Caution: supplier payments during the liquidity crisis

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With today’s economic challenges, and particularly the reduced availability of credit, some suppliers and tour companies may be unable to meet short-term financial obligations.

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With today’s economic challenges, and particularly the reduced availability of credit, some suppliers and tour companies may be unable to meet short-term financial obligations. That includes making deposits and final payments to hotels and other travel suppliers. These difficulties may be only temporary if the supplier is otherwise healthy, but extra care is required to protect agency clients in these economic conditions.

Travel agents should be particularly diligent in vetting travel suppliers by speaking with company management, checking Better Business Bureau ratings, and requesting references. Once payments are made to the intermediary, agents should verify that funds have been forwarded to suppliers in accordance with contractual or other established deadlines and that customer reservations are confirmed in good standing. Agents should also create a paper trail of emails that are dated and timed. Travel agents should keep their clients informed as appropriate.

If faced with non-delivery of contracted services, travel agents should remind customers that the Fair Credit Billing Act provides some protection for consumer payments made by credit card. To assist you in selecting a tour operator or industry supplier, ASTA provides a list of frequently-asked questions in qualifying a tour operator and how to qualify a new supplier. Check out the list of ASTA Tour Operator Program members on

Travel agents should review their consumer travel insurance products to fully understand coverage for supplier default. Insurance policies may cover supplier default but require that the policy be purchased within a certain time frame of the final deposit. Many insurance companies provide a list of suppliers that are either included or excluded from default coverage. Agents should ensure that customers are aware of these limitations and secure a signed insurance waiver form from customers who decline insurance coverage. A waiver form can also protect your business by advising consumers that your agency is not the source or supplier of the travel services requested and acts solely as an agent for the actual suppliers of such services. For more information on selling consumer travel Insurance, see ASTA’s Travel Agents Guide to Selling Travel Insurance.

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