Travel agents engaged in outbound travel services from Hong Kong are regulated under the Travel Agents Ordinance. The aim of the ordinance is to minimise the occurrence of fraud, and loss to travellers in the event of default of travel agents. The present regulatory system is made up of two components: a licensing system and a self-regulatory mechanism.

The Registrar of Travel Agents is appointed under the ordinance to carry out the licensing function. All travel agents providing outbound travel services must be licensed under the ordinance. At December 31, the number of licensed travel agents totalled 1 165. This requirement provides the first line of protection for consumers against default. It aims to enable the public to identify bona fide travel agents and to prevent undesirable persons from operating as travel agents. Under the ordinance, the Registrar may, after investigation, suspend or revoke the licence of a travel agent found to be operating against the public interest.

The Travel Industry Council of Hong Kong (TIC) is the self-regulatory body of the travel industry. The ordinance requires travel agents to become, and remain, members of the TIC in order to obtain a licence. TIC membership carries conditions, such as minimum requirements for capital, number and experience of staff, and office premises. The TIC sets and enforces codes of conduct to regulate business operations in such areas as advertising and business practices. It is also responsible for collecting statutory levies and handling public complaints about services of its members. Members who breach the rules of the TIC are subject to disciplinary action, including losing their membership with the TIC.

To collect public views on the regulatory regime, the ordinance provides for the establishment of the Advisory Committee on Travel Agents (ACTA). It is chaired by a non-official independent of the travel industry, and its non-official members are drawn from different walks of life. The ACTA regularly reviews the regulatory regime and recommends improvement measures when needed.

In addition, the ordinance sets up a Travel Industry Compensation Fund (TICF) to provide financial protection for participants of outbound package tours. It provides ex gratia compensation of up to 90 per cent of the loss of tour fares in the event of travel agent default. The fund is overseen by an independent management board and derives its income from contributions from licensed travel agents in the form of a levy on outbound package tours and from investments and bank interest. At the end of 2000, the TICF was holding a balance of about $320 million. During the year, one case of default on cessation of operation by a travel agent occurred, affecting just eight travellers. These travellers received ex gratia compensation of $6,600 from the fund, in total.

The TICF also operates a Package Tour Accident Contingency Fund Scheme. The scheme provides emergency financial relief concerning outbound travellers injured or killed in accidents while touring abroad. It covers medical and funeral expenses incurred in the place of the accident; costs for repatriating the remains of the deceased to Hong Kong; and expenses incurred by relatives of the injured/deceased for travelling to the place of the accident or to Hong Kong for compassionate visits or dealing with residual matters relating to the death. In 2000, 10 tour accidents involving four fatalities and 68 cases of injury were reported. Payments under the scheme amounted to about $80,000.