The Best Practices to Keep Your Travel Business Safe

During the hustle and bustle of booking airfare, scouting fun excursions and coordinating complex itineraries for clients, best legal practices may be far from a travel advisor’s mind. But it’s important to operate with a strong legal foundation, even though working with contracts isn’t the most glamorous part of the job. 

Two experts in travel law shared legal tips, opinions on general best practices, documentation guidelines and more to make sure you’re operating with the law on your side. Here’s their playbook. 

Recognize the Risks 

First, know what you’re getting into. 

“Selling travel is a high-risk business to be in,” said Thomas R. Carpenter, attorney at Carpenter Law and travel advisor at Huckleberry Travel. He represents about 1,200 small travel agencies and tour operators. While there’s a low barrier to entry in the travel advising business, he said, that doesn’t mean advisors can skip the basic steps. 

“It’s unrealistic for people to think that they can start any business, let alone a business in a high-risk industry, without having the necessary documents and policies in place,” he said. 

Travel advisors occupy a middleman position: They have loyalties both to their clients as well as resorts, airlines, tour operators and more. 

“A lot of times people don’t realize, when they’re getting into the industry, what those risks are,” he said. “They don’t understand all the different things that come into play when you’re the booking agent.”

From fielding client complaints to misrepresenting information or misclassifying an employee, there are plenty of potential pitfalls to avoid.

While it’s impossible to eliminate risk, travel advisors ought to try to minimize risk. The best way to do that is to work with an attorney who specializes in travel advising, said Jeffrey Ment, managing partner at Ment Law Group, which runs one of the country’s largest travel law agencies.

“When you hire someone who’s already seen this movie a few times before, you don’t have to start at the beginning of the movie; you know how the movie’s going to go,” Ment said. “We’re really able to help advisors set up a new business, help them insulate themselves as best as possible, help them navigate the ever-changing current about independent contractors. We’re sort of the beacon of the industry.”

Create a Terms-and-Conditions Document 

Both experts agree that establishing a solid terms-and-conditions document is critical. This document can include liability waivers and limitations on liability, which is important because once a traveler begins their trip, there are a lot of variables out of their control. Plenty of things can go awry on a trip you’ve booked: Perhaps the hotel doesn’t put the guest in the room type you reserved, or the tour’s motorcoach gets into an accident. Maybe there’s smelly seaweed on the beach. A well-written liability waiver ensures the client can’t come after you for those types of problems. 

A terms-and-conditions document also rounds up general advisories, like telling clients they need to have a passport and that they can’t bring cannabis on an airplane or cruise ship, Carpenter explained. This helps shift responsibility back onto the client.

While there are some cookie-cutter templates for purchase, Carpenter recommends customizing a template for your specific business needs. For example, an advisor who works with school groups needs a different document than someone who specializes in adventure travel, destination weddings or gluten-free travel. 

Some people balk at the name “terms-and-conditions” document, Ment said, preferring to call it a more palatable “customer contract, passenger agreement, onboarding document or planning-fee agreement.”

“Whatever you call it,” he said, “it all comes out the same. It’s a contract with your customer about what you’re doing, what you’re not doing and what they are and are not responsible for themselves. Everybody needs that. Not having a good set of terms and conditions is creating an opportunity for the customer to blame you if something goes wrong.”

Also, be sure to spell out a policy on chargebacks (when a client tries to reverse a charge).

Seek Credit Card Authorization Every Time

In addition to the chargeback policy, Carpenter recommends that you seek authorization from the customer for every single charge. Of course, advisors want to trust their clients, but it’s important to secure that authorization so you can defend yourself if a client claims that a charge you made was fraudulent. 

Tech tools can help with this. He recommends VAX VacationAccess’ tool to send a payment link directly to the client for their approval. 

The industry has what Ment describes as a “loathing relationship” with chargebacks. 

Without a policy in place, the travel advisor may end up financially responsible for a chargeback. “That is really a terrible way to start your day — your agency passing you a chargeback or a supplier passing it back onto you because you were the booking agent,” Ment explained. “If you are the processor of credit cards, you need to be protected with a credit card authorization.”

Clarify Independent Contractor Agreements 

Given how busy the travel business is right now, many advisors are opting to add independent contractors to their business. It’s important to make sure contractor documentation clarifies exactly how you’re working with these individuals. 

“The penalties for misclassifying an employee as an independent contractor are really, really steep,” Carpenter said.

A subagent is different from an independent contractor, Ment cautioned, and it’s crucial to clarify that relationship. “Who you're working with needs to be identified somehow so there is no ambiguity in the relationship,” he said. 

Workflow Matters

As Carpenter put it, “It’s not enough to have really great documents and policies; you also need to make sure that your clients are agreeing to them. The workflow is just as important in protecting you from risk as what it says in the document. It doesn’t do a lot of good to have a document with great protections if nobody’s actually agreeing to it.”

While it’s important to make sure the documents are contractual and enforceable, he recommends also using a client agreement as a companion document that’s more user-friendly for a client to understand. 

Don’t Overpromise

Always a good rule of thumb: Don’t overpromise, and don’t guarantee things, Ment said. To avoid liability, it’s important to speak from authority and speak with reason.

“Misrepresenting or misstating is a way that you fall into this quicksand,” Ment said. “People are relying on you; that’s why they’re coming to you. Think before you speak. Speak only [about] that which you know.”

Ment recommends reading travel news, industry feeds, travel market reports, host agency reviews and professional newsletters to stay up to date. 

“You just need to know what’s happening in the industry to avoid that claim of a negligent selection of a vendor,” he cautioned.

Other Tips 

While the terms-and-conditions documentation, credit card authorization and independent contractor info rise to the top of the list, the pros offer a few other suggestions, as well:

• When forming the business, be sure to register it as a corporation or an LLC.
• It may be worth trademarking your business name and logo. Using a ™ designation sends a signal that you intend to register your business in the future and offers some degree of protection until then, Carpenter explained. 

• Data privacy policies are a good idea, Carpenter said, but it’s an expense small businesses may be able to hold off on for right now. However, if you’ve got a business with a gross annual revenue of more than $25 million or you collect personal information from more than 100,000 California residents, then you’ll need to adhere to this law. 
• There are differences in opinion on whether a written declination of travel insurance is necessary, Ment said, but each agent should consider that on their own. 
• Have an attorney look into your errors-and-omissions insurance policy. A typical insurance policy from a family agent may not cover what you need for a travel business. 
• Find out if you need “seller of travel registration.” It varies state by state, and it can be difficult to understand the statues, Ment said, so be sure to consult an attorney.

Originally appeared in the Summer 2023 issue of The Compass magazine