Outbound Travel

Some 1 200 travel agents are licensed under the Travel Agents Ordinance
to conduct Hong Kong's outbound travel business.

The Registrar of Travel Agents is responsible for regulatory functions
under the ordinance, such as licensing and financial checking of outbound
travel agents, and hearing appeals and handling complaints concerning
suspected unlicensed travel agents. In line with the policy objective to
promote self-regulation of the outbound travel industry, regulation is
undertaken through the mutually complementary work of the Registrar
and the Travel Industry Council of Hong Kong (TIC). A travel agent must
be a member of the TIC before it is licensed.

The TIC, as the self-regulatory organisation of the outbound travel
industry, is mainly responsible for improving trade practices; formulating
and enforcing codes of conduct and directives for the industry; collecting
statutory levies; handling public complaints and enquiries; and establishing
membership criteria and maintaining membership records. Member travel
agents who breach the rules of self-regulation risk losing TIC membership
and the licence to operate.

Under the auspices of the Advisory Committee on Travel Agents
(ACTA), a review was carried out in 1996 to strengthen the regulatory
mechanism of licensed travel agents. Several measures were
recommended to provide better protection to outbound travellers. These
included stepping up financial surveillance of travel agents, monitoring the
records of substantiated complaints against travel agents as a reference in
considering renewal of licences, and setting up a task group to advise on
appropriate actions to be taken when a travel agent is found to be in
financial difficulty. These recommendations were implemented during the
year.

In August 1997, a tour accident in Manila resulted in the deaths of seven
Hong Kong tourists. The ACTA subsequently reviewed the safety
measures for outbound travellers and made several recommendations to
improve safety precautions and emergency handling. The TIC has agreed
to adopt these recommendations and to draw up detailed directives for
implementation within the travel industry.

The Travel Industry Compensation Fund (TICF) was set up in October
1993 to protect participants of outbound package tours. It is under an
independent management board and derives its income from contributions
from licensed travel agents in the form of a levy on package tours and
from investments and bank interest. Should a licensed travel agent default,
aggrieved outbound travellers with proof of payment are entitled to a
maximum ex gratia payment of 90 per cent of the tour prices paid. In
1997, no default of travel agent requiring payment of compensation
occurred.

With a view to enhancing its service to the travelling public, the TICF
management board has examined and simplified the application procedure
for claims of ex gratia payments not exceeding $10,000 each. The
simplified procedures shorten processing time by up to four months and
were implemented from April 4, 1997.

The TICF also operates the Package Tour Accident Contingency Fund
Scheme. Introduced in February 1996, this scheme provides financial
relief to outbound travellers injured or killed in accidents while touring
abroad. It covers medical expenses and funeral expenses incurred in the
relevant country, or repatriation of the body/ashes of the victim, as well
as expenses incurred in compassionate visits for up to two relatives of the
victim. Under the scheme, maximum ex gratia assistance of up to
$180,000 may be granted in a single incident in the case of death. As the
scheme aims only to provide emergency relief, outbound travellers on
package tours are encouraged to take out their own insurance policies to
fully cover themselves. In 1997, seven tour accident reports involving
eight fatal and seven injury cases were received. Claims since the
introduction of the scheme amount to about $150,000.

The TICF has been growing steadily and is in a healthy financial state.
Having reviewed its ability to meet contingency liabilities and the potential
benefits to consumers, the management board recommended to the
Financial Secretary to reduce the rate of the fund levy from 0.35 per cent
to 0.15 per cent of the outbound package tour fare. The new rate was
implemented with effect from May 2, 1997. At the end of 1997, the TICF
had a balance of $234 million.

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