Travel platforms face cost and compliance impact of changing regulations

Travel companies are facing a shift from what has been a lightly regulated environment to a more regulated, consumer-friendly regime.

The Package Travel Directive in Europe and similar U.K. legislation, for example, have covered travel elements bundled together for many years. But shifts in how travel is sold have pushed legislators in Europe and the U.K. to rethink.

The rules are expanding to cover single travel services bought within a 24-hour window, affecting travel providers with websites that have things like different tabs for flights, hotels and car hire.

Rhys Griffiths, the travel lead at law firm Fox Williams, described the change as “quite significant,” potentially requiring firms to obtain licenses from regulators and put insolvency protection schemes in place.

“It’s the most stringent piece of travel regulation that we have,” said Griffiths. “And by expanding the footprint, bringing a bunch of other companies within it, it’s just going to mean many more restrictions on the way that companies can operate.”

He spoke about the importance of planning for regulation changes affecting the sector in an interview in the PhocusWire studio at The Phocuswright Conference.

Griffiths went on to discuss the EU's Corporate Sustainability Reporting Directive, which mandates reporting on environmental, social and governance. He highlighted examples where travel companies might need to report on climate change impacting business.

“In Europe in recent years, we've had certain countries being extremely extremely hot during the summer. There's been lots of speculation about whether that's going to change customer behavior, whether they're going to travel to those southern European countries. That’s a risk to OTAs brought around by climate change. So that may be an example of something which will need to be reported on.”

And the penalties for noncompliance could be steep, he said, as legislators have tended towards turnover-based fines in recent years.

Griffiths also discussed other ways regulators are cracking down on travel companies, including through the Digital Services Act, which aims to regulate content on sites, such as illegal listings.

The compound effect of the current regulatory landscape is that the rules will apply to many more travel companies, and they may not even realize it.

See below for the full interview with PhocusWire’s Linda Fox.