ETOA Executive Director Tom Jenkins, in conversation with David Browne, looks ahead to a new year of activity for the Association including a program of intense lobbying to improve the business environment for European tourism. High on the agenda is taxation, along with reform of Europe-wide consumer protection, promotion of Europe as a destination especially for escorted tour groups and the growth of online distribution in travel and tourism.  

Tour Operator Margin Scheme  

Of all the issues that we are concerned about none are more pressing than the way in which tourism is taxed. Europe is unique in that it taxes anyone wishing to stay in Europe but it grants tax-free status to anyone wishing to take a vacation outside. We apply VAT to tourism exports when every other service export is VAT exempt.  

Spain has just assumed the rotating Presidency of the European Union and last year pledged to reform of the Tour Operators Margin Scheme (TOMS) for the collection VAT. The imbalance between the tax falling on European based tour operators compared with those based outside the EU has long been a bone of contention for ETOA. The Tour Operators Margin Scheme (TOMS) can amount to five times the net  profit made on a tour. This has driven member companies who sell direct to consumers off shore. ETOA will be fighting to prevent TOMS being extended to the wholesale market.  

If TOMS were to be extended to them then they would experience identical pressures to relocate off-shore, and this threat of disinvestment applies equally to the online operators as well.  

So the pledge by the Spanish to reform the TOMS marks a critical moment for European inbound and online travel and tourism. We will be asking for a clause which gives EU companies the same advantages as non-EU companies when selling to inbound tourists.   This proposal is expected to get broad industry support from ETOA’s European partners and the Association will be putting forward its case to the EU Commission, the Council of Ministers and the European Parliament throughout 2010. These negotiations are almost certain to be protracted and go through to the Belgian Presidency after June 2010.  

The Tour Operators Margin Scheme is an issue of such importance to industry that ETOA will be holding regular seminars on the subject of taxation of tourism throughout the year.    

Package Travel Directive  

ETOA is also seeking reform of the Package Travel Directive., the out-dated consumer protection regime enshrined in European and national law, but applying only to European-based tour operators. European companies are penalised by administrative costs not imposed on competitors outside the EU in an industry where trading is globalised and anyone can sell vacations to Europe from a base anywhere in the world without incurring the same costs.  

With the Package Travel Directive we have an interesting problem. For legislators it seems entirely natural to impose a consumer protection regime on operators in the field of travel. Politicians feel that it is their responsibility to ensure consumers are protected when purchasing travel in a way that few other consumers are.  

In doing so, they seldom reflect on the costs that this imposes on consumers. The administrative burden of being able to prove you are solvent always costs a business a time and money. This cost is passed on to the consumer in higher prices. This burden has hitherto not applied to many online distributors.  

It is worth noting that when consumers are offered a choice between buying a package that is covered by the PTD or opting to purchase through an online distributor, they choose the cheaper of the two options. IIt isn’t a coincidence that the explosive growth in the tourism industry has been online. This is  outside the protection of the PTD and so without the associated costs.  

The difficulty that the legislators face in the coming year is that they can only legislate for vacations sold in Europe. But consumers can and do source their holidays from vendors on the Internet who can be based anywhere on the Earth.  

In the travel field consumer law no longer has a monopoly. Consumers can choose if they wish the PTD to apply to their purchase or not. Currently, European tour operator companies have no choice. The central problem with the existing PTD is that the legislation does not address this and we look forward to seeing proposals from the European Commission to address it.  

Travel consumer has grown up and no longer needs this nanny.  

The Commission should be aiming for clarity and freedom. Just as consumers are free to choose where they buy their travel arrangements, so companies should be free to choose any scheme such as a “kite mark” or other banner of probity and consumer assurance.  

Online Distribution Standards  

Both these problems – taxation of tourism services and consumer protection – are accentuated by the ease and spread of online distribution channels.  

We hope in 2010 to assist in rolling out some very modest proposals for standardisation. This standardisation is longed for by suppliers and operators but both have their own agendas. Our challenge is that suppliers spend much of their time defining how they differ from their competitors rather than on what makes them the same.   Operators have always expected suppliers to conform to their own sometimes idiosyncratic requirements, and when each customer calls an individual tune you have a natural discord.   What we are hoping to suggest, in conjunction with TTI, is initially very modest – a unique numerical identifier. This is a very small beginning but we hope it can lead to solving a very big problem.  

Promoting Europe  

One by-product of the Lisbon Treaty that is seldom commented upon is that it gives the European Union a role in promoting Europe as a destination overseas. This is something ETOA is interested in, obviously. What form this role will take and how it will manifest itself is something that will occupy our Brussels office. And we look forward to a much closer relationship with the European institutions. One immediate effect is likely to be that separate national tourist offices are going to be facing budget cuts in the immediate future.  

Group Tourism  

One of the areas which ETOA has always been interested in is escorted tours. It is an area of huge importance for the Association as a large proportion of incoming visitors choose to travel in groups when seeing Europe.  

From a client’s point of view, this is entirely sensible. An escorted tour is a popular, comparatively inexpensive and stress-free way of seeing Europe. They are also exceptionally good for the destinations they visit. They bring huge buying power in discreet groups that can be organised and planned for. From an operator’s point of view, it remains one of the most important ways of adding value. We sell knowledge. We sell expertise. And both are manifest in an escorted tour.  

What we have to do to ensure that the virtues of an escorted tour are widely appreciated by both destination and potential client. It is also vital that they are not persecuted with punitive access charges, bed taxes and local guiding restrictions.  

One of our successes of 2010 will be the reintroduction of the 12-day Rule, to allow coach drivers to work for up to 12 days on tour, but our primary purpose will be to broadcast how attractive and important escorted tours are.  

On guiding in particular, we will remain vociferous in insisting that clients should not have local guide lecturers imposed upon them. They should be free to choose who they want to listen to. Guiding monopolies almost invariably lead to importunate mediocrity masquerading as professionalism.

 

ETOA Expands Management Team

The Association has strengthened its management team by recruiting tourism veteran John Boon as head of ETOA’s membership services. He joins after a distinguished career in the travel industry, including American Express, Sovereign Tourism and Anglo-World Travel. His most recent position was head of contracts and operations at JAC Travel, one of the largest travel wholesalers in Europe.

Boon was chairman of the British Incoming Tour Operators Association, the forerunner of Ukinbound, in the 1980s. From 1990 to 1997 he was chairman of first the British and then the International Chapters of the American Society of Travel Agents.

Boon is the latest in a series of senior figures to join ETOA this year.

Tim Fairhurst, formerly operations director at EF, became head of group tourism. Tom Nutley, formerly of Reed Travel Exhibitions, became head of industry liaisons. Nick Greenfield, formerly Head of NETC’s London Office, took over tour operator affairs. 

The ETOA Secretariat now numbers 15 people. 

“Next year we see proposals in Brussels to overhaul both the Package Travel Directive and the Tour Operators Margin Scheme. 2010 will be a crucial year for the travel industry,” said ETOA Executive director Tom Jenkins.

“We are assembling an exceptionally strong team to address these issues. John Boon is one of the leading figures in the European inbound industry.

I am really pleased that he has agreed to join us. He brings a massive amount of experience to bear and gives us new authority. His grasp of current commercial practice will be of real benefit.” Boon said: “ETOA is a genuinely exciting organisation and membership is growing exceptionally fast: it grew by 25 per cent in 2009. To be part of this dynamic growth and help the team deliver value is a thrilling challenge.”

ETOA and Travel GBI sign Media Partnership

The European Tour Operators Association (ETOA) and Travel GBI have entered into an exclusive domestic travel trade media partnership agreement that will see a high profile for ETOA’s forthcoming events and initiatives, promoted through the pages of Travel GBI. 

Tom Jenkins, Executive Director, ETOA, said: “I am delighted to be forging a working partnership with Travel GBI.  It has great penetration, particularly of the group travel organiser community and I am impressed by the number of times members mention the publication to me.  The UK is a vital destination for inbound tourists and the country in which most of the European incoming industry is based.  What happens here is of concern to tour operators and intermediaries throughout the world.”

Bob MacBeth-Seath, Publisher said: “ETOA is a very prominent trade association representing the European inbound industry.  In addition to being an effective lobbying body, it organises a number of extremely well-attended industry events that have grown consistently, owing to their success in putting the right tour operator buyers together with numerous new and existing suppliers.”

ETOA’s Hoteliers European Marketplace will be on February 12^th at the Hilton London Metropole and the Britain and Ireland Marketplace will be on March 16^th at Park Plaza Westminster Bridge.

Come and meet us at FITUR!  We will be exhibiting at the Madrid event for the first time, from 20th-22nd January. FITUR is also open to the public on 23^rd and 24^th January.

Read Full Press Release: FITUR 2010: 30 years committed to tourism