It seems as though the COVID-19 crisis has led many travel advisors to take a good hard look at their businesses. In my law practice, I’m speaking to advisors every day who are shoring up their Terms and Conditions documents, re-vamping their workflow, refining their niche and marketing plans, and just generally taking stock of what they’ll need to do to be competitive in the new landscape of travel. And more than ever before, I’m also speaking to travel advisors who are either re-evaluating their relationship with their host agency, or who are independent and thinking of affiliating with a host for the first time.
Whether you’re at an ARC-accredited agency and thinking about making a change, or you’re a relatively new advisor who’s rethinking whether your current host is a good fit, it’s important to remember that when you affiliate with a host agency, you’re entering into a contractual arrangement that has legal consequences. So, with that in mind, here are some legal considerations you might want to think about when considering whether to affiliate with a host, and which host agency to choose.
Do Your Research
There are many reputable host agencies out there, but there are also some outfits that are little more than multi-level marketing schemes. There are even some out-and-out scams! Start your research by visiting the website of the Professional Association of Travel Hosts (“PATH”). Host agencies that affiliate with PATH agree to adhere to a code of ethics, and those standards are a good baseline to protect you.
Even if a host agency has agreed to the ethical code promulgated by PATH, not every host agency is right for every small business. There’s a lot of good information about the different travel hosts at two websites in particular: Find a Host Agency and Host Agency Reviews. The information on those sites can help you narrow the list of hosts that would best fit your business model.
Of course, there are many factors in play when evaluating if a host is a good fit for you, and not all of them are legal concerns. If you need GDS access and ticketing, what types of training a host offers, the commission split, the technology tools the host provides—all of those factors are less about protecting yourself legally, and more about whether working under the umbrella of that particular host will benefit you. You’ll want to do comprehensive research on any host that you’re seriously considering.
Avoid Conflicts of Interest
Some host agencies also sell travel directly to consumers. That doesn’t have to be a deal-breaker, as long as the host agency is structured so that you’re not in competition with your host. You should ask the question of your prospective host agency—do they sell directly to consumers, and if so, what steps have they taken to ensure that there aren’t any conflicts?
Is Your Host in Compliance with Legal Regulations?
The travel and tourism industry is a high-risk industry and is heavily regulated. Most reputable hosts will have a conversation with new advisors to clarify the “dos and don’ts” for working under their umbrella. They’ll explain how they comply with seller-of-travel laws, and they’ll guide you through best practices for keeping your business on the up-and-up, as well. After all—you’re using their industry credentials to book travel, so they don’t want you to inadvertently do something that puts you both in hot water.
There’s a fine line, here, though. On one hand, a host shouldn’t exercise so much control over your business that it looks like you’re an employee and not an independent contractor. At the same time, the host should absolutely put guidelines in place to ensure that you’re not placing them in legal jeopardy. Where that line is drawn will be in the terms of your contract with your host, most likely.
What Happens If You Leave?
Many times, when people are entering into a new contractual relationship—especially if they’re excited about working with a new partner or starting a new business—they are focused only on the things that happen during the term of the agreement. How much is the commission split? What are the fees? What marketing support and tech tools can you access? But some of the most important things to look at are what happens when you decide to end your relationship with your host.
Consult an Attorney
Your host agency agreement is a legal contract, and it has rights and obligations on both sides. Even a host that’s completely above-board and transparent, is going to have an agreement with you that is legally binding, and which has been drafted by a lawyer. Shouldn’t you also have a lawyer review that agreement and explain it to you, before you sign it?
Many host agency agreements have a confidentiality provision—and there are good reasons for that. Hosts don’t want you sharing info about their business, their technology or other proprietary information with their (friendly) competitors. But if your host agency agreement itself is confidential, and there’s no carve-out to let you speak to your lawyer about the terms and conditions of that agreement—well, that’s a red flag, in my opinion. You should be able to show an attorney your agreement before you sign it, and you should be able to consult with an attorney before you terminate your agreement with your host.
Hiring an attorney who understands the travel industry to do a quick review of a contract you’re about to sign doesn’t have to be cost-prohibitive. If you’re a member of the American Society of Travel Advisors (“ASTA”) one of the benefits of membership is that you can take advantage of a free initial consultation with a travel lawyer and get a reduced hourly rate thereafter.
Which Host Agency is the Best?
There’s no right answer to that question. It’ll definitely depend on your business, and the terms of your contract with your host. A good host agency relationship should be symbiotic. You should be with a host that will support you and provide sound guidance. But you should also make sure that you understand your obligations to your host, so that you’re not creating risk for your host…or for your own small business.
About the Author:
Thomas R. Carpenter is an attorney in private practice, representing clients in the Arts, Entertainment, Media and Travel industries. He is also the co-owner and co-founder of Huckleberry Travel, an award-winning travel business.