Phocuswright Europe: New ‘monster’ package travel rules will be impossible to comply with

The new European Package Travel Directive (PTD) was described as a ‘monster’ that will be impossible to comply with. The new rules which expand the scope of existing regulations to cover more travel sales are due to come into force … Continue reading →

The new European Package Travel Directive (PTD) was described as a ‘monster’ that will be impossible to comply with.

The new rules which expand the scope of existing regulations to cover more travel sales are due to come into force in the UK next year.

Speaking at this week Phocuswright Europe conference in Amsterdam, Christoph Klenner, secretary-general of the European Technology and Travel Services Association, said:

“We see the same pattern emerge with the PTD that we see in different areas of regulation such as price parity.

“It’s one that tries to shoehorn a new business reality in to a regulatory framework which is long outdated and which from the outside does not seem to be based on principles.

“To regulate and enforce you have to set down principles, not try to differentiate between business models.

“You have to be clear about this. This PTD, which is an absolute monster, was designed through extensive lobbying by the tour operating industry to try to make the life of online travel agents as difficult as possible.

“You have to now comply with rules that are almost impossible to comply with.

“If you [a customer] makes a booking on a flight.com site and are referred to an accommodation provider suddenly those two partners, who have a very loose marketing relationship, have to exchange data and the airline has to take out insolvency protection

“How is this going to be complied with by the marketplace? It was never thought through.”

Lastminute.com group deputy chief executive Andrea Bertoli agreed, saying: “It’s a regulation that’s impossible to comply with.”

Bertoli added what makes the situation worse is that the PTD is not a regulation but a directive and so will be interpreted and imposed in different ways by different countries and parliaments.

“Each country will give its own twist to something which by nature is impossible to put in place.

“They are trying to regulate innovation by looking at the past, using past business models and trying to do it in a new order where packages are dynamic, where users can package product together on an OTA, on meta or on a search engine like Google.”

Klenner said the irony of travel industry regulation is the biggest impact has been seen by a decision to deregulate, when first the US and then Europe opened up the skies.

“This made air travel more affordable and accessible to consumers that with the emerging of the internet created an explosion in travel distribution and put the consumer in charge of their own choice and purchasing.

“It was a great vision by the regulators who had the vision that deregulation was the way ahead.”

Klenner said a lot of time has been wasted in Europe on investigating Google’s dominant position in search.

He said the search engine had become powerful in horizontal search but that it was something that could be solved with a few “quick fixes”.

“We have made some very pragmatic proposals to remedy the situation. We think it’s fair, it gives Google the space to innovate but it redraws the level playing field.

“You have to have a level playing field otherwise you end up throttling innovation and you’ll end up with just a couple of big guys left. The small companies will suffer.

“We are pushing very hard to get a decision because it’s been going on too long and quite frankly Google has been pulling the wool over the eyes of many politicians and officials.”

Bertoli agreed saying this is an area where regulation is not working. He said in a few years it won’t be Google that’s the problem it will be Facebook. “They are trying to fix a problem that won’t exist,” he said. “When you try to fix something ex-post you end up making it worse.”

Tobias Wann, chief executive of accommodation rentals specialist @Leisure Group, said Google, which is paid billions of dollars by travel’s big players, has to lose something while Facebook can be disruptive.

Speakers agreed the rise of peer to peer firms like Airbnb did raise questions for regulators, particularly associated with areas like tax and health and safety.

But Wann said the accommodation rentals sector has been around for much longer than Airbnb.

“We have to acknowledge that in this very large short-term rental industry in which the sharing economy is a small part, we don’t have a problem.

“I believe the hotel industry is using the security argument to its own favour and I do not believe it’s a big issue. Let’s regulate where it makes sense, let’s find a common framework, let’s not come up with risks that are not there.”

Michael Simon, EMEA general manager for distribution at Marriott, said there has to be a level playing field.

He claims research suggests 30% to 40% of people using the Airbnb platform are professional renters.

He said there needs to be clarity and transparency about the responsibilities of “platforms” in terms of consumer protection.

“There is consumer protection law, the issue is it cannot be enforced in each individual case and applied to platforms in general,” said Simon.

The European Commission is proposing legislating in three markets, the retail, gaming and hotel sectors.