Michelle Baran
A few weeks ago Sunny Land Tours resigned from the U.S. Tour Operators Association, saying that the $1 million consumer protection bond required for membership provides unequal coverage to operators with vastly different sales numbers.
Sunny Land's resignation once again brought to the foreground the issue of the USTOA's $1 Million Travelers Assistance Program, which requires active members to post $1 million in the form of a bond or letter of credit. The security, which is held by the USTOA Tour Depositors Trust, is to reimburse consumers for tour payments or deposits lost in the event of member bankruptcy, insolvency or cessation of business.
As the economy teeters on the verge of a double-dip recession, the consumer protection issue is an extremely relevant one right now.
"USTOA is probably the best association that provides some assurances to clients because of the consumer coverage that the members are required to post," said Elie Sadawi, chairman and CEO of Sunny Land Tours. "But it is not proper coverage for the consumer, because it is a standard amount that applies whether you are a $100 million company or a $5 million or $10 million company.
"A $5 million company, they're not going to have $1 million in advance payments for the whole year," he said. "Normally, you have advance payments for one or two months."
Sadawi brings up a valid point, and one that has been brought up and tossed around before. The $1 million is not a one-size-fits-all amount.
When pressed about the bond issue, however, USTOA President Terry Dale said: "I can assure you that it is actively discussed by several committees within our association. We continue to support it, and we believe that it's the best that we have. I'm not aware of any other association in this country that has any type of consumer protection program."
Sidawi said that Sunny Land would rejoin USTOA if smaller operators were offered a less costly bond. He suggested a bond that is equivalent to 5% to 10% of tour operators' annual sales.
As for whether, when and how the USTOA would ever change the bond program, Dale said, "I can't say that a change will take place on X date." But he said that for those who are concerned that larger members don't have adequate coverage, "I can assure you that many of our members have additional coverage on top of the million-dollar coverage that they have with us."
The question is, how much, and is it enough?