Content provided by: Chris Buseman & 360 Coverage Pros

The travel industry offers many opportunities for those looking to engage with travelers at various levels.

The travel industry has a history of running parallel to economic trends. As the economy rises and falls, consumer demand for travel reacts in turn. This affects the careers of everyone who works in the business, from travel advisors and travel agency owners to tour operators. Change is a constant in the travel business.

This article will review six specialty roles related to sales within the travel industry: travel advisors (also known as travel agents), travel agencies, host agencies, tour operators, tour guides, and meeting planners. Since jobs in these settings depend on understanding consumer travel needs, preferences and assessing and selecting travel solutions, experience in one setting can be viable for a different role in another. It is however, always important to consider the risk exposures involved with each role and mitigate them with appropriate errors and omissions insurance.

Travel advisors

Travel advisors, help their clients assess and book a wide variety of travel services. These include flights, cruises, rental cars, hotels and resorts. They may also assist with the design of extended tours that involve one or more of the above elements. At its core, a travel advisor’s main task is to simplify the daunting task of planning a trip in order to avoid logistical glitches, overpaying for services or dealing with an undependable travel supplier.

For most travel advisors every day is different. Their jobs are complex and fast moving, embodying many different tasks such as:

• Devising an overall trip approach and plan
• Completing due diligence on travel suppliers
• Researching for the best deals
• Advising customers about travel insurance
• Finalizing travel reservations and contractual obligations for clients
• Providing itineraries and travel documents to support a client’s trip
• Educating clients about the health and safety hazards they might encounter during travel
• Dealing with issues that arise during a trip such as cancelled or overbooked flights or missing hotel reservations

Travel advisors often work as employees in an agency office. However recently there has been an increase of independent home-based advisors working as employees or independent contractors. Regardless of their employment status, travel advisors face a challenging array of liability issues. Some of the major exposures include:

• Failure to provide promised services. When travel clients fail to receive a service they paid for and sustain a financial loss as a result, they might bring litigation to recover their funds as well as allege additional damages
• Failure to honor agreed-upon pricing. Travel advisors may sell a service at one price, but a service provider might insist on charging a higher price. When clients refuse to pay the difference, they might be unable to receive the promised service. When this involves ground transfers or hotel rooms, a pricing dispute might literally leave them stranded in a foreign land. Such disputes can result in litigation against travel advisors who have, perceptually, deviated from their duty of client care.
• Misrepresentation. A travel advisor with larger income needs might be more allured to misconstrue or over exemplify a particular hotel, attraction, or experience. Higher than anticipated expectations can easily result in client dissatisfaction, as well as legal action.
• Failure to discover and disclose. Travel advisors aren’t liable for the negligent acts of their suppliers. But they are required to fully disclose the known hazards and risks of the services suppliers provide. For example, if an adventure travel package has resulted in injuries or deaths in the past, then advisors need to communicate necessary information.
• Failure to inform. Travel advisors have a duty to inform their clients about travel documents, limits on reservation changes, foreign-country entry requirements and the availability of travel insurance. If they don’t and this omission results in a client injury, disrupted trip or financial loss, litigation may be in the near future.

Lapses in the above areas can result in E&O lawsuits alleging:

• Traveler injuries
• Trip delays
• Trip cancellations
• Discrimination against travelers
• Lost or damaged baggage
• Violation of consumer-protection laws
• Deceptive port of entry charges

Consider one consumer’s case from 2016. In this example, the client booked a charter bus trip to Disney’s Magic Kingdom for herself, her three daughters, her mother, and her nephew. The total for the trip was $5,340. When the family arrived at the pick-up location, the bus never arrived. The client called her agent only to discover the trip had been cancelled.

Facing the disappointment all around, the client took out a short-term loan for another Disney trip. Ultimately, 22 other clients had similar experiences with the same agent, filing legal actions against them. All but one plaintiff won their case.

Fortunately, most travel advisors operate their business with more expertise, allowing them to successfully prevent consumer litigation. To protect themselves in the event they do get sued, agents should also carry E&O insurance.

Travel Agencies

Travel agencies can be individuals or private entities ranging multiple staff that sell travel and tourism services directly to consumers and businesses. Their offerings are broad, encompassing air, water and land travel; packaged trips and tours; hotel accommodations; car rentals; travel insurance, among other services. Travel agencies function as agents for travel suppliers, designing experiences for their clients using services created by other firms. In return for providing these services, they receive a commission. Travel agencies can employ travel advisors, who may operate as employees or independent contractors.

Although there are many different types of travel agencies, similar services are provided, including:

• Travel information. The guidance a traveler needs en route to or at a destination. Things like passing through immigration and customs, checking into a hotel or other accommodation and engaging in shopping or other tourism activities while staying safe
• Itinerary preparation. Offering a detailed trip plan and laying out destinations, travel routes and accommodations
• Airline ticketing and reservations. Helping clients arrange for airline, rail, bus and other travel tickets
• Tour packages. Selecting tour operators to represent. Then matching those offerings with appropriate clients
• Travel reservations. Helping clients identify and book hotel rooms, local tours and various land travel
• Travel insurance. Protecting clients in the event a health condition prevents them from traveling after they’ve booked a trip. Also providing emergency health services while a client is in a foreign location
• Currency services. Making currency exchanges and selling traveler’s cheques

As with travel advisors, travel agencies face serious liability issues that can create massive financial losses if they find themselves in court. Some of those include:

• Failure to reveal the identity of a supplier. Not doing so might make the agency jointly liable for any client injuries or financial losses a travel supplier’s negligence causes
• Vouching for the reliability or a travel supplier. This can expose the agency to litigation alleging breach of warranty, negligence or misrepresentation when a supplier fails to deliver on its commitments
• Not disclosing health and safety hazards. Not revealing known safety risks to consumers who then end up getting injured

Travel agency legal liability issues are not theoretical. When an agency’s negligence financially harms a client, the legal consequences can be severe. One such example occurred when an agency that specialized in resort travel sold travel vouchers to several customers, receiving payment but never following through with reservations. When clients arrived at their destination, they learned they had no rooms. Others were told their “reserved” accommodations weren’t available and that they would have to move to another one with fewer amenities. Others had to pay out of pocket to secure a room. One client alleged the travel agency charged his credit card a higher price than initially agreed upon, never actually paying the resort.

The state’s Attorney General said the travel agency violated the state’s Deceptive Trade Practices Act by misrepresenting:

• Availability of resort bookings
• Cost of resort bookings
• Amenities in purchased rooms
• Booking confirmations
• Payments made
• Refund or reimbursement promises

Well-practiced travel agencies avoid such egregious business lapses. However, even highly careful and experienced agency owners may occasionally make mistakes which expose them to legal risk. Travel agent E&O exists to safeguard firms from the financial consequences of these mistakes.

Host Agencies

Host agencies aren’t necessarily travel agencies or travel suppliers. They are organizations that serve the needs of travel advisors and smaller travel agencies. A host agency serves as a travel advisor’s bookkeeper, training firm, technology support arm and marketing agency. They also provide a framework for advisors to share ideas with peers. A travel host agency facilitates the success of its advisors by providing the services and support member agents require to become effective travel entrepreneurs.

One of the most important services host agencies provide is access to suppliers. Host agencies have relationships with cruise lines, tour operators, resorts, travel insurers and other vendors, they allow travel advisors to focus on their client work rather than having to establish and maintain their own supplier network. When advisors need to book travel for their clients, they use their host agency’s credentials to make the arrangements.

Host agencies also provide technical capabilities so advisors don’t need to invest in their own bookkeeping, customer relationship management (CRM) or commission tracking applications. In addition, they often provide sales leads, which helps new travel advisors quickly launch their business. Host agencies also provide training and continuing education. Since the travel business is constantly evolving, travel advisors need to continuously upgrade their knowledge and skills to be able to best serve clients.

Since travel host agencies generate larger volumes of business for travel suppliers, they tend to receive larger commissions, out of which they compensate their affiliated advisors. Because of these scaled benefits, advisors may receive higher compensation working through a host agency than they do dealing directly with suppliers.

Being a great travel advisor doesn’t leave a lot of time for IT or marketing management. That’s why travel advisors outsource their technology and marketing needs to their host agencies. Because of their scale and resources, they can provide impactful expertise to participating advisors.

Tour Operators

Tour operators are firms that devise concepts for vacations, holidays, and other types of travel and then package services needed to execute the trip. This involves selecting accommodations, ground transportation, tour guides, meals and entertainment and more. The tour operator typically sells their offerings directly to consumers or through travel agencies and host agencies that distribute its tour packages through travel advisors. One key differentiator for distinguishing tour operators and agencies are engagements and negotiations with various supplier contracts and heavy involvement in the creation of self-branded and marketed tour packages. Tour operators function at more of a wholesale level, maintaining relationships amongst all suppliers involved with tour packages whereas an agency may seem synonymous to a retailer, selling the tour operator’s packages.

A tour package will commonly involve:

• A charter airline flight to a certain location
• A ground transfer from the local airport to a hotel
• The services of a local tour guide
• The means by which to transport clients from one tourist attraction to the next

Tours operators often specialize in select countries, specific types of travel and/or a niche destinations.

Although the internet has empowered consumers to become more involved with do-it-yourself (DIY) travel, many still prefer the convenience of buying a tour package through their travel advisor or agency. Knowing that a tour operator has expertise with the trip they’d like to take—and the ability to handle all trip planning and execution—provides consumers with a great deal of comfort.

There are four specific kinds of tour operators: inbound, outbound, domestic and ground operators. Inbound tour operators are located in the destination country. They sell tours to a resident of a foreign country and then manage that trip from start to finish. For example, an American interested in traveling around Japan might reach out to a Japan-based tour operator and purchase a tour package.

Outbound tour operators are similar to inbound operators, except they are located outside the country where travel will occur. An American tourist might purchase a tour from a U.S. based tour operator that specializes in Japan travel.

Domestic tour operators design and sell trips to people wanting to travel domestically. A U.S. resident who wants to visit various U.S. national parks might purchase a bus tour from a domestic tour operator. Unlike the other operators, domestic tour providers provide travel services to facilitate travel within a tourist’s native land.

Ground tour operators, also known as handling agencies, organize tours for incoming travelers who have purchased packages from foreign operators. This entails managing arrival and departures, planning and organizing local travel and guiding clients through each step of the itinerary.

Given the more expansive scope of business, tour operators may be subject to serious liability risks. Some of the more common exposures are:

• Nonpayment for contracted services. If a tour operator runs into financial problems, the company might have difficulty paying for the services it needs to execute a group tour. This can be a serious problem when a tour is in process. Normally payment disputes are handled under the law of contracts. But sometimes a dispute between a tour operator and supplier results from the operator’s negligence. If the conflict ends up in court, it may amount to negligence on behalf of the tour operator.
• Nondelivery of promised services. Since tour operators contract with local firms to provide client services, travelers may experience a disconnect between what the tour operator promised in their marketing materials, what the selling agent explained, and what the client actually received during their trip. When this gap is severe, clients may perceive misrepresentation of services resulting in a tour operator and/or agent or agency ending up in court.
• Negative impact of adhesion contracts. An adhesion contract is a legal agreement in which one party imposes nonnegotiable terms on another. Tour operator consumer agreements may result in adhesion contracts. Although they help to facilitate doing business—imagine if each traveler within a group had the ability to negotiate a customized contract—the tour operator must be careful not to impose onerous terms within an adhesion contract. For example, if it requires excessive cancellation or change fees or imposes overly broad liability disclaimers, clients might feel abused and file a litigation against the operator. If a court rules that one or several contract terms are unfair, it could result in an entirely voided contract.
• Liability for injury or accidents.Global travel is much safer today than in the past. But accidents and injuries still occur. Under the law, tour operators aren’t normally held liable for the negligence of travel suppliers. But if the operator itself is found negligent in failing to prevent a consumer injury, it can face large legal settlements or judgments. For example, a tour operator that fails to advise customers of the risks of traveling to a certain region or country might be looking at a large settlement if a client gets seriously hurt or dies during a tour.
• Misrepresentation. Enticing clients to purchase a tour can lead tour operators to misrepresent their offerings, making them sound overly attractive or including travel components the operator isn’t planning to provide. When there’s a gap between client expectations and the tour experience received, E&O lawsuits will often ensue.

Given the scope of these risks, cautious travel operators protect themselves with sufficient E&O insurance designed especially for their increased level of professional duties and expertise. If their negligence directly contributes to a problem, or a client interprets that they have been wronged in some way, then clients are capable of suing. E&O insurance can mitigate the financial consequences of such litigation.

Tour Guides

A tour guide is someone who provides assistance and information to travelers on a trip, either as part of a packaged tour or during a visit to a single attraction. Having advanced knowledge about the history and features of a country, region or city, tour guides provide walking, bus or boat tours, leading visitors efficiently and safely through the various stops of a travel itinerary.

Tour guides combine many professional roles into one job. They serve as teachers about the area through which they’re leading clients. They function as entertainers, providing funny and entertaining remarks that capture and retain their clients’ attention. They serve as experts in travel logistics, making sure the tour operator’s plans are executed properly. And finally, they act as a tour group’s safety director, making sure everyone follows local safety rules and avoids injury.

Tour guides often lead escorted tours. These are trips in which a guide accompanies a group day and night providing a running commentary about local sites and attractions. Escorted tours have grown in popularity amongst older clients or those with physical impairments.

The main legal liability for tour guides is having a participant get injured or killed on their watch. This liability is based on legal theories of negligence or breach of warranty. Many tour operators tell prospects that one of the main benefits of going on a group tour is the training and experience of their guides. The presumption is that guides will be familiar with known hazards and will warn tour participants about them. If they don’t, an injured client can sue for damages due to guide negligence. Similarly, if a tour operator represents that a tour will be safe, but a participant gets hurt, the person can file suit on the basis of breach of warranty.

As with the other travel jobs, E&O insurance is an essential purchase for self-employed tour guides. By purchasing coverage, they will safeguard themselves against any claims of negligence or breach of warranty that might result in large financial settlements or judgments. Even tour guides working as employees can benefit from having their own insurance, which will provide coverage independent of the decisions of the person’s employer.

Meeting Planners

Although meeting planners commonly work for larger corporations, professional associations, or other entities. They procure similar travel services to agents, agencies, and tour operators; airlines, hotels, resorts, ground accommodations and more. Meeting planners envision, plan and execute large-scale events and conferences, either as corporate or association employees or as independent consultants.

Meeting planners work in two separate realms: planning and execution. As planners, they help their employers or clients design meetings and conferences months or years in advance. This involves documenting the requirements of the event and then matching them to available venues that can fulfill those requirements. Planning involves a multitude of tasks, including issuing requests for proposal, interviewing and visiting prospective meeting sites and providers and selecting every entity needed to conduct the event.

Executing a meeting or event involves working on site to direct how the event unfolds. This involves supervising hotel rooms, meeting and food suppliers; coordinating the movement of attendees within and between sites; and solving operational or safety issues that might arise during the event.

As with any job that involves people gathering in large groups, safety is a major consideration. Meeting planners are highly skilled at evaluating and mitigating the risks involved in conducting an event and minimizing any legal exposures their employer or client bears as an event sponsor. Potential hazards include terrorism, shootings, civil unrest, cybercrime, theft and trips and falls.

To mitigate these risks, meeting planners build safety into every phase of their operations. During the RFP process, they require providers to share their safety and emergency protocols. The ability to keep non-attendees out of meeting areas is a key concern, as is a venue’s ability to ensure the physical safety of attendees and the security of their computer devices and personal information. Events that feature risky physical activities, alcohol use or the carrying of firearms will require additional planning and insurance coverage, both of which fall within the meeting planner’s scope.

Common occurrences and litigation resultant from meeting planners services are:

• Personal injuries. If someone gets hurt, the meeting planner may be found liable if he or she (or an affiliated vendor) breached health and safety protocols. Conducting effective risk assessments, evaluating vendor safety protocol and assuring that staff working the event have safety training will help shield a meeting planner against lawsuits.
• Equipment damage. Meeting planners are liable for equipment damage if their negligence contributed to it. If equipment was installed or used improperly at the planner’s direction, or lack thereof; resulting in damage, the planner might have legal liability for repairing or replacing the item.
• Venue damage. Similarly, if a venue suffers damage because the meeting planner failed to carry out his or her responsibilities correctly, then the person might face legal exposure.
• Breach of contract. Finally, if a meeting planner fails to uphold a commitment defined in a contract with a venue, vendor or performer and this failure results in a third party suffering a financial loss, then the planner may potentially be sued for breach of contract.

Due to the complexity of their jobs and the risks involved, meeting planners, either as employees or consultants, must have robust E&O insurance coverage. Since meeting planners’ mistakes can expose them to litigation from meeting attendees, event sponsors and venues, it’s crucial they maintain sufficient liability limits. Meeting planning employees may also want to augment their corporate coverage with a self-purchased policy. This puts their personal financial security under their direct control rather than under the control of their employer could potentially implicate E&O coverage.

Upon reviewing six travel industry career settings, it is apparent that understanding the liability risks within the travel industry is paramount.. Individual travel advisors, agencies, tour operators/guides, host agencies, and meeting planners all maintain daily exposures resulting from encounters with clients in which their advice, lack of advisement, actions, or inactions could result in client’s perception of negligence. If a client perceives wrongdoing, they are likely to sue or move forward with litigation. 360 Coverage Pros provides comprehensive coverage for a wide variety of travel professionals, available conveniently online.

E&O insurance for travel agents, travel agencies and tour operators is available from 360 Coverage Pros for as little as $29.33 per month. Review our coverage details.

Content provided by: Chris Buseman & 360 Coverage Pros