Government support

State-backed vouchers for cancelled package holidays

"No customer losing money": Thomas Bareiß, state secretary in the German economics ministry and responsible for the tourism industry.
"No customer losing money": Thomas Bareiß, state secretary in the German economics ministry and responsible for the tourism industry.

The German tourism industry has welcomed the government’s decision in favour of money-back vouchers for cancelled package holidays, saying it will prevent widespread insolvencies and job losses throughout the sector.

Following strong lobbying by travel industry associations, the German cabinet last week approved a plan for customers whose holidays have been cancelled due to the Covid-19 pandemic to be given a voucher to book a new holiday of the same value. The scheme, which is similar to moves in France, Italy, Belgium and the Netherlands, requires approval by the European Commission.

Protecting revenues and cashflow

This means tour operators and travel agents will not have to refund customers their payments for holidays that were cancelled before March 8 and can thus protect their current revenues and short-term cashflow.

Under the German scheme, the vouchers can be used to book a new holiday of the same value at any time up to December 31, 2021. If the customer does not use the voucher by that date, the tour operator is obliged to refund the customer's original payment. This means that customers will not lose any money through the scheme.

"Good compromise in difficult situation"

Thomas Bareiß, state secretary in the economics ministry and responsible for the tourism industry, said: "The vouchers are a good compromise in this difficult situation to secure jobs at tour operators and travel agencies while protecting customer interests at the same time." Some 85,000 employees of travel agencies and tour operators are worried about their jobs at present, he pointed out.

In response to criticism from consumer rights organisations about a "compulsory loan by consumers to companies", Bareiß also emphasised that the vouchers will be financially backed by the government so that customers do not have to worry that the vouchers might become worthless.

Hardship rule for clients in need

"We take the concerns of consumers very seriously. No customer should lose their money. That’s why we want to guarantee the value of the vouchers through the state," he declared. "Of course, consumers will get their money back if they do not use the voucher and do not go on a trip."

Moreover, there will be a special 'hardship' rule for any customers in financial difficulties who need their money back quickly, the state secretary explained.

Trade organisation DRV welcomes solution

The government support was welcomed by the German Travel Industry Association (DRV), which represents the bulk of the country’s tour operators and travel agents.

DRV president Norbert Fiebig said: "The agreement comes just in time for many small and medium-sized travel agencies and tour operators. An obligation to repay customers immediately (for cancelled holidays) would have driven very many companies into insolvency."

He urged the German government to press the EU Commission to suspend the repayment clause in the EU Package Travel Directive and to approve the voucher scheme. "Time is pressing, and many other EU state have already implemented the voucher solution," he pointed out.

Under the DRV voucher model, commissions already paid by tour operators for holiday bookings that have since been cancelled due to the coronavirus travel restrictions will remain with travel agents in order to support their liquidity. Customers would have to use the vouchers for new bookings through the same travel agency or sales point to ensure that these do not lose out on future bookings.

TUI satisfied with state-backed vouchers

Market leader TUI Germany also welcomed the government support. Sales director Hubert Kluske told fvw: "This is an important step to retain liquidity in the travel industry in these difficult times."

He emphasised: "Customers want to travel. Most of them should be able to afford it if they use the voucher for a trip at a later date."

However, one leading tour operator is taking a different path. Alltours, the fourth-largest German tour operator has already started to refund customers for all cancelled package and individual holidays that were scheduled for the period of March 17 – April 30.