There’s an interesting story developing north of the border involving a bankrupt tour operator, several Caribbean resorts and thousands of vacationers. When Canadian tour company Conquest Vacations closed its doors last week, it left many of its bills unpaid. Now hotels are essentially forcing their guests to pay their hotel bills twice, often using heavyhanded and threatening tactics.
Guests were locked out of their rooms and threatened with arrest if they didn’t settle up. The resorts offered no apologies for their behavior. As one hotel chain owner put it,
Conquest never paid us. The result is that consumers have been enjoying vacations at our hotels and resorts – sleeping in our beds, eating our food, drinking our beverages – which were never paid for. We have no recourse but to require payment prior to the traveler’s departure. We completely understand that this situation is upsetting to everyone involved and we regret the impact it may be having upon people’s vacations.
Regret the impact? Well, being threatened with prison time in a foreign country is a little more than an inconvenience.
So what are your options?
I mediated a case like this just a few weeks ago, and the credit card company came to the rescue of the vacationer.
If you paid for your vacation with cash, you have to become a claimant in a bankruptcy court. In the United States, that basically means you’re out of luck, because there are a lot of folks in line ahead of you for a refund. You’ll probably get pennies on the dollar — if that.
Travel insurance would have helped, too, although not all policies cover bankruptcy.
The best way to prevent something like this is to monitor the health of your tour operator. There were warning signs of Conquest’s demise. Signs that appeared to have been ignored, for the most part.
If your tour operator belongs to an organization like the US Tour Operators Association, you’re unlikely to run into this kind of trouble. As part of their membership requirements, USTOA companies must carry a minimum in liability insurance and have all the right references. I have yet to come across a Conquest-like case involving a USTOA member.
What if it’s too late, and you’re locked out of your room?
Call your travel agent and explain the situation. Remember, your agent is your advocate and will be able to make a call that could ensure you don’t spend your vacation in a Banana Republic jail.
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{ 10 comments… read them below or add one }
Ummm.. unless your Travel Agent went bankrupt. I’m a little confused by the call your travel agent advice.
Thanks for the USTOA deets.. that will come in handy!
For insurance that does cover provider default coverage, you have carefully read the terms of the policy to protect yourself. All default coverage I have seen excludes coverage for the company with which you booked the travel (tour operator, airline, cruise line, etc.)
So, if you book a tour through a travel agent, insurance will protect you from the tour operator’s default, but not the travel agent’s.
This would be a good reason to book through an agent, but only if you have verified that they have insurance of their own to cover any default on their part.
SirWired
Oh, and as a side note, the linked article mentioned that $1M has been seized from the operator, and there is a $30M compensation fund that could be used to reimburse at least some travelers.
SirWired
Your travel agent and your tour operator are two separate companies, under most circumstances.
If a TA went bankrupt, you most likely would have known in advance–you woudl not be allowed to board the plane, etc. and you woudl have known the TA did not pay the TO.
But the hotel is entirely correct. It sucks for the traveler for sure, but all 3rd party insurances cover suplpier insolvency except for certain suppliers. Your agent or the insurance company can tell you who and what is covered.
This is really no different than the guy you worked with on a WN ticket bought on Craigslist that was not valid. In the end, Southwest was not paid and they need to be paid to provide the service.
I woudl not go so far to say an agent can get you (or keep you) out of jail, but hopefully there is some pull that will help you out. If you want a good example of an agent helping out a client, read this column
Uh, liability insurance is just that, liability insurance – it does not insure against banruptcy – it insures against business torts . . . employee theft . . stuff like that.
Now, they have a travel bond – guess what? If they post a letter of credit – it is immediately frozen the result of the bankruptcy – no one will pay out on such a letter of credit. If they post a bond, every bond I have ever seen also becomes uncollectible once the beneficiary becomes insolvent. Even when the bond is there to protect against insolvency – thats all in the fine print.
Thus, membership is meaningless and the bond further is meaningless – and $1M US is further insufficient.
The point here is to ALWAYS pay via credit card. Period. End of subject. And ALWAYS pay a local agent since in most cases if you buy more than 50 miles from your home – the issuing bank does not have to refund your money.
Fine print taketh away.
RTFP. Sigh.
What a mess. I suppose the customner is ultimately responsible for paying the hotel bill, or the hotels would go bankrupt too.
The best advice seems to be to use a credit card, so you at least get your money back.
The unnamed hotel representative being quoted that tells the customers to go pee-in-the-breeze and play in the steam is from Oasis Hoteles. With Mexico’s image imploding (remember the tourists murdered at the Barcelo on the Riviera Maya?), what goes around comes around….when their tourism numbers are down, I will be crying crocodile tears as their occupancy rates will reflect the efforts they have made to satisfy (or chase away) their clientele.
I understand the hotels haven’t been paid, and guests certainly don’t want to double-pay, but the hotel isn’t responsible for comping guests. It’s up to the traveler to find out in advance what happens in the event the tour operator goes bust before their trip. However, threatening guests with arrest is wrong and will ensure they never come back to your property. I hope the hotels attempted to contact guests who hadn’t arrived yet to inform them of the situation. Personally, I’d rather book direct even if it means I pay more. I have always avoided tour operators and other third-party vendors. I won’t even book through Expedia or Orbitz. I just feel more comfortable dealing directly, because when a third party is involved it’s more complicated if something goes awry.