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New legislation regarding the provision of services in the area of tourism industry in the Czech Republic – part two

New legislation regarding the provision of services in the area of tourism industry in the Czech Republic – part two

Part two of this article is focused on (i) the new legal regulation concerning the consumer protection in the area of tourism industry and on (ii) the most important changes relating to the right to operate a travel agency in the Czech Republic. All these changes were introduced by the Amendment of the Czech Act No. No. 159/1999 Coll., on certain business conditions and performance of certain activities in the area of tourism industry, which became effective as of 1st July 2018.

I. CONSUMER PROTECTION

To ensure the sufficiently high level of consumer protection a number of new or existing, but reinforced, law instruments has been embodied by the Amendment. Among the most important belong especially the following:

  • Higher level of traveller’s protection against the insolvency of the travel agency.
    According to the new legislation all travel agencies are obliged to conclude an insolvency insurance or newly obtain an insolvency bank guarantee, where the travel agency must ensure to the clients: (i) the repatriation (i.e. the return to the place of departure or to another place the contracting party agree upon) and (ii) the refund of all payments (i.e. the refund of the prepayment or the price of the package provided that the relevant services were not performed, or the refund of the relevant part of payments if travel services were performed only partially). At the client’s request the travel agency must provide a valid insurance certificate. In the event of the insolvency the insurance company (or the bank) shall provide the insurance payments up to the agreed amount, and if it will be exceeded, also the payment from the means transferred to the insurance company (or the bank) from the newly established Guarantee Fund.
  • Wider pre-contractual information obligation.
    Prior to the final confirmation of any booking, the travel agency must provide the client with the pre-contractual information regarding the legal characteristic of the offered travel services (i.e. whether a package or a linked travel arrangement is offered and sold) and information about the legal protection of the client (consumer´s legal protection in case of a package travel is higher than in case of a linked travel arrangement; and all travel agencies must point this out to the clients in a prescribed manner!) The information must be provided in a respective standard form issued by the Czech Ministry of Regional Development for particular types of packages or linked travel arrangements.
  • New and more detailed main requirements for the package travel contract (package confirmation).
    The package confirmation shall newly include: main requirements (such as the travel destination(s), period(s) of stay, accommodation, agreed means of transport, the meal plan, visits, excursion(s) or other services included in the total price agreed for the package) and further requirements (e.g. the total price of the package inclusive of taxes and, where applicable, of all additional fees, charges and other costs).
  • New rules for modification of the travel package price.
    Newly, once the package travel contract is concluded, the price may be increased only if (i) the contract expressly reserves that possibility and (ii) at the same time the contract states that the client is entitled to the price reduction and (iii) the formula for the price amendment is pre-specified in the contract.
  • Right to withdraw from the contract without any termination fee.
    The client shall have the right to terminate the package travel contract prior to its commencement without paying any termination fee: (i) in case of increase of the price by 8% or (ii) in the event of unavoidable and extraordinary circumstances occurring at the place of destination or its immediate vicinity, which may significantly affect the performance of the services or the transport to the destination.
  • Obligation to provide emergency assistance.
    In case of any emergency or unavoidable and extraordinary circumstances which prevent the return of the client in accordance with the services terms, the travel agency is obliged to provide a necessary assistance and cooperation. The travel agency is particularly obliged to:

    • provide appropriate information with respect to health services, local authorities and consular assistance,
    • assist the client with communication and
    • procure for alternative travel arrangements.

The scope and the form of the assistance will depend on the particular situation. The organiser shall be entitled to charge a reasonable fee for such assistance, if emergency situation was caused intentionally by the client.

II. OPERATING A TRAVEL AGENCY

  • With regard to one of the aims of the new law – setting fairer business rules in the area of tourism industry – it comes to the legal regulation of new the manners by which the travel services are offered, sold and arranged (i.e. the implementation of so-called linked travel arrangements mentioned in part one of this article) and the new legislation also imposes new mandatory obligations, especially the obligation to obtain an insolvency insurance or a insolvency bank guarantee and the obligation to pay an annual contribution to the Guarantee Fund.
  • The obligation to arrange insolvency insurance or insolvency bank guarantee. All travel agencies (offering both packages and linked travel arrangements) are obliged to obtain the insolvency insurance or alternatively an insolvency bank guarantee. The existing requirement that the limit of the insurance premium must be at least 30% of annual planned, or previous year (if expected lower), revenues remains unchanged.
  • New obligation to pay an annual contribution to the Guarantee Fund. The new legislation establishes a Guarantee Fund and all travel agencies are newly obliged to pay an annual contribution to this Fund. The basis for the calculation of the contribution for the 2018 is the estimated revenue of the agency for the second half of the 2018. The amount of the contribution will be 0,1 % from the basis and the contribution shall be paid by 1st September 2018. In case of breach of this obligation, the relevant authorities may impose a contractual penalty up to CZK 1,000,000.
  • The implementation of the regulation of so-called linked travel arrangements is also reflected into the changes of the Trade Licence Act, where the existing licensed trade ”Operating a travel agency“ is divided into two parts: (i) package organisation and (ii) arrangement of linked travel arrangements.
    • The entrepreneurs, who were so far entitled to operate under the trade licence ”Operating a travel agency”, will be as of 1st August 2018, entitled to conduct only the trade ”Operating a travel agency – package organisation“. The respective trade office will register this change automatically, by 1st September 2018 and there is no need for further actions from the traders.
    • Any other entrepreneurs with the licence “Operating a travel agency“ who intend to arrange the linked travel arrangements after 1st July 2018, must apply with the relevant trade authority for the renewed licence “Operating a travel agency – arrangement of linked travel arrangements”, by1st August 2018.

By Michaela Fuchsová & Magda Stárková

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