The Government’s $47.6m incentive scheme to help travel agents recover tourist funds will take the industry forward, House of Travel chief executive Mark O’Donnell says.
The new package would support agencies to recover New Zealanders’ money locked up offshore due to cancelled travel plans because of Covid-19.
“I was part of the petitioning group that approached the Government on this so we are broadly happy with it,” O’Donnell told the Ticker.
“From an industry point of view, the problem is there is no income for many businesses now.”
Travel agencies would be paid 7.5% of the value of cash refunds, and 5% of the value of credits successfully secured on behalf of consumers.
If an agent recouped $10,000 in a cash refund on cancelled travel, the customer would get that money back and the agent would receive $750. If it was a credit for the $10,000 of cancelled travel, the customer would get the credit and the agent would receive $500.
“We want to help customers but companies like cruise shop operators, hoteliers and airlines need to be able to pay staff and rent and so on,” O’Donnell said.
“This scheme is taking us forward. It will offset some of those costs although not all.”
It was taking airlines and travel product suppliers a long time to deal with refunds and credits because their systems were not built for it.
“You book an airline ticket online and pay your money. It’s not really designed to work the other way,” O’Donnell said.
“The suppliers are getting quicker but it’s still up to them to provide the money. And customers often need to make choices about taking a refund or a credit that may be worth more than the cash refund.”
New Zealand Travel Industry Suppliers Group chairwoman Robyn Galloway said most of the companies in the industry were SMEs with a predominately female workforce.
“It is estimated that nearly $700m of New Zealanders’ money is currently locked up in bookings for international travel.
“Getting this money back into New Zealand will be an economic boon, as it can then be spent in the local economy. This is complicated work that relies on the expertise and relationships our travel companies have with multiple international partners.
“We have had to cut costs and make staff redundant over the past six months just to stay in business, and many travel companies are struggling and being forced to downsize, increasing the risk that Kiwi travellers’ money will be stranded overseas.”
But Galloway said the support would not be to sustain the industry in the long term.
The Travel Agents’ Association of New Zealand’s outgoing chief executive, Andrew Olsen, said the package gave a great message to customers.
“Not all details are hammered out yet but it’s great news,” he said.
“It’s been a long time in the making. It will help some more than others but it’s good recognition of the industry’s role with customers.”
Commerce and consumer affairs minister Kris Faafoi said travel agents and wholesalers had been working hard to recover refunds and credits owed to New Zealand consumers, but were under “severe financial pressure, with many facing the prospect of insolvency”.
“The travel reimbursement scheme will help increase the likelihood of consumers recovering refunds and credits owed to them,” Faafoi said.
“It will also give greater confidence to the travel industry by limiting further insolvencies.”
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