For the discussion this week, define the role of the travel agent and explain the “duty to disclose” and how the travel agent demonstrates it. To support your explanation, use a specific scenario to demonstrate how the duty to disclose is and is not demonstrated.
For your peer replies, outline how STEM [Select, Train, Educate, Manage] could be implemented with the example provided by your classmate to reinforce the fiduciary responsibility of the travel agent in your employment.
Week# 7 Lesson
Product of Travel
Recalling our review of food products and truth-in-menu standards, travel is held to the same standard of how the product is represented. The product cannot be misrepresented. There is also a duty to the guest (client) provide the promised service. Additional liability issues for travel agents are failure to discover or disclose, failure to honor agreed upon price (contract), and negligence. Unlike food and beverages and other tangible products, travel and tourism do not sell a product that can be examined before consumption. Customers are at the mercy of the sellers to act with integrity and within the bounds of the law.
“Within the bound of the law” can be pretty complex when considering the nature of travel. Technology has made the world seem “smaller” as it is far easier to not only communicate and interact with people from around the world through networks but also to travel between different locations. International travel is cheaper and faster than what it was generations ago. As such, defining the bounds of the law can be complex because the laws from the point of the origin and the destination could be vastly different. American tourists arriving in Dubai and enjoying maybe one too many alcoholic drinks can be arrested once in Dubai for intoxication [if they clearly show they are intoxicated or behave in a way assumed to be due to intoxication, such as arguing with an immigration officer]. Barth (2012) defined law as “rules of conduct and responsibility established and enforced by society” (p. 3) and then clarified that society is not a singular concept. Travel involves a point of contact between different societal customs and values thus different rules for conduct and responsibility. These intersections could be global or they could be state to state, location to location as different areas are governed by different rules.
As implied on the last page, jurisdiction is one aspect of travel that creates legal complexity. An American travel could book a Canadian trip using a travel agent found online and headquartered in a different state. That trip could be managed through a separate agency that subcontracts meals and lodging at planned stops. Then the guest is given an itinerary of where to go. Who would be liable when something goes wrong, the agent, the tour company, or the individual contractors? The answer would likely be found in a contract or agreement at the outset but there is a clear question as to what the jurisdiction would be. For many elements where responsibility/liability is not expressed in any agreement, the liability will fall to who provides the service but there are potential liability issues for the travel agent and the tour operator.
As it sounds, the travel agent is an agent of the traveler, acting on their behalf to make arrangements and serve as an intermediary. The goal is to make the planning and actual travel easier for their client. They may work to fulfill specific requests of the traveler or sell travel packages already cobbled together by the destination or through agreements facilitated between the travel agent and the vendors. Agents are responsible for providing accurate information as well as advising their clients about any laws or regulations [i.e. passport requirements] that will affect travel or their client.
Failure to disclose accurate information can create a liability for the lack of honesty and/or full disclosure or the duty of good faith, acting with total truthfulness, absolute integrity, and total fidelity to the client’s interest. Potential liability issues include:
Failing to provide promised services. In terms of a contract, this is the terms of the agreement. The agent agrees to fulfill the client’s stated needs for compensation. Failure to do so is a breach of contract. There are conditions where the agent would not be liable, such as if an attraction at park is temporarily closed for repair or maintenance. It is a reasonable expectation that such a closure is possible and the agent may not have been aware that routine closure was occurring or that extenuating circumstances occurred. If however, it can be determined that the missing component of the agreement was never really an option, the agent would be liable.
Failing to honor agreed-upon pricing. Also a part of the agreement is the costs associated with the services. It can be difficult for an agent to manage what vendors may charge once the client is in motion, but the agent could still be liable for vendors increasing the price above what was already agreed upon. The agent could pursue legal action or other recourse [discontinuing the business relationship] but the agent would be liable to their client. Like strict liability and food service, responsibility could flow through the supply chain but the seller is liable to the buyer at each link in the chain.
Misrepresentation. Like other industries, the line between puffery and misrepresentation can be blurred. Adjectives may be used to create appeal and generate interest that may not be completely accurate 100% of the time. A beautiful, secluded beach could be marketed as an escape from the crowds but be beyond crowded when the guests arrive. The beach itself is tucked away in a cove but it has grown in popularity. The agent should have maybe recommended a different location but they would not be liable for popularity of the beach. They would, however, be liable if they characterized the beach as a hub of entertainment and there wasn’t anything there except for the hotel bar. A good case study to examine how a trip or experience may be misrepresented is the FYRE Festival of 2017.
Failure to discover and disclose. As stated, vendors will be liable for their actions [or lack thereof; negligence], but the agent has a duty to inform their client of any known or foreseeable risks or danger.
“If you book a June trip to Southeast Asia and your travel agent doesn’t mention it’s rainy season, experts say, they can be held responsible. Same goes for serious dangers such as outbreaks of Zika virus or civil unrest. While travel sellers are not guarantors of safety, the courts have ruled they can be held liable for ‘failure to warn’ if an injured party can prove an agent knew — or should have known — about the risk but did not disclose it” (Rutledge, 2018, para. 20).
This duty to warn is based on the agents expected level of expertise and the nature of the client trusting the agent to be not only knowledgeable about their product but also informative. Failure to do creates a danger for the client, which has been well represented in several travel destinations succumbing to instances of crime against tourists. The American Society of Travel Agents (ASTA) has stated that “while the appropriate course of action depends on the specific circumstances, as a general matter agents are obliged to disclose information that is ‘material’ to their clients’ travel plans…‘material’ means information that if known to the client would be reasonably likely to influence the traveler’s decision with respect to where, when, or how to travel” (as cited by Leposa, 2018, para. 2).
Negligence. Like other types of business, travel agents are responsible for their actions or decisions. To try to limit their liability and in the spirit of proper disclosure, an agent may weave exculpatory clauses into their agreements with a client. Though these clauses do allow the client to make an informed decision about the risk they are willing to take on, the exculpatory clauses do not replace responsibility to mitigate known risks. For a comparison, a theme park ride may not be liable for harm incurred by the motion of the ride but they would be liable for failing to properly restrain the passenger.
[For further exploration of these elements, research and review Pellegrini v. Landmark Travel, 165 Misc.
2d 589, 628 N.Y.S.2d 1003 (N.Y. Misc. 1995).]
Though a travel agent may also serve as a tour operator, the two roles can be mutually exclusive. The tour operator is used to refer to those that purchase travel resources and then market those resources to travelers, often using packages or predefined tours. Tour operators are able to buy in bulk to get a volume discount, mark up the price, and still sell the tours for a profit for less than what individual travels would pay on their own. A difference in the tour operator and the travel agent is that the tour operator’s income is mostly profit from sales and the travel agent’s income is likely commission based. This difference is also shown in liability as the tour operator is clearly responsible for the failure to deliver services [considered their own product being sold] and the travel agent may not be liable if they could not have reasonably known about the discrepancy [the product they are selling for someone else]. In addition to misrepresentation, potential liability issues include:
Nonpayment for prearranged services. Whereas the agent is doing business with the client as an intermediary or a liaison, the tour operator is conducting business to business transactions to build supply to meet demand, not unlike any retail operation. In the context of travel and tourism, supply could be prearranged services such as lodging or local tours. It benefits the tour operator and the service provider to establish agreed upon terms of what service will be provided for what cost. Failure to make payment or provide service would then be a breach of contract.
Nondelivery of promised services. Following nonpayment to a supplier, the next legal issue would be nondelivery of the product to the customer. Like misrepresentation, there is some grey area when evaluating the use of descriptors and a tour operator may not be liable for boredom on a marketed “exciting adventure” but the operator may be liable if a sold excursion was cancelled or did not exist. For contracts, it is advised to not use “flowery”, subjective descriptions but to use plain, quantifiable language.
Adhesion contracts. An adhesion contract is a contract with terms that were not truly negotiated or may be so one-sided in favor of the stronger party in the contract. These contracts can be deemed unenforceable by a court. For tour operators, pressure sales with clearly excessive penalties for cancellations or changes may be considered adhesion contracts. Initiating a new agreement with unfavorable terms for the consumer once travel has begun, thereby using the anxiety and uncertainty of being away from home as leverage, would also be an example of adhesion contract.
Liability for injury. Like agents, tour operators may not be liable for the actions of their suppliers but the tour operator would be liable for their own actions or if they own the service being provided
A travel agent is similar to a real estate agent and can be held similarly responsible in a fiduciary relationship [where one person places complete confidence in another in regard to a particular transaction or one’s general affairs or business]. The agent is expected to act in the best interest of the client…and trusted to do so, much like a restaurant patron or hotel guest trusts the organization to provide the same duty of care in their service. Adhering the following duties within the framework of fiduciary responsibility will help to prevent or mitigate liability related to legal issues that can affect travel planning and touring.
The travel agent is expected to act with the utmost care, assuring that the client’s interests, which would include their safety, security, and their needs during travel are addressed and protected at an appropriate level. Appropriate is used because safety cannot be guaranteed and extreme tourism will inherently include elevated risks.
The travel agent is expected to act with integrity, being honest and loyal to the client. Herein lies one aspect of where the travel agent should not misinform or mislead the client. Promises or descriptions could be used to establish expressed warranties when claims are made.
The travel agent must fully disclose all facts that could influence the client’s decision. Risks, possible costs, and any other elements that affect the decision to purchase or during travel should be identified and addressed prior to travel. The client should not be surprised during travel.
The travel agent must be loyal to the client. Though the travel agent is likely making a commission or otherwise being compensated for their service, the agent should not use the client as a means to make secret profit, influencing the client to make a decision that is unfavorable to the client. Options can be presented, but all costs should be disclosed and all options should be related to the needs of the client, not the agent and not a third party.
Seller of Travel
Several states in the United States [Iowa, Hawaii, Florida, California, and Washington] have implemented “Seller of Travel” laws, which means that anyone providing travel related services must register with the government. These laws apply to anyone doing business in the state or doing business with state residents.
Florida defines a seller of travel as any resident or nonresident person, firm, corporation or business entity that offers for sale, directly or indirectly, at wholesale or retail, prearranged travel or tourist-related services for individuals or groups, through vacation or tour packages, or through vacation certificates in exchange for a fee, commission or other valuable consideration. The term includes any business entity offering membership in a travel club or travel service for an advance fee or payment, even if no travel contracts or certificates or vacation or tour packages are sold by the business entity. [shown on next page]
California defines any seller of travel as anyone who is doing business in California and they must register. The broad definition of “doing business” includes solicitation of prospective purchasers who are located in this state, which means having a website accessible by Californian residents would trigger application of their statute.
These laws and variations of these laws implemented by other states create a means to regulate those doing business as well as provide some level of consumer protection. The “level” will vary state by state depending on the complexity of their travel laws and how comprehensive they are. The states with Seller of Travel laws provide a guaranteed minimum action of recourse if a customer is a victim of fraud.
A properly managed and regulated tourism industry helps to sustain the industry for any destination, bolstering the workforce, conservation of natural resources, and preservation of culture and customs. The problem for many areas is when proper management and governance is hindered or willfully ignored. This problem is created because tourism money is money being brought into an area, meaning wealth is being redistributed into the area. This condition motivates those who receive the money or otherwise benefit from it to be more “flexible” in governance. Rules and laws are bent and, eventually, the benefits of tourism are overshadowed by the detriments.
Even without flexible governance, destinations are more susceptible to overtourism now than they were a decade ago because of the advent of social media and information sharing. People share “hidden” gems or favorite locations and everyone flocks to that spot which tend to be overcrowded when they arrive and other noteworthy locations are overlooked or never known about. An example of this is Boracay Island in the Philippines. Because of the number of visitors to the island and the infrastructure being unable to cope demand, the president of the Philippines closed the island to tourists. Though the single island was a favored spot, the island is one of over 7,000. It was necessary to impose legal action to redirect tourist traffic and redistribute the demand.
Different destinations have responded differently to impose rules and standards in an effort to reduce the harm done by overtourism or uncontrolled tourism. Like Boracay Island, Venice, Italy has been victimized by overtourism with little gain that other destination may enjoy. Because of the unique nature of Venice, it is included as a cruise stop or as a stop for tourists sightseeing Europe or Italy and those visiting are only there long enough to snap a pic of a popular tourist site, buy a souvenir, and leave. They are not staying for meals or overnight stays so incoming revenue is limited but effort to accommodate and expenditures to maintain infrastructure are excessive resulting in little to no value of tourism.
In response, Venetian leadership have imposed or attempted to implement different rules and laws designed to more effectively manage a more sustainable number of tourists.
“The Mayor of Venice, Luigi Brugnaro, has also introduced new and controversial plans for controlling visitor numbers. In April 2018, he announced a system of segregation, whereby access to popular sites such as the Rialto and St Mark’s Square will be controlled if crowds become too great, with tourists diverted along alternative routes and only local and business people allowed to use the most popular thoroughfares. In addition, any tourists arriving by car via the Ponta della Liberta from the mainland could be turned away if they don’t have pre-booked parking. The mayor authorised fines of €500 for noisy, wheeled suitcases being used in the historic center, as well as fines for littering and loitering on bridges, swimming in canals, wearing swimwear while sightseeing and picnicking in public areas” (Simmons, n.d., para. 9).
The United States has several areas subject to overtourism. Las Vegas and Mardi Gras in New Orleans are obvious locations but they, like Orlando, have been able to allocate resources to adapt to the demand [or at least slow the harmful effects]. Other areas, like Alaska’s national parks or sites made famous in movies [i.e. Forks, Washington] do not have the same resources as Las Vegas or Orlando. As such, others means have to be explored. In one example, a byproduct of overtourism has affected the environment in Hanauma Bay, Hawaii as hundreds of pounds of sunscreen is transferred to the ocean and chemicals were killing the coral reefs. Hawaii banned the sale of sunscreen containing oxybenzone and octinoxate, two chemicals that can harm coral
A problem with imposing different regulations and restrictions is they also disrupt the lives of residents to some degree. Even among fervent anti-tourist sentiment in Venice, some residents responded negatively to impositions placed upon them. In Amsterdam, restrictions placed on short term rentals, used to manage supply to meet demand, was met with pushback. In this context, the legal question becomes a contrast between the right to travel and the right to live. Perkumien (2019) define the right to travel as individuals’ mobility rights or freedom of movement or a human rights concept encompassing the right of persons’ to travel from place to place within the territory of a country and to leave the country and return to it. It is freedom of movement addressed in United Nation’s Universal Declaration of Human Rights [Article 13], several comprehensive documents and legislation from around the world, and the United States Supreme Court in Kent et al. v. Dulles, Secretary of State. Though there is slightly more to the case, an aspect of the court’s decision was that “the right to travel is a part of the ‘liberty’ of which a citizen cannot be deprived without due process of law under the Fifth Amendment” (Kent v. Dulles, 1958). Officials could not summarily obstruct travel or freedom of movement.
In contrast, the right to live [in context of overtourism] is the right of the resident to live there day to day lives unobstructed and unencumbered by throngs of nonresidents vying for the perfect selfie. In a more serious contrast, residents should not be restricted either by accommodating tourism or through tactics to restrict tourism. Explained by Perkumien (2019), residents’ rights include a right to life and a right to privacy.
The element that makes overtourism relevant in the context of this class is that travel agents and tourism leaders have to know and understand what the laws are in their areas, whether in relation to where they are operating or when planning travel. A travel agent cannot promise unfettered access to all areas of a destination if there are restrictions. A travel agent also should not imply a luxurious, uncrowded experience [representing the product, the experience] if the destination is popular and tends to be overcrowded. Ultimately, this would be a failure to act in the best interest of the client and could be construed as misrepresenting the product.
As hospitality in general and tourism specifically is affected by the development and integration of new technologies intended to make doing business easier, it is important to also take a look at how technology is implemented. Sitting there, reading this implies you have at least a general sense of how technology and the multitude of software applications have transformed society since the turn of the millennium. You are, in fact, making use of a variety of technology to complete your education. If you have been attending classes for longer than a year, you have likely been exposed to different changes in the learning platform or adapted how you complete your classwork using available software. Just as you have as students, your role as future owners, managers, and advisors, will involve determining how to best integrate and update technology within operation without compromising service, endangering the guest, and sacrificing a competitive stance.
The speed of change and adaptation would make locking down a specific “current state” of technology within hospitality a difficult task. Mobile devices have and continue to revolutionize different industry segments. Touch screens of all sizes are being used to provide services such as check in, room assignment, reservations, menu ordering, and processing payment. Smart devices [formerly known as “phones”] are serving as bankers, planners, environmental controls, and even room keys.
Advancing technology and software updates can keep a business competitive, but there will come a time when a decision has to be made about upgrading hardware and/or completely overhauling the system to adapt to changing technologies. An aspect of that decision is whether integrate first (first mover) or wait. “First-movers” can gain a critical advantage when utilizing an advancement or entering a market for a product or service before their competitors. A first-mover advantage can be simply defined as a firm’s ability to be better off than its competitors as a result of being first to market in a new product category (Suarez & Lanzolla, 2005). Their name is the first to be associated with the change and they are able to spend more time refining their work to be more efficient. “Late-comers” may also have an advantage by learning the lessons of the first-movers. Mistakes and trial and error can be avoided because of the trail left by the first-mover. An example would be multiple software version updates as known “bugs” are exterminated and the programming is refined to improve performance. The dynamic demonstrated by comparing these few elements illustrates the crucial decision point for when and how to update technology.
Another concern would be determining any legal ramifications of the adaptation or integration. In addition to training and modifying systems and practices, legal questions should be anticipated and addressed. Following what we have been discussing in class, a primary question, outside of the change being legally permitted in the first place is establishing duties and standards of care. For example, a small, independently owned hotel that decides to compile information about the guests or conduct data mining [collecting and analyzing guest and other related data] to develop marketing strategies based on customer data should first examine the legal standards and restrictions related to data mining, such as privacy laws and disclosures. Likewise, they should be evaluating how to protect the guest and safeguard the information that they are collecting. Data breaches at a number of companies have shown that security is at a premium and hotels are targeted for data as well as credit card theft.
A data breach is an assumed failure of security protocols, no matter how proficient the hackers are, so enacting minimal precautionary measures would be perceived as a failure to act with reasonable care. Affected guests only perceive the failure to protect their interests and will explore options to recover from perceived or actual harms. Jay Shelton, senior vice president of risk management services at Assurance, explains that
“If sensitive or protective data finds itself into the wrong hands, it can result in claims expenses for which businesses will be liable. This could include identity theft, fraud and other cyber-related crimes. Organizations of all sizes and in every industry are exposed to cyber-related breaches, which can cost companies millions of dollars each year” (2015, para. 3).
As with any other basis for litigation, the cost of negligence can far outweigh the cost of reasonable care. One step in adhering to a duty of care to protect the interests of the guests is to understand the nature of the attacks. Those with ill intent have a variety of tactics that can use to hack a system. The variety of methods represents the level or preparedness that managers and owners must have. Leaders, managers, and employees must be properly trained in recognizing where there is potential for attack, the signs of an attack, and changes in their surroundings.
Travel and tourism are like any other business that sells a product. Sellers are liable for the product they sell, which means the product must be represented accurately and risk of harm from the product should be disclosed and mitigated. This applies to travel agent, tour operators, and transportation companies.
Barth, S. (2012). Introduction to hospitality law: Managing legal issues in the hospitality industry. (4th ed). Hoboken, NJ: John Wiley & Sons
Kent v. Dulles, 357 U.S. 116, (1958). https://casetext.com/case/kent-v-dulles
Leposa, A. (2018). Mexico and travel safety. Travel Agent Central. Retrieved from https://www.travelagentcentral.com/running-your-business/asta-talks-agents-duty-to-warn-mexico-and-travel-safety
Perkumien, P. (2019). Overtourism: Between the right to travel and residents’ rights. Sustainability (Basel, Switzerland), 11(7), 2138–. https://doi.org/10.3390/su11072138
Rutledge, R. (2018, April 11). Travel agents and popular sites didn’t share the risks with those booking travel to Mexico resorts. Retrieved from https://www.jsonline.com/story/news/mexico-blackouts/2018/04/11/travel-companies-fail-warn-tourists-risks-mexico/495145002/
Shelton, J. (2015). The growing risk of cyber liability. Retrieved from https://www.propertycasualty360.com/2015/03/01/the-growing-risk-of-cyber-liability/?slreturn=20201011170303
Simmons, B. (n.d.) Overtourism in Venice. ResponsibleVacation.com. Retrieved from https://www.responsiblevacation.com/copy/overtourism-in-venice
Suarez, F. & Lanzolla, G. (2005). The half-truth of first-mover advantage. Retrieved from https://hbr.org/2005/04/the-half-truth-of-first-mover-advantage
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