Reported by Divagar Kaveri

Despite the impact of Covid19 pandemic, on 10 April 2020, Richard Wee Chambers(RWC) has organised a webinar on the “Impact of Covid19 Pandemic on the stakeholder of the tourism industries”.  A prono bono series which is moderated by our very own Managing Partner of RWC, Mr. Richard Wee. At the same time, it is a great honour to have two other speakers of the day who are Ms.Marlysa, Partner of RWC and Prof.Dr.Nuraisyah Chua Abdullah who is a tourism and hospitality law expert from Faculty of Law,UiTM.

As the topic was clear on the impact on the stakeholder of the tourism industries, one of the questions that was raised is what are the business challenges going to be faced by the industries? According to Prof.Dr.Nuraisyah Chua Abdullah, one of the challenges can be seen on point is where Arab Saudi has refused to accept any tourist to serve Umrah and Hajj. This had been a hurdle for many travel agents to organise the tour especially for the pilgrims who wish to go for the holy place in Mecca.

Since 1992, the Government has largely focused on outbound tour operators. Ultimately, the outbound tour packages are widely governed by Tourism Industry (Tour Operating Business and Travel Agency Business) Regulations 1992 (hereinafter referred to as Regulations 1992). This piece of legislation has been used to safeguard all the interested parties and stakeholder such as tourist and tour companies. As a general rule, an operator or a customer is not allowed to make any cancellation on the trip. However, under the Regulation 1992 there is a Force Majeure Clause being engaged for an outbound tour package to protect the stakeholder to make the cancellation, as the non performance of the contract were due to unforeseen circumstances which is beyond the control of the stakeholders. In layman terms, a company is able to cancel any trip which is beyond their control due to unforeseen events taking place (e.g Covid19 Pandemic, swine flu etc). Which means the customer would not be able to initiate any legal suit against the company as they were bound by the Force Majeure Clause.

Albeit the rights have been protected under the Force Majeure Clause during an uncanny situation which is beyond the control of the company, the company has an obligation to offer an alternative package to the same destination on a different date, otherwise to a different destination. In the event, the client refuses the offer made by the company, there is a clause under Regulation 1992 which requires the company to make a refund. At the same time, the company reserved some rights to impose administration fees but this term were only applicable for outbound tour packages. It should be bear in mind that the standard term and condition does not apply to inbound tour packages.

Next question is what kind of contractual term should be reviewed?  Since, each and every travel agent and tour operator have owed a fiduciary duty towards their customer, in safeguarding their interest, they should come out with some alternative such as rescheduling the trip for clients. However, this has not always been a fruitful alternative as the customer might tend to refuse the offer and seeks for refund and this will cause the travel agent to incur the cost as the travel agent has a contractual duty with the service provider. There are no particular rules to govern this as this solely depends on the contract between parties. Thus, the question still remains on the liability as to who has to fork out money to compensate or refund the customer?

Statistically, in between 2015 to 2019, it was estimated to have almost 26.7 million visitors a year. Unfortunately in light of the current pandemic, in the first quarter of 2020, the industry was estimated to have incurred a loss of  RM9 billion. Even most hotels prepare for refunds but it all goes down to cash flow which gives a great impact to the industry to survive.

The impact that we can foresee post Movement Control Order(MCO) is the changes in behaviour pattern of stakeholder. Not only that, we are also able to foresee the travelling norms and decision making process will change. In other words, we would be able to see a more stringent regulation and policies which will fall in place under the tourism industries. Other than this, there will be rise in the dispute between the stakeholders which subsequently may turn into litigation if there is lack of negotiation among them. The consumer tribunal will be swamp with disputes if the parties did not compromise and come to a mutual agreement.

Looking into the circumstances, the industry will easily face the challenges for another 6 months. This was aint easy for many small travel agents to survive. However, a pragmatic method should be adopted to overcome this pandemic impact by travel agencies such as conducting online coaching and talks with minimum or free of charge to gain back the demand. With a good relations with the stakeholder of the tourism, “together we will prevail” the impact of Covid19 Pandemic

 

Published on 9th June 2020

Photo by Sunyu on Unsplash

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