So Many Of Us Had Trips Booked

Today, I’m going to be talking about what to do when you can’t travel the world. And I mean, how do you get a refund for your trip? When you book a trip, how do you know your money is secure, and that you can get it back if it has to be cancelled? And what happens when something like COVID takes place and suddenly you have to cancel because your government says, “no, you can’t travel to that country, it’s not safe”?

So, not traveling the world today, really being at home, in a situation that unfortunately so many of us had to experience this year. So many of us had trips planned, had flights booked, had accommodation booked, had an Airbnb booked.

Around the world, billions and billions and billions of dollars was booked for trips that certainly had to be cancelled because of COVID-19 — and not specifically because of a disease, but because of the travel restrictions that went with that. And something really riled me this week. I’m not usually one to get angry, but I read in the newspaper LoveHolidays in the UK — an online travel agent — still owes 18 million pounds to 44,000 customers.

I’m Still Waiting For A Travel Refund

Eighteen million pounds to 44,000 customers. And what happened was, people booked a trip with LoveHolidays, then due to an increase in COVID cases, the UK government said, “you can’t travel to those places, we advise against travel”. So if you did travel there, your insurance wouldn’t be valid. So in that situation, the customer is legally obliged to get a refund. But LoveHolidays said, “no” they said, “well, actually what’s happened is, the airline hasn’t cancelled their flight. So, the flights still went ahead. So, you can’t get a refund”.

Forty-four thousand customers, 18 million, it’s really — and then thankfully, a lot of people complained and under UK law they’ve now been targeted by the competition and markets authority. And they will have to get these refunds by the end of March 2021. March 2021. Imagine you spent all your money on a trip and you don’t get it back for another four or five months.

And that was the reality facing a lot of people this year. I’m still waiting for a refund from KLM for a flight that was six months ago. KLM was supposed to be a world leader in tourism. And I’m still waiting for them, not actually not even waiting for a refund, I’m waiting for a travel voucher.

And so many of us experienced this this year. You know, all the laws, all the terms and conditions say, if it’s cancelled, you get your money back, you get your money back straight away. That is what happens in the world of commerce. If you buy something from Amazon and it doesn’t get delivered, well, you get your money back. If you buy a holiday and the holiday is cancelled — so the holiday is not delivered — you get your money back.

So why are people waiting six months? Why are people waiting 12 months? Why are people still waiting to get their money back? And the real challenge is, that unfortunately the people you book your trip with, have usually spent your money before you’ve gone on the trip. So even though it’s required by law — and it is required by UK law — for agents and operators to have to have a bond or a trust, basically they are not supposed to spend your money until your holiday has been completed — but they do, you know, they get a million pounds in sales and what’s the best thing to do as a business?

We’ll reinvest that million pounds. So we’ll reinvest that million pounds in marketing and we’ll make 2 million more in sales. And we’ll do that again. We’ll make 4 million more in sales. And then you end up in a situation where we’ve got 18 million in sales and everything’s been canceled and we’ve already spent the money. So all the customers are waiting for their money back.

How Can You Trust Travel Companies?

The other big challenge has been, where did they get the money back from? Because if you book a package at a travel agent, and the travel agent uses 10 different suppliers — so I’ve used two airlines, and that person there and that person and that person — so, the travel agent has used lots of different suppliers. Well, some of the suppliers they’ve already paid. Each supplier has a different cancellation policy for each aspect of the trip. And some of the suppliers are saying, no, we can’t give you the money back because we didn’t cancel. For example, the airlines say, “well, we can’t give you money back for your customers because our flights still went ahead and you booked that flight. So you have to go on the flight”. It’s really a murky, murky world.

And I mean, it’s amazing if people still will be travelling next year, because how can you trust where your money is going? How can you trust that that company will stick to the terms and conditions? How can you, when you can’t even trust that they’re going to stick to the law?

There’s another company called On The Beach, and they’ve left the Association of British Travel Agents because the Association of British Travel Agents said to them, “you have to give people’s money back. They couldn’t go on the trip because of travel restrictions. So you have to give their money back”. So On The Beach travel agent said, “no, we’ll just leave the Association of British Travel Agents and keep the money”.

I’m sure many of you listening are still waiting for a refund from something of a trip that was cancelled due to COVID, or have had to fight for a refund. This is not — I haven’t met many people who found it that easy to get their money back from an airline, from a travel agent, from a hotel. Many people have just started to accept, “Oh, that money has been lost”.

Travel Agents Should Have Holding Accounts

So, what’s the solution? How can we make travel different? How can we make travel better going forward? Because this has happened now, but in 2008, a lot of travel agents collapsed. Another disaster. People lost money. And for me, the only way to do this is just don’t spend — if you’re in travel, don’t spend the money until the trip has happened. It’s that simple. Somebody books a trip, and that money is not spent. That money stays in a holding account. Somebody books a trip, that money is in a holding account. And then it only gets taken out of that account when the trip has been completed

And to do it this way, makes it really easy to give the money back because it’s already there. Imagine as a customer, I bought my trip and I know, I can see it, it’s there in that account. So if something happens and within the conditions, I’m due a refund, then that money, it comes out of the holding account. And it’s back in my bank account within 24 hours. Simple, fair, transparent, easy.

Not spending the money — because if we spend the money before we actually delivered the service, that’s kind of like a pyramid scheme, isn’t it? A simple system — you pay your money, it’s held in escrow, it is held in a holding account, it is not spent. And then when your trip is complete, then the money fully goes over to the operator. So, somewhere in between where your money is stored. So, when you pay for your trip, you don’t pay everything. You basically pay it to this holding account. And if you need to get it back because of the terms and conditions, you can do that straight away.

Hopefully — and let’s all hope — in 2021 we’re not going to have these issues. Travel will be straightforward. We won’t have these cancellations. We won’t need to use any service like that, or rely on a service like that.

But for me, and for others at Kated, we believe the system should be fairer, so that what you pay doesn’t get spent until you’ve actually completed the trip. So that whenever something happens such as some new travel restrictions or something, because of COVID, you can get your money back straight away.