Is it ethical for a tour operator to make “such a large extra profit”?

Even though Harold Singer isn’t concerned with his tour operator’s ethics, his recent email suggests we should be. And he’s right.

Singer canceled his tour and received a partial refund. Then he says the operator turned around and resold the tour to someone else. Is that fair?

That’s a question tossed around a lot on this site: Is that fair? What’s a fair profit? What’s an unconscionable profit? Is it possible for rules designed to protect a company’s revenues to overprotect it — and to exploit consumers?

“I recently had to cancel an expensive tour due to severe health problems and I did not have cancellation insurance,” explains Singer. “In accordance with the tour brochure, they agreed to refund half of the cost, since I canceled within the window.”

Then he received some additional information.

“I found out that this tour had a waiting list,” he says. “When I canceled, they immediately were able to rebook the tour.”

“Is it ethical — or legal — for a tour to make such a large extra profit on a tour that was fully booked?” he asks.

Legal, yes. If you sign up for a tour and agree to its terms, you are bound to them. The contract may be ridiculously one-sided — or not — but most of these agreements are within the bounds of the law.

But ethical? Before we go there, let’s give the tour operator, which he declines to name, every benefit of the doubt. Because we just know it would do the same for us. It’s possible that the tour operator had some fixed expenses that it would have had to cover for a cancellation, such as nonrefundable airline tickets or hotel rooms. Let’s assume they did.

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But half? I can’t imagine some of that not being pure profit — a profit made at the cost of his misfortune.

[Insert mandatory paragraph on travel insurance here.]

Is it any of our business how much profit a company makes?

Actually, it is. And not because we say so, but because they say so. Many tour operators have customer service promises or belong to organizations like the US Tour Operators Association, which have ethics statements; in aggregate, they claim to be “ethical” businesses that treat their customers fairly.

By the way, even if you think companies didn’t set themselves up for this discussion, we’d still talk about it. Remember the case of the 100-percent travel agency commission?

If you can resell a tour, as this operator claimed to do, you should offer a full refund, less any nonrecoverable expenses.

The technology now exists to let a customer know when a nonrefundable room has been resold or a seat rebooked. The travel industry refuses to implement it because it’s costly, in more ways than the obvious. The industry would have to pay to put the system in place, and then pay again when it would have to refund a ticket or tour.

I think everyone can see that’s the right thing to do.

Well, almost everyone. A few fringe free-marketers who embrace opacity and believe there is a constitutional right to keep pricing and profits in a black box will no doubt object to my line of reasoning. If you’re in the industry, you might disagree, too — but that’s OK, why would you support something that takes money away from you?

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But if you’re on the consumer’s side, there’s no doubt. Singer received only a partial refund when he canceled his trip. Nothing more — not even a “thank you.” That kind of outcome would leave me singing the blues.

When a customer cancels a vacation and a tour operator resells the package, should the tour operator offer a full refund?

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Christopher Elliott

Christopher Elliott is an author, journalist and consumer advocate. You can read more about him on his personal website or check out his adventures on his family adventure travel site. Contact him at chris@elliott.org. Read more of Christopher's articles here.

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