CATO News
All the latest news, updates and activity from the Council of Australian Tour Operators (CATO) 

Amid the mounting confusion and concern around the rights of travellers seeking refunds from bookings cancelled due to the impacts of the COVID-19 pandemic, Australia’s peak body representing tour operators and travel wholesalers explains to consumers why travel ‘credits’, and not refunds, are the optimal resolution.

CLICK HERE for a downloadable PDF version.

The COVID-19 pandemic has obviously had a profound impact on travel with widespread and ongoing ramifications.

One of the most contentious points being debated in mainstream media right now is consumer rights around refunds for bookings made where travel was not possible due to government restrictions imposed in the efforts to contain the spread of the virus.

The Council of Australian Tour Operators (CATO), the representative body for tour operators and wholesalers that supply travel experiences to Australian consumers, would like to provide deeper context for consumers to better understand the complex issue.

On face value, across-the-board refunds might seem to be a fair and reasonable outcome but CATO Managing Director, Brett Jardine, says it is not a straightforward proposition given the way the travel industry works from the inside.

"Behind every tour or holiday is a complex network of operators that work in unison to deliver the safe, seamless experiences we all expect when we travel," he said.

"Australian based tour operators and wholesalers develop international travel packages that are distributed through retail travel agencies and sold directly to consumers."

"During the development phase, these organisations commit time, money and resources working with independent suppliers based in the destinations where the travel takes place and who will ultimately deliver specific components of each holiday. So, once a booking is made, and even before, contractual commitments to the various parties involved have already been made."

A typical multi-day package may include many individual elements such as:

"CATO members completely understand the frustration and anger some travellers have right now which is why we felt it was critical to get the facts behind the headlines out there," said Mr Jardine.

"Once consumers are fully informed, they are in a much better position to understand why travel credits are the optimal outcome from this difficult and unprecedented situation."

Mr Jardine said in the majority of cases, travel credits for paid services have been negotiated between suppliers and the tour operators. "This is because the payment for international travel services are arranged months (sometimes years) in advance with contracts between tour operators and their suppliers that are binding," he said.

"Returning deposits, is not often an option. In normal times, our members would be hit with a cancellation penalty if they do not proceed with bookings. Hence, when an initial deposit for a holiday is paid, it is generally non-refundable as this is a commitment from the traveller seeking the services of the agent and tour operator to start preparing their future trip."

Travel plans might only involve a small number of components (ie: air and hotel) but a typical two-week tour can involve dozens of individual elements and this is where the complex nature of the international travel ecosystem can become challenging to follow.

"Whilst plans for one future trip may appear simple, virtually every itinerary is slightly different," added Mr Jardine. "Multiply that by the 6.5 million leisure trips taken by Australians in 2019, and a huge amount of time and energy is expended by professionals in every layer of the travel ecosystem or supply chain to be able to deliver the final travel product."

Most participants in the global travel ecosystem are supportive of travellers postponing their trips as opposed to cancelling and seeking a full refund.

There may be circumstances where a refund is a more appropriate course of action and in some instances, operators do offer refunds as part of their booking conditions. However, consumers do need to be aware that if a refund is offered by an operator due to force majeure, each contributor to the travel package (such as those elements listed above) may have the right to deduct any unrecoverable costs.

Examples of unrecoverable costs include:

This amount may vary subject to what has been involved in the development of an itinerary.

CATO believes a better outcome is therefore delivered by a future travel credit because it will generally be provided at up to 100% of the value of the travel originally booked.

"By helping travellers understand this deeply connected supply chain that has delivered outstanding, high-quality and secure travel experiences for decades we hope to see all concerned accepting a future travel credit as the best outcome," said Mr Jardine. "The alternative and potential rush for full refunds could send many parts of this network to the wall and result in further consumer disappointment."

On 05 May 2020, CATO Managing Director, Brett Jardine, discussed credits, refunds and the travel & tourism ecosystem on air with ABC Radio Sydney's Cassie McCullagh.

The nearly hour-long Focus segment explored the 'vexed world of travel refunds and credits', and included contributions from consumers with impacted travel bookings; travel lawyer, Anthony Cordato; and Andrew Paull from law firm Slater + Gordon.

CLICK HERE for the full Focus radio segment.

CLICK HERE for Jardine's seven-minute interview with Cassie McCullagh.

Last Friday 03 March, the NSW Government confirmed thousands of small businesses across the state struggling to cope with the COVID-19 shutdown may receive grants of up to $10,000 under a new assistance scheme.

This is in addition to other Federal Government stimulus measures and will likely only apply to CATO Members in our Tier 1 & 2 categories.

Whilst this is limited to business operating in New South Wales, we are researching if similar initiatives are being rolled out in other States and Territories.

To be eligible, NSW businesses will need to:

• Have between 1-19 employees and a turnover of more than $75,000.
• A payroll below the NSW Government 2019-20 payroll tax threshold of $900,000.
• Have an Australian Business Number (ABN) as at 1 March 2020, be based in NSW and employ staff as at 1 March 2020.
• Be highly impacted by the Public Health (COVID-19 Restrictions on Gathering and Movement) Order 2020 issued on 30 March 2020.
• Use the funding for unavoidable business costs such as utilities, overheads, legal costs and financial advice.
• Provide appropriate documentation upon application.

Applications for the small business grant of up to $10,000 will be available through Service NSW within a fortnight and remain open until 1 June 2020.

CLICK HERE to read the full NSW Government announcement.

CATO will keep a look out for further updates and advise as they become available.

For formal financial advice about how these announcements might affect your business, please refer directly to your own accountant.

By Aaron Zoanetti, Pointon Partners

• The following article was due to appear in Issue 5 of CATO's Ground Control Magazine which we anticipate will now be delayed until June.
• The article provides general guidance only and should not be considered legal advice, as an operator’s legal position will depend on its particular circumstances.

LIMITING EXPOSURE TO WORLD EVENTS THROUGH EFFECTIVE LEGAL DOCUMENTATION

No industry is more directly and broadly exposed to world events such as Coronavirus than the travel industry. Many businesses will experience challenging times in the coming months as forward bookings cancel and new bookings come to a halt.

There is not much within the control of tour operators to generate new bookings in this environment. But where customers are cancelling or where the tour operator has taken forward risk on inventory, what can be done at a practical level to mitigate exposure?

Cancellations – do I need to refund my customers?

Turning firstly to cancellations, customers may have rights at law (or potentially under booking conditions) to cancel their booking due to Coronavirus being considered an event of force majeure.

An event of ‘force majeure’ is an unexpected and extraordinary circumstance outside of the control of the parties which prevents the fulfilment of a contract. Usually the parties will be excused from performing their obligations in these circumstances.

Where a customer has the right to cancel or where the operator cancels because of an event of force majeure, a crucial question is whether the operator needs to refund the customer, even if the operator has already paid its suppliers.

This type of fact scenario was considered in the 2015 case of Ferme v Kimberley Discovery Cruises. In this case a cruise operator cancelled a cruise just prior to sailing because of cyclonic weather conditions and sought to rely on a provision in its booking conditions which stated that no refunds would be made if the cruise was cancelled due to ‘unexpected events’.

The court found the 100% cancellation fee provision to be an ‘unfair contract term’ and therefore void because it went further than necessary to protect the legitimate interests of the cruise operator. Because of this, customers were entitled to a full refund, even though the cruise operator had incurred costs that were not recoverable.

The court offered some guidance on a type of condition that would be less likely to be considered ‘unfair’ and would therefore be enforceable: In effect, a condition which limits cancellation fees to amounts which have not been expended or legally committed to be spent would likely be enforceable in a situation where travel is cancelled due to ‘unexpected events’.

Do my suppliers need to refund me?

Whether or not an operator’s suppliers need to refund payments made for future services depends on the agreement between the operator and the supplier.

A supplier agreement should contain a force majeure provision which gives a right to cancellation and refund where services are cancelled due to unexpected and extraordinary events. A useful tip is to ensure that the definition of ‘force majeure’ encompasses a ‘do not travel’ or ‘reconsider your need to travel’ advice issued by DFAT.

Key Takeaways

Properly drafted cancellation/refund terms should mitigate exposure to refund customers for existing bookings where funds have already been paid to suppliers (although profit and potentially administration costs may not be recoverable).

Properly drafted force majeure provisions in a supplier agreement should mitigate the risk associated with forward risk on inventory that is no longer required due to ‘unexpected and extraordinary events’.

CATO Members seeking further advice, please contact us for a direct introduction to Aaron Zoanetti.

The summary below has been provided by CATO's external accountant who is available to members if further assistance is required.

• The information was correct at 01 April 2020.

UPDATE: The Federal Government has announced a $130 billion wage subsidy to support businesses to stay in business and keep Australians in work through the Corona Virus pandemic.

The JobKeeper Payment will support employers to maintain their connection to their employees. These connections will enable business to reactivate their operations quickly – without having to rehire staff – when the crisis is over.

Under this JobKeeper payment:

• The Government will provide $1,500 (before tax) per fortnight per employee for up to 6 months provided that the turnover of the business has decreased by at least 30% and turnover is less than $1 billion (or a 50% decrease if turnover is $1 billion or more).
• Employers must elect to participate in the scheme by making an application to the ATO.
• The subsidy will start on 30 March 2020, with the first payments to be received by employers in the first week of May 2020.
• The scheme will be available to full-time, part-time workers, sole traders, and casuals who have been with their employer for more than 12 months, provided that the employees were on the books on 1 March 2020.
• Employees who may have been stood down or even retrenched after 1 March 2020 may still be eligible.
• Employers must report the number of eligible employees employed by the business on a monthly basis. For most businesses, the ATO will use Single Touch Payroll data to pre-populate employee details.

Businesses without employees, for instance sole traders, can also register for the JobKeeper Payment and will need to provide a monthly update to the ATO to declare their continued eligibility for the payments.

CLICK HERE to download the Federal Government issued JobKeeper fact sheet.

• The 2020 CATO Awards have been postponed due to the ongoing Covid-19 crisis.
• The CATO Awards were set to take place in Sydney on 23rd October.

The Council of Australian Tour Operators (CATO) has announced the postponement of the 2020 CATO Awards due to ongoing uncertainty around the Covid-19 crisis.

“We are acutely aware of the challenges facing the entire industry right now, so we have made the appropriate decision to postpone our October event," said CATO Managing Director, Brett Jardine.

Image: CATO Managing Director, Brett Jardine.

"After the success of the 2019 CATO stream within the National Travel Industry Awards, the 2020 CATO Awards was to be our first stand-alone awards event. We are immensely grateful for all the sponsorship support and commitments we had received, particularly from the event's Platinum sponsor, Globus family of brands," added Jardine.

Image: Brett Jardine with the Globus family of brands team.

The CATO Awards are an opportunity for the land-supply sector—tour operators, wholesalers and the like—to recognise the outstanding achievements of retail travel agents and media.

"Travel agents and CATO members do an amazing job, never more so than recently, as they worked to bring tens of thousands of Australians home safely. We look forward to celebrating with them at the rescheduled CATO Awards at a later date," said Jardine.

For additional information and inquiries, please contact:

Brett Jardine
Managing Director, Council of Australian Tour Operators (CATO)
E: bjardine@cato.travel

-ends-

• Working together to bring Australians home 
• Supporting travellers and staff 
• Planning for the recovery

The Council of Australian Tour Operators (CATO) has held crisis planning talks with its members to support their short and long term needs.

"Our sector will be the key to recovery," said CATO MD, Brett Jardine.

"We need to take a unified approach and work together to ensure the survival of our industry so we are ready to help travellers with their plans when the timing is right," Jardine added.

A three-point action plan resulted from the meeting:

1. Members agreed that the first and most immediate priority was to share information and develop collaborative solutions to assist with the immediate repatriation to Australia of their clients currently travelling overseas regardless of which company they had booked with.
   
   "Travellers book with Australian tour operators so they have the peace of mind advantage of end to end support with their holiday plans. More than ever, we are mindful of delivering on that promise to our clients," said Jardine.
   
   
2. Members heard from an expert advisory team including insurance and legal specialists who were brought in to provide recommendations on how to best support travellers and ensure they could enjoy their holidays at a future time. CATO reinforced the position outlined earlier this week that the provision of credits to travellers is preferred where possible. It was agreed that this approach would deliver the best outcomes for travellers, and may also help to protect the financial health of tour operators and wholesalers which in turn will assist their staff, their travel agent partners and also suppliers such as airlines and hotels.
   
   
3. CATO will continue to work with other industry associations and government organisations to ensure the best possible outcomes for the sector.

Jardine closed the meeting by reiterating the vital importance of the travel industry to the Australian economy.

"We are at a critical juncture. Working together with our members and other like-minded organisations, we need to enact smart decision-making to ensure that the travel industry survives this immediate crisis.

"We also need to start planning for the rebound which will undoubtedly happen to make sure we are ready to help our clients reboot their holiday plans and reignite the outbound travel sector," he concluded.

- Ends -

• CATO supports credits rather than refunds to protect agent bookings and commissions
• CATO urges Australians to support travel industry by postponing rather than cancelling

(March 17, 2020) The Council of Australian Tour Operators (CATO) has today issued a rallying cry to the travel industry and holidaymakers to work together in these unprecedented times to ensure the best possible outcome for the future.

The Association commended the efforts of the entire industry for its proactive customer focused approach to dealing with this crisis.

“It is obvious that front-line staff, across all sectors of the industry are doing it very tough as they work around the clock to help clients navigate through this.” 

Brett Jardine, CATO Managing Director.

“We’ve all faced various crises before but nothing of this scale and magnitude. With borders closing, foreign governments imposing restrictions on movement and the Australian Government now imposing self-isolation of travellers returning from an overseas trip, CATOs view is that an event of ’Force Majeure’ has occurred,” said Jardine.

’Force Majeure’ is an unexpected and extraordinary circumstance outside of the control of the parties which prevents the fulfillment of contract terms and conditions.

In typical force majeure circumstances, tour operators, wholesalers and their suppliers would usually be excused from performing their obligations. However, right now in CATO’s view, the best possible outcome for everyone concerned is for customers to be issued with credits for future travel.

By issuing travel credits, where possible, as opposed to refunds, not only does the traveller have a positive experience in this difficult time with an assurance that their holiday of a lifetime can still be enjoyed at a later date, but the agent with whom they booked also retains their commissions which ultimately guarantees an even stronger industry in the future.

As an industry we have quickly entered uncharted waters and now is the time for us all to work together for the long-term prosperity of our industry.

The travel industry is a vital part of the economy, providing much needed jobs in cities and country towns throughout Australia. Working together to find the best solutions for both travellers and travel planners, we will ensure that the travel industry survives this crisis and when the time is right will be there to help Australians re-book their well-deserved holidays.

• Globus family of brands has been named as the Platinum Sponsor for the 2020 CATO Awards
• The CATO Awards take place at the Hyatt Regency Hotel, Sydney on Friday, 23rd October.

The Council of Australian Tour Operators (CATO) has announced that the Platinum Sponsorship rights to the 2020 CATO Awards has been awarded to Globus family of brands.

Image: Brett Jardine, CATO Managing Director (3rd from left) with the Globus family of brands team. Left to right: Chris Fundell, Head of Marketing Australasia; Gai Tyrrell, Managing Director Australasia; and Peter Douglas, Head of Sales.

“We are absolutely thrilled to have secured the Globus family of brands’ Platinum Sponsorship commitment for the 2020 CATO Awards. Their contributions to CATO’s support of Australia’s land-supply sector over the years has been immense—we’re delighted to have them on board", said CATO Managing Director, Brett Jardine.

Image: CATO Managing Director, Brett Jardine.

Confirming the CATO Awards Platinum Sponsorship, Gai Tyrrell, Managing Director Australasia said, “The Globus family of brands is a longstanding supporter of the Australian travel industry, so we’re delighted to come on board as CATO’s first dedicated Platinum sponsor for its inaugural awards.”

“It’s essential the industry continues to celebrate excellence and encourage growth within the field, and I have no doubt CATO’s travel awards will be a coveted event in the travel industry calendar for decades to come”, Tyrrell added.

 
Image: Brett Jardine presenting the 2019 CATO Awards stream at AFTA's National Travel Industry Awards in Sydney.

The inaugural CATO Awards were held as a stream within the National Travel Industry Awards (NTIA) gala in 2019. But it’s a different story in 2020—the CATOs will, for the first time, be run as a stand-alone event, one that recognises the outstanding achievements of retail travel agents as well as trade and mainstream media.

CATO Awards Need-to-Knows

• Date: Friday 23rd October 2020 - 6pm till late
• Location: Hyatt Regency Hotel, 161 Sussex Street, Sydney
• Tickets: Just $150 per person
• Cocktail dress code

Tickets are limited. Grab yours now RIGHT HERE!

Contact CATO to find out more about tailored sponsorship opportunities.

A statement from The Council of Australian Tour Operators
Chairman, Dennis Bunnik and Managing Director, Brett Jardine.

DOWNLOAD CATO's statement as a PDF HERE.

A simple scroll through social media and various news outlets at the moment and it is easy to jump to the conclusion that the world is doomed! We’re all about to be eaten up by the Coronavirus and should stop everything immediately.

It’s not too far-fetched to say that this is causing a Worldwide Panic. What started off primarily in the East is now rapidly spreading West with Europe and North America currently in the grips of the panic and its associated irrational behaviour.

We don’t profess to be medical experts and never will be. However, one piece of advice we should all be following is not to take medical or travel advice from social media or mainstream news headlines.

Whilst this situation is changing daily, to ensure minimal impact on the year ahead, consumer confidence is critical and every participant in the travel industry has a role to play.

We all need to be making decisions and directing customers to the best credible information available.

World Health Organisation
For the latest information and guidance from the WHO regarding coronavirus disease (COVID-19) that was first reported from Wuhan, China, on 31 December 2019.
www.who.int/emergencies/diseases/novel-coronavirus-2019

Australian Government Department of Foreign Affairs & Trade (DFAT)
The Smart Traveller website (www.smartraveller.gov.au) provides the latest travel safety information for Australian travellers heading overseas.

Perspective
Each year in Australia alone more than 3,000 women die from breast cancer, more than 3,000 men die from prostate cancer and more than 3,000 Australians commit suicide.

If we compare this to the SINGLE death from coronavirus as at today – we really do need to put our attention on more important issues.

Why there are so many sensational headlines at the moment
Dramatic headlines create clicks and sell papers.

So, when a Government Minister talks about reviewing the National Emergency Action Plan and details the different threat level responses the media naturally leads with what the ‘worst case’ scenario looks like as this will create more interest for the story. It is not until you read the body of the story that you realise the headline has been over dramatized. The problem is most people only read the headlines.

Governments and professional businesses need to have emergency plans in place and at times like this it makes sense to review them and make sure all is in order. The World Health Organisation, similarly, has protocols in place and has been calling for all governments to prepare. The news media is simply amplifying this message. It does not mean however that the worse-case scenario is any more likely than the best-case scenario.

Adding further fuel to the fire of dramatic headlines are the politicians who will take any opportunity to look strong in the media to help their opinion polls – for example by shutting borders or prematurely declaring a pandemic when one does not exist. This impact then snowballs and creates further unnecessary angst in the community.

Social Media Loves Drama – and a Conspiracy Theory!
Social media and instant access to information via smart phones is overall fantastic. However, spend enough time online and you’ll be convinced the earth is flat and man didn’t land on the moon. As mentioned before, it is best not to take medical advice from strangers on social media.

Sadly, the result of all this panic is that holidays and even public events are being cancelled for no valid reason.

The head of the World Health Organisation, Dr Tedros Adhanom Ghebreyesus, said this week, ‘Our greatest enemy right now is not the virus itself, it’s fear, rumours and stigma.” He stressed that fear and misinformation were the biggest challenges to overcome.

Fear, misinformation and panic is leading to irrational decisions which in turn is placing entire industries and economies under threat. Thousands of jobs have already been lost and it is not inconceivable that several airlines and companies relying on travel, tourism and events will stop trading as a result.

“The biggest impact of COVID-19 will be economic rather than medical.”
So before making any decisions it is important that you are armed with up to date information from reliable sources. 

DFAT Smarttraveller
On Friday 28th Feb, CATO met with senior officials from the DFAT Smart Traveller Division which included a senior manager from the DFAT COVID-19 Task Force.

A very realistic approach to COVID-19 is that taken by DFAT who operate on a very strict No Double Standards policy. Under Australian law DFAT is unable to withhold information from the public which they have available to their own staff. This ensures all travel safety and security information is shared with the Australian public. DFAT is obviously monitoring COVID-19 very closely and amending travel warnings as a result.

Despite the ‘world-wide panic’ DFAT as at 1 March 2020 has only changed the travel warnings for 5 countries. They are:

China & Iran: Changed to Level 4: Do Not Travel
For China this is due to it being the epicentre of the outbreak and with the evacuation of non-essential staff Australia only has limited consular capability for assisting Australian travellers.

For Iran the warning was already at the second highest level (#3 Reconsider Your Need to Travel). The increase is due to the rapid spread of the virus, the perceived weakness of the Iranian health system, reducing commercial flight options for leaving the country and the limited Australian consular capability in Iran.

Japan & South Korea
Both have had their warning levels increased from the lowest Level 1 (Exercise Normal Safety Precautions) to the second lowest Level 2 (Exercise a High Degree of Caution).

The Australian Government does NOT recommend cancelling travel to either Japan or South Korea. It is advising travellers to be more vigilant regarding their personal hygiene and stay aware of any local restrictions. Both countries have strong robust health systems and the Australian Government has high levels of Consular Capability in place.

Mongolia
The travel warning has been increased from the lowest Level 1 (Exercise Normal Safety Precautions) to the second lowest Level 2 (Exercise a High Degree of Caution).

The reason for this change is that whilst Mongolia has not had any reported cases the health reporting system there is perceived as potentially weak and Australia has limited Consular Capability in Mongolia.

Italy
The overall travel warning for Italy has not changed. It remains at the Level 1. Parts of Northern Italy (not including Tuscany and Florence) has increased to Level 2 (Exercise a High Degree of Caution). Again, the Australian Government is not recommending that people avoid travelling to Italy.

It is worth adding that each year more than ONE MILLION Australians enjoy travel to Indonesia each year and the DFAT advice level here is also at level 2 (Exercise a High Degree of Caution).

Changes to government travel warnings are based on fact and information from multiple credible sources. The fact that so few warnings have changed should give travellers comfort as to the seriousness of this virus.

United Nations World Health Organisation www.who.int
The World Health Organisation is the world’s peak health organisation providing advice and assistance to governments to help improve health services and manage health emergencies.

WHO has been involved with COVID-19 since its initial outbreak and continues to be the leading source of up to date information.

At a press conference in Geneva on 28 February 2020 Dr Tedros said that most cases of the virus could still be traced and there was no evidence of the virus spreading freely in communities.

The head of the WHO’s Emergency Health Program, Dr Mike Ryan, stressed that current data information does not suggest that the virus has become a global pandemic.

Dr Tedros reiterated that the spread had the potential to become a pandemic but cautioned against unnecessary panic.

THE NEXT STEPS – To Travel or Not To Travel?

If you are travelling in the next 2-3 months

• Closely monitor www.smartravellers.gov.au and the information available on www.who.int
• Check with your insurance company as to the level of coverage you have.
• Check with your tour operator as to the status of your tour.
• Your decision to travel should be based on the advice from the above sources taking into account your personal circumstances
• If you fall into a high-risk category consult with your GP before making a decision.

If you are travelling from 1 June 2020 onwards

• Do nothing now. The situation will likely change significantly in the next 3 months and making a decision to cancel or delay your booking now may result in unnecessary cancellation and amendment fees.
• Keep monitoring the information sources above and keep regular contact with your travel consultant.

Fear of Quarantine After Travel
There is some fear among travellers that they may be sent to special quarantine facilities in Darwin or Christmas Island if there is an outbreak at their holiday destination. Whilst this fear is understandable it is important to bear in mind that the only Australians sent to special quarantine facilities were those evacuated out of Wuhan City and from the Diamond Princess cruise ship.

The normal practice for Australians returning from countries with high rates of infection is to self-isolate at home for 14 days and seek immediate medical attention if symptoms of illness develop.

A Final Note
Travel restrictions from China and other parts of Asia are having a significant impact on visitor numbers to many destinations. Similarly, there are many irrational cancellations from the western world. As a result, this could actually be the best year to see some of the world’s most popular destinations without the mass crowds.