26 May

Business travel: Who’s responsible when things go wrong?

The following article appeared in ABTA's issue of Travel Law Today - Spring 2022.

Business travel is big business. It is estimated that global business travel will be worth approximately $1.4 trillion by 2024.

ABTA’s business travel Members range from large travel management companies (TMC) to independent specialists. There are more than 127 ABTA Members whose principal activity is business travel.

Nowadays, companies are increasingly aware of their duty of care to corporate travellers; using a business travel specialist can be vital. But who is responsible if things go wrong?

Business travel is not automatically exempt from the Package Travel and Linked Travel Arrangements Regulations 2018 (PTR). Recital 7 to the Package Travel Directive envisaged that some, though not all, businesses may prefer to benefit from the PTR protections:

(7). …it is not always easy to distinguish between consumers and representatives of small businesses or professionals who book trips related to their business or profession through the same booking channels as consumers. Such travellers often require a similar level of protection. In contrast, there are companies or organisations that make travel arrangements on the basis of a general agreement, often concluded for numerous travel arrangements for a specified period, for instance with a travel agency. The latter type of travel arrangements does not require the level of protection designed for consumers…’

So, if a business wishes to buy a conventional package or LTA it can do so. But for larger businesses or more frequent travellers, a ‘general agreement’ with a TMC may be better. ‘General agreement’ is defined in Regulation 3(3) as ‘an agreement which is concluded between a trader and another person acting for a trade, business, craft or profession, for the purpose of booking travel arrangements in connection with that trade, business, craft or profession.’

Anything bought under that agreement will fall outside the PTR, so who is responsible if things go wrong?

The starting point will always be the general agreement itself as this should set out the contractual relationship between the travel specialist and customer. It should cover the basis upon which the travel services are offered and the extent of the TMC’s responsibility.

TMCs usually act as agents for the suppliers of any travel services. If there’s a problem, a business will not have the same rights as a consumer under the PTR and the TMC will not have the extensive PTR obligations. Although a responsible TMC will no doubt do everything it can to help, because it will be acting only as agent, its liability is likely to be limited. For example, if a hotel overbooks and has no room for a business traveller upon arrival, unless the general agreement says so, the TMC will not be obliged to arrange alternative accommodation or pay compensation. The financial burden will be on the business customer rather than the TMC. Similarly, there will be no insolvency protection if a supplier goes bust and the traveller is left stranded abroad. The business is likely to have to bear the burden of finding replacement flights or accommodation.

While trading outside the PTR may mean the business customer bears a greater burden of financial risk, using a TMC can offer peace of mind and convenience, not only when booking but also when making alternative arrangements if things go wrong. Business travel specialists are exactly that: specialists, and so can be highly responsive and able to put alternative arrangements in place if needed. If the TMC is negligent (for example, it forgets to book accommodation when arranging a trip) it will have to sort out any mistakes and may have to pay compensation. But these situations will be limited and, hopefully, rare.

For individual travel services that would not normally fall under the PTR, there should be no difference as to who’s responsible when things go wrong. They are almost always sold by agents, so the customer must seek redress with the principal, ie the service provider.

The decision to sign up to a general agreement may depend upon a business customer’s appetite for a little more risk balanced against the convenience and pricing a specialist can offer. For smaller businesses with limited travel needs a general agreement may not prove attractive but for customers who have regular travel needs the trade-off between losing some financial protection but gaining convenience and expertise will probably be worth it.

What about when a business trip is extended and becomes a holiday? Each case will depend on its facts. For a TMC to argue it should not be caught by the PTR, the holiday would need to fall under the general agreement, but some judges might have a problem accepting that such a holiday is ‘in connection with a trade, business, craft or profession’, which is what a general agreement should be for. Care should also be taken to ensure that any travel insurance provides protection once the business trip becomes a holiday. Many business travel policies cover directors and their families for holidays but may not cover other employees in similar situations.

What about when a business trip is extended and becomes a holiday? Each case will depend on its facts.

In summary:

  • Business travel is not automatically exempt from the PTR.
  • For smaller companies with less frequent travel needs, the PTR protections may be attractive.
  • For larger companies or more frequent travellers, a general agreement with a specialist could be better.
  • ABTA Members offering a general agreement will still have to comply with the ABTA Code of Conduct.
  • The general agreement will take travel outside the scope of the PTR and the TMC will usually act as agent.
  • Businesses can further protect their risk by purchasing comprehensive travel insurance.

Alex Padfield, Hextalls Law – Director