (although it is dated earlier, 26 June), was heard on an urgent basis in accordance with the restaurant’s application.
Likely to have far-reaching implications on similar Business Interruption disputes in South Africa’s short-term insurance industry, the Western Cape High Court has ruled in favour of Café Chameleon, calling on Guardrisk to settle the restaurant’s claim. With regard to the policy in question, the judgement has deliberated on the following:
Notifiable Disease Extension: Covid-19 falls substantially within the ambit of the Notifiable Disease Extension. The requirement to report the disease to a competent local authority is met by national legislation under the National Disaster Management Centre, in the absence of legislation enacted by any local authority.
Causal Link: There is a clear nexus between the Covid-19 outbreak and the regulatory regimes (i.e. the lockdown) that caused the interruption of the restaurant’s business, therefore establishing factual causation.
Citing the Supreme Court of Appeal in a previous matter, the judgement emphasises that words in a document must not be considered in isolation, without regard to context.
It also states that each case must be decided on its own facts and the law, and that reference to the alleged condition, or insolvency, of the insurance industry in general, is not a defence for an insurer to be excused from honouring its contractual obligations.
We see this as a very positive development in what has become the story of our tourism industry’s survival. And while it is almost certain that Guardrisk will appeal this judgement, it sends a strong message to all insurers.
Off the back of this High Court ruling, and with additional cases being heard in the UK this month and again in Cape Town in September, legal pressure is mounting against insurers. However, while we will be closely monitoring these proceedings, many of which are on an urgent basis, we fear they are not urgent enough. We know that all around us, tourism and hospitality businesses are calculating, not just the months and weeks that they can survive, but the days.
SATIB believes this recent judgement opens a window to further push our agenda with insurers – to propose a favourable settlement for those of you who are seeing your runway diminish with each day and to secure immediate relief for our clients who cannot wait for court rulings and appeals, urgent as they may be. As communicated to you last Friday, we need action now.
We will present you with the details of our proposal for immediate relief by next week, following our discussions with insurers.
Following the success of the first virtual Resilience Council summit, a second summit was held, of which the recording will be available on 8 July 2020.
In partnership with Jacobs Media Group and FINN Partners, the Global Travel & Tourism Resilience Council virtual destination summit looked at how destinations around the world are dealing with the new challenges and opportunities they face because of the Covid19 pandemic.
Setting the agenda for the second summit in the opening session, Debbie Flynn, Managing Partner, Finn Partners Global Travel Practice and Daniela Wagner, Group Business Development Director, Jacobs Media Group discussed FINN Partners newly launched Travel Recovery and Resilience Think Tank and Travel Weekly’s Roadmap to Recovery.
The Deep Dive into Africa session was moderated by Jillian Blackbeard, CEO, Victoria Falls Regional Tourism Association, and she was joined by a panel of senior travel leaders including:
The session aimed to answer questions including:
This virtual destination summit is one of a series of activities presented by Finn Partners and the Global Travel and Tourism Resilience Council.
For more information and to register to receive the recording for the summit, please click here.
Source: Southern and East African Tourism Update
Virtual Bucket List.Guru – created by two popular South African bloggers – is an online platform designed to help the recovery of the South African tourism industry post-COVID.
Well-known travel writers, Di Brown (The Roaming Giraffe) and Ryan Enslin (My Lime Boots) teamed up to create Virtual Bucket List.Guru during lockdown to allow suppliers and operators in tourism and hospitality to offer experiences at discounted rates to consumers, who can pre-book for an exciting post-lockdown experience.
“Virtual Bucket List.Guru calls upon all South Africans to ‘do their part’ to help rebuild the travel and hospitality industry, one that employs 1.5 million South Africans,” said Enslin. “We all love to travel, eat out, explore our cities and enjoy a little pampering.”
Based in Johannesburg, Enslin began his career as a chartered accountant but soon realised it was the world of exploring and story-telling that caught his attention. Today he is an avid writer, photographer and videographer.
Brown lives in Cape Town and fell in love with the tourism industry while working as an aeronautical cartographer creating maps for the tourism market. She created The Roaming Giraffe blog in 2013, which has since enjoyed great success.
With a combined audience base of 400 000 engaged accounts, plus marketing expertise from each of their individual blogs, Enslin and Brown want to provide hope and get people back to working and earning as fast as possible.
“I also believe domestic tourism has the potential for tremendous growth, and now is the perfect time to grow it,” said Brown.
Tourism products such as Thanda Safari in Zululand, Tintswalo Lodges’ walking safaris, Samara Private Game Reserve and Sanbona Wildlife Reserve in the Great Karoo, have already committed to the new venture.
“The offers continue to come in daily,” said Enslin. “The most important point being that it is a win-win for both the tourism operator and the consumer, as no money changes hands until the experience is enjoyed.”
Operators who list on Virtual Bucket List.Guru incur no cost for either the listing or the marketing activities undertaken by the site until a sale is made and a minimal commission structure kicks in.
COVID-19 has shone a spotlight on Consumer Protection Legislation and the rights of tourism businesses regardless of what their T&Cs state. Given that some businesses are considering closing down because they’ve been informed their T&Cs have no legal standing, Advocate Louis Nel* unpacks the CPA and certain T&Cs applied by agents and operators…
THE CPA AND COMMON LAW
Common law is that part of the law that has evolved based on custom and judicial precedent (court cases) rather than statutes/legislation.
The CPA, however, is a statute. When a statute impacts on the common law, whether changing or ‘recalling’ it, the statute must very specifically be worded in that regard. Hence the statement that ‘There is a presumption that rights under common law continue unless the legislation clearly does away with them’.
So, let’s look at what the CPA says about the common law.
Section 2 (10) Interpretation states the following:
‘No provision of this Act must be interpreted so as to preclude a consumer from exercising any rights afforded in terms of the common law’
Section 4 (2) Consumer Rights reads as follows:
‘The court must develop the common law as necessary to improve the realisation and enjoyment of consumer rights generally, and in particular by persons contemplated in section 3(1)(b)’ (e.g. low income)
Section 56 (4) Implied Warranty specifically states that the implied warranty contained in section 56 (1):
‘… applies in addition to any other implied warranty or condition imposed by the common law’
Furthermore the CPA encourages the development of the common law (Section 4 (2)(a)):
‘….common law as necessary to improve the realisation and enjoyment of consumer rights’
One could interpret the above as implying, whilst consumer common law rights are retained and in fact enhanced in the CPA, supplier common law rights have been revoked. I don’t believe that to be the correct reading or implication of the CPA. The rules of interpretation clearly state that such a meaning must be unequivocal, which I do not believe to be the case (see discussion below). There are therefore several supplier rights (also discussed below).
COMMON LAW AND THE CONSUMER
I believe the following common law principles have been retained:
What does this mean? It means that any consumer must be alert, be aware of and read any document that pertains to the purchase/sale of goods/services. Likewise, the consumer must be circumspect when accepting and signing any document relating thereto.
CPA AND CONSUMER BEHAVIOUR
The CPA has clear guidelines about the behaviour of consumers and therefore, in my view, is not there to ‘bail out’ consumers who have simply not acted within the following parameters:
What does that mean? Read with the common law principles discussed above, a consumer cannot simply disregard documentation applicable to a transaction and then, when ‘the wheels come off’, expect reliance upon the CPA to ‘come to his/her rescue’.
This should not, however, be viewed in a vacuum. The supplier’s documentation and business dealings must meet all the other CPA requirements, e.g.:
CPA AND SUPPLIER RIGHTS
Here are three supplier rights that are relevant to this discussion (other than the common law aspects addressed above). There are many others which are often contained in the same paragraph that describes the consumer’s rights:
THE CPA, COVID-19 AND CPA CLAUSES BEEN RAISED REGARDING CONSUMER RIGHTS
I have alluded to the rules on interpretation. Here are also several extracts from our judiciary on the issue before we deal with sections of CPA that have had lots of attention recently:
Judge Wallis in Natal Municipalities Pension Fund v Endumeni SEA 2012 (4) SCA: ‘interpretation of legislation: language must be considered as used in the light of ordinary rules of grammar and syntax & purpose for which it is directed’
Investigating Directorate v Hyundai 2001 (1) Const Crt:
‘.. an interpretation that can be reasonably ascribed to the section’
“Certainly no less important than the often repeated statement that the words and expressions used in a statute must be interpreted according to their ordinary meaning is the statement that they must be interpreted in the light of their context.
T [ Ngcobo J, Bato Star Fishing (Pty) Ltd v Minister of Environmental Affairs & Tourism & others 2004 (4) SA 490 (CC); [
SECTION 14
This section pertains to fixed-term contracts, such as gym and cell/mobile phone contracts and rental agreements.
It provides for the consumer to terminate early i.e. before the end of the contract period and allows the supplier to levy a ‘reasonable cancellation penalty’ (similar to Section 17 (4)) – it does not apply between juristic persons (companies).
However, it’s peculiar that this section was ever be introduced into the tourism space.
SECTION 17
Let’s start with Section 17 (1), which states that this clause does not apply to special order goods. I believe a strong argument can be made that a tour that is tailor-made for a consumer or group of consumers addressing the consumer’s (specific) requirements, constitutes such ‘special order goods’.
I make the point, as section 17 seems to address off-the-shelf generic goods, hence the exclusion of ‘special order goods’. This makes sense and I will address that aspect below.
Section 17 (2) entitles the consumer to cancel any advance ‘booking, reservation or order’.
By the same token, section 17 (3) entitles the supplier to ask for a ‘reasonable deposit’ and may impose a ‘reasonable charge’ if the consumer cancels.
Section 17 (4) addresses the question as to what constitutes a ‘reasonable charge’ and indicates that the following aspects will have a bearing on such an assessment (note that each of these is not weighted in terms of importance:
Let’s look at each bearing in mind the above comments about generic and that section 17 only applies if the consumer cancels, not the supplier. In many COVID-related matters, suppliers have done their best to arrange extremely generous postponements and the majority of consumers have accepted same.
The first element will clearly impact on the 3rd and 4th requirements. Travel, in most cases, is a highly personal event, planned long in advance and can vary in satisfaction levels, depending on the traveller’s personal experience. It should also be borne in mind that there is a vast difference between a complex tour and a plane ticket.
In my experience, the biggest problems with COVID lay with the period of notice and industry practice.
Notice period
It is fair and reasonable to expect someone who has spent their hard-earned cash on a trip planned well in advance to read the applicable T&Cs. However, this is rarely the case. Most consumers demand penalty-free late cancellation, subject to the nature of the booking. This is not always possible, as there may be a number of suppliers and any such request, if applied, has a domino effect. So late notice in the tourism industry is a major factor, hence clear provisions in the T&C re timeframes.
Industry practice
The norm for travel agents and tour operators is that their contracts with the consumer contain one or more of the following:
o A requirement that a non-refundable deposit be paid
o A statement that they engage third parties with their own T&Cs which apply to the consumer e.g. plane tickets or the indemnity at the gates of the Kruger National Park
o A sliding cancellation structure including the forfeit of the deposit
The practice due to COVID has in most cases, as mentioned, has been to postpone, not cancel.
Finally, Section 17(5) deals with a consumer who has been hospitalised or passed away. The clause specifically uses the following words when identifying such a consumer: It is singular, not plural, and it refers to the individual, not the group with whom he or she may be travelling:
‘the person for whom, or for whose benefit the booking, reservation or order was made’
Refer to the rules of interpretation discussed in the court cases above. In particular the ‘ordinary meaning’ must apply.
CPA (Section 4 (4)) states that a body adjudicating a contract should only deviate from the above norm if the following applies:
‘any ambiguity that allows for more than one reasonable interpretation’
There is no ambiguity in section 17 (5). Based on the ‘ordinary meaning’ criteria, it is limited as follows:
SECTION 19
This section prescribes the following in Section 19 (2):
‘the supplier is responsible to deliver the goods or perform the services’
(i) on the agreed date and at the agreed time, if any, or otherwise within a reasonable time after concluding the transaction or agreement;
(ii) at the agreed place of delivery or performance; and
However, there is a caveat in Section 19(2) as follows:
‘Unless otherwise expressly provided or anticipated in an agreement’
So, where T&Cs applies, the consumer cannot rely on this section. Also note use of the word ‘anticipated’ which could include the reference to T&Cs in a quote or invoice.
SECTION 47
As with Section 17, this section does not apply to ‘special order goods‘.
The purpose of this section is to address over-booking and over-selling. The CPA does not contain a definition of these terms. Once again, we must apply the ‘ordinary meaning’ and only deviate from that if there is some ‘ambiguity’.
This section in 47 (2) and (3) prohibits the following:
(2) A supplier must not accept payment or other consideration for any goods or services if the supplier—
(a) has no reasonable basis to assert an intention to supply those goods or provide those services; or
(b) intends to supply goods or services that are materially different from the goods or services in respect of which the payment or consideration was accepted.
(3) If a supplier makes a commitment or accepts a reservation to supply goods or services on a specified date or at a specified time and, on the date and at the time contemplated in the commitment or reservation, fails because of insufficient stock or capacity to supply those goods or services,
Whilst the tourism industry believes this is about selling seats on an aircraft, rooms at an accommodation establishment or seats at a restaurant, I have not come across one supplier who has fallen foul of this section. Furthermore, any such arrangements will, in the main, only be part of a package and by definition subject to the T&Cs of such airline or establishment.
SECTION 48
There have been suggestions that the T&Cs relating to non-refundable provisions fall foul of this section which (read alongside regulation 45) deals with ‘ Unfair, unreasonable or unjust contract terms’.
Section 48 (2) contains a number of events that result effectively in any term being deemed to fall in one of the above categories such as being excessively one-sided or so adverse to the consumer as to be inequitable.
Regulation 45 (2) also has some elements that are deemed to breach the CPA. These are mainly related to the issue of liability and rights afforded the supplier only such as amending the agreement.
I believe the issue of a non-refundable deposit does not fall foul of any of the above.
DISPUTE RESOLUTION
Here’s an example of what the CPA has in mind regarding dispute resolution (Section 3 (1) (g)) namely that the CPA must provide:
for a consistent, accessible and efficient system of consensual resolution of disputes arising from consumer transactions;
Sadly, the suggested ‘consensus resolution’ does not appear to be the norm. On the contrary, there appears to be a witch hunt based on the misinformed perception that tour operators and travel agents, having been paid large sums of money, have deposited this and are earning material interest at the cost of the traveller.
There are no doubt exceptions, but intermediaries are largely a conduit for travel monies, which are disbursed to various third-party suppliers which the intermediary has engaged on behalf of the traveller.
All parties in the travel value chain have been caught unawares by COVIC-19. Most of these, in my experience, are trying to find solutions in the spirit of the CPA, i.e. ‘consensual resolution’.
This is being done through postponements and vouchers, for example. Where possible, travel agents and tour operators are doing their best to recover as much as possible of the travellers’ money (from suppliers) where the traveller does not want a postponement or voucher.
However, there are contractual terms that govern those relationships. The common law principles, and in this case the T&Cs, come into play in this situation.
As the tour operator and travel agent are intermediaries, their T&Cs are linked (and mostly refer the traveller to) to the third-party suppliers’ own T&Cs*. So, when a traveller has booked a flight, car hire, transfers and/or accommodation, the T&Cs of these service providers apply. It is in terms of these T&Cs* that the intermediary will try to recover monies on behalf of the traveller.
As everyone is cash strapped, the recovery of these refunds are not easy. Even under normal circumstances, it can often take weeks or months.
There seems to be a completely unreasonable and relentless pursuit of intermediaries. Consumers and lawyers are ignoring consensual agreements and hammering the low-hanging fruit, namely travel agents and tour operators.
I have a number of cases where these intermediaries have paid millions over to airlines on behalf of the traveller, but lawyers persist in hounding the intermediaries, instead of suing the airlines as per the contract.
CONCLUSION
So, where to from here?
Consumer behaviour must meets the standards addressed above. Suppliers must meet all standards (See ‘Supplier Rights’ above) prescribed by the CPA, namely disclosure of information (Part D); Fair and Reasonable Marketing (Part E), Fair and Honest Dealing (Part F) and Fair, Just and Reasonable Terms and Conditions (Part G).
The body adjudicating will consider the above and prescribed guidelines contained in Section 52, of which the following is an example:
(a) the fair value of the goods or services in question;
(b) the nature of the parties to that transaction or agreement, their relationship to each other and their relative capacity, education, experience, sophistication and bargaining position;
(c) those circumstances of the transaction or agreement that existed or were reasonably foreseeable at the time that the conduct or transaction occurred or agreement was made, irrespective of whether this Act was in force at that time;
(d) the conduct of the supplier and the consumer, respectively;
(e) whether there was any negotiation between the supplier and the consumer, and if so, the extent of that negotiation;
I am of the view that, if both parties have met the prescribed CPA requirements discussed in this article and as mentioned above, the non-refundable deposit is a term of the contract entered into between the parties and should be enforceable.
Accordingly, it is my view that the statement that, ‘there is no such thing as a non-refundable deposit’, is unfounded.
By ADV LOUIS NEL
I am by no means suggesting that the views I express in this article is the ‘alpha and the omega’, that I am an expert or that my word is the gospel.
However, I’ve worked with the tourism sector for 38 years, have been dealing with the CPA since 2004 (when it first saw the light at a discussion at the Sandton Convention Centre hosted by the DTI (see pmg.org.za -June 02 2004 ‘The Consumer Bill was also old and was not in line with global developments. Consumers also needed more protection’) and have advised over 300 businesses on the CPA.
Just before the CPA went public, I was invited to address the Tourism Business Council of South Africa. As a consequence of my address, the TBCSA requested that I submit a paper to Parliament addressing the issues that were of concern to the tourism industry, which I duly did.
t/a louis-THE-lawyer
06 July 2020
South Africa’s key tourism assets are its communities and conservation. The stranglehold that COVID-19 has placed on tourism, and its ability to fund conservations and communities, now threatens the very tourism assets on which South Africa is so reliant.
As well as community livelihoods, the lack of income and increased poverty leads to increases in environmental crime. This coupled with constraints on anti-poaching measures and security spending due to equivalent total erosion of entrance fees and revenue for SANParks and other reserves, creates a huge challenge for conservation.
It is essential that, in future, there is transparency in terms of how deposits are split between conservation and community vs tourism, so that some money remains in the value chain to fund conservation and communities.
What about protecting money in the value chain for conserving our tourism assets?
From the conservation side, how do we make sure that money gets down to the communities and for conservation efforts? If we don’t protect that, we don’t have a product.
SATSA’s Reimagining the Value Chain Thinktank proposes in future that there’s some transparency in future about what percentage of a deposit goes to conservation and communities, vs tourism and that this percentage is non-refundable and paid directly to conservation efforts.
In the case of South Africa, because of the lack of transparency, everything is in the favour of the customer. In Rwanda, however, if a traveller wants to book a trekking permit, this is non-refundable. We must therefore separate out the actual costs of conservation and cost of communities, and this should be paid to the lodge directly.
Total transparency would mean that a separate amount is paid for conservation and communities. Everybody would know this money is non-refundable and is going to conservation efforts.
“There’s potentially a conservation argument around why some of the money should remain with a conservation product, even in a COVID world. If there were some transparency around which component of the package cost is used for conservation, which part of that goes towards conservation?”
“We have this debate ourselves to separate out conservation and community expenses. We have to start focusing on people at the coalface. If they run out of money, it’s going to be chaos. If we don’t have money in the system to protect them, we are not going to have a product.”
“It’s really around the lodges and conservation and you can drill it down further to those that are involved in conservation and those that are not. You might charge a conservation levy which is billed separately and often on arrival. If you’re transparent about it in your policy, there is nothing wrong with it becoming a donation if there’s a cancellation.”
If you missed our guiding principles for Reimagining Deposits and Cancellations, and Protecting money in the value chain, click below:
o Reimagining Deposits
o Reimagining Cancellations
o Protecting the money in the value chain
A third and key pressure point within the value chain, in times of COVID-19 and beyond, deals with Protecting Money in the Value Chain, which is essential if South Africa is to be viewed as tourism friendly and trustworthy.
If you missed our guiding principles for Reimagining Deposits and Cancellations, click below:
o Reimagining Deposits
o Reimagining Cancellations
What can we as role players in the tourism value chain do to protect the traveller’s money when it is in the tourism value chain?
“Our purpose is to protect the traveller’s money. If we look at the leniency and flexibility on refunds currently in a COVID situation, we’ve already made huge steps forward in protecting that money. We’re giving peace of mind to the traveller that that money is protected until the time of travel.”
However, it goes beyond peace of mind around flexible deposit and cancellation policies. It’s about the security of the customer’s money in the value chain if the money has to be refunded. The Industry has a responsibility to ensure that the monies are protected on behalf of the customer.
There are cases currently where elements of the value chain are unable to do refunds because they’ve already traded on prepayments that are not theirs to use, which impacts our reputation as a trustworthy destination.
We must be vigilant and aware of immediate linkages in the chain, and be guided by the following principles:
“I believe it is the duty of a guest, booking agent or DMC to be asking the questions about how funds are protected. There’s a question to be asked and answered for how money is protected to ensure that a refund gets back to where it needs to get to. You cannot be paying money over to any partner that cannot provide you with that reassurance.”
“If you’re paying money over, know that it’s secure.”
Do what you can do in your part of the chain and take accountability for controlling what you can control in your area. While you can’t police your partners, you can ask questions of your partners on how that money is being treated and react accordingly. Understand who you are linked to, then choose who you are prepared to do business with on that basis. You need to be asking questions and be vigilant and aware.
“You need to see who your immediate partners you’re working off are solvent and that we have good cancellation terms with them. Our customers just want to know that their monies are safe. They don’t want to know what the T&Cs are of the end suppliers.”
If the traveller’s money is not refunded, there’s a negative impact to the Tourism Sector’s reputation, which is detrimental to everyone in the value chain. We cannot afford for there to be a breach of trust, especially at a time when there’s a likelihood that it could occur as a result of role players in times of COVID not being adequately solvent.
“Those who’ve behaved ethically will position the destination and industry well. We can align ourselves with people who are likeminded and those who come to the part as best as they can, get the benefit.”
One way of instilling trust is to ensure you do regular audits and show your partners that you are a viable concern. It provides comfort within the business and with partners and makes sure that everyone is completely aligned.
“Although going through audit is quite daunting, it’s a healthy process. I urge everybody to think about it. If you can go through that process and show that you have enough liquidity in the system.”
In the next step of “controlling what we can control”, SATSA’s Reimagining the Value Chain Thinktank tackles Cancellations – a critical pressure point that must be solved if the Tourism Sector is to navigate the immediate negative impact of COVID and thrive in a post-COVID world.
If you missed the Reimagining the Value Chain Thinktank’s guiding framework on dealing with deposits and how to save the forward book, click here.
This week’s guiding framework around Cancellations is important if we are to position South Africa and its Tourism Sector as travel friendly and trustworthy and generate demand.
As we compete with other destinations, we must demonstrate a willingness to meet the traveller, who is prepared to take the risk of travelling, halfway. We must also put the cancellation risk into perspective – not everyone who books, will book to cancel.
“Nobody books to cancel. We’ve all been fairly successful in persuading customers to postpone as opposed to cancel and keep that forward book. If it means you have the occasional booking that you have to refund, for the long-term reputation and integrity of our brand, it’s a small price to pay.”
Travel cancellations as a result of COVID will be isolated, so it would be foolish to manage our entire business around risk and then deal with demand. We must manage our business around demand and then deal with the isolated risks.
Cancellations – what’s the problem?
The problem lies in balancing the concerns of the traveller with the concerns of the supplier.
The concern of the traveller is that they may not be able to travel as a result for reasons out of their control, and that they will be stuck with having to pay a cancellation penalty. They would therefore rather not book, and so demand disappears.
The concern of the supplier is that they won’t be able to re-sell their vacant rooms, as well as cover the costs incurred prior to the guest’s arrival.
“There’s a fine balance between being super flexible and a guest cancelling out and you’ve incurred a whole bunch of cost.”
But risk is not a 100% certainty. It’s an equation of the level of impact multiplied by the level of probability of it occurring. What is the level of probability of a cancellation occurring and then the level of impact? How do we share the risk between the industry and the traveller in a way that we can still get demand going?
“If we put ourselves in the shoes of the traveller, the tour operator or the supplier, there’s a risk. When we think about whether a risk is worth taking, it’s worth considering that the following equation is considered – the level of negative impact and the level of probability of this risk occurring. If something is a 10% probability and a minor impact, why not extend very flexible cancellation penalties through times of COVID and improve demand?”
What is the cancellation solution that would encourage travellers who are worried about cancellations, while fairly allocating the impact where that travel can’t occur?
The solution lies in being flexible around cancellations to create an environment which encourages business. This would mean you would allow cancellations up until a period of time close to the arrival, or the day of arrival, or even during the stay.
Whatever the cancellation or non-use penalty then is, must be reasonable taking into account the impact to you, the product, as well as the client’s perception of value.
Here are two suggested guidelines proposed by the Thinktank in terms of dealing with cancellations:
Four principles apply in this guiding framework:
We are talking about cancellations only where the cancellation is due to circumstances outside of the traveller’s control due to COVID.
We propose
“The principle has to be around flexibility. Be as flexible as you will allow. The risk is that if you’re not flexible enough you’re not going to get any customers, so which is more important?”
“The general recommendation should be: Make it as flexible and easy as possible and rather get something, rather than nothing. We’re competing with the rest of the world.”
How you play the game at this time determines whether you will have a game afterwards. You can destroy your destination’s reputation in the way that you handle this existing situation. It’s important to realise that if there’s no demand, there’s no game.
“South Africa has an extraordinary opportunity to drive business. We have to be flexible to address the concerns of our travellers and make our destination totally tourism friendly. On those occasional times, we might lose a bit of business, but at least we’re in the game. If we’re not in the game, we’ve got nothing.”
“We’ve got to take a big-picture on this thing and get in the game. It’s our one opportunity.”
“We have to create the demand that we have the most lenient cancellation policies and we’ve done that now with deposit policies, which makes us an attractive destination.”