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The Guardian article mentions that hotels have to wait up to 3 months to be paid by the holiday company. I can see why the Tunisian hotel did what they did, but

The Guardian article mentions that hotels have to wait up to 3 months to be paid by the holiday company. I can see why the Tunisian hotel did what they did, but you are correct that their business relationship is with Thomas Cook, not the holidaymakers. Meanwhile, Thomas Cook holidaymakers were anxious that they might be evicted from their hotels or charged again for their holidays. Holiday companies do not normally pay hotels until up to 90 days after guests have left. Do hotels typically have insurance that covers situations like this?

kitd 7y ago
British travel agents that belong to ABTA, the national association, should have emergencies like this covered by insurance, so the money is there. This is basically the nightmare scenario for a travel agent so you would think ABTA has an emergency process all set up and ready to go.
- warrenmiller 7y ago
  There is ATOL protection but there's only approx £18 million in the fund. £200 million is needed to pay everyone out.
  - Already__Taken 7y ago
    Where do you get numbers like that from and hows the scheme funded by design?
    - tialaramex 7y ago
      The UK requires that any outfit selling flights where you pay them and they promise to sort everything out, rather than they just execute and you get a bunch of tickets, passes etcetera in exchange for your money - joins ATOL and pays a small fee for every such holiday sold. That fee is held by a central organisation that spends the money to fix things when one of these companies collapses, in particular to make sure all the random Brits abroad get put on a plane home. It exists because the seasonal nature of the business means it's very common (routine in fact: https://www.caa.co.uk/ATOL-protection/Make-an-ATOL-claim/Latest-ATOL-holder-failures/ https://www.caa.co.uk/ATOL-protection/Make-an-ATOL-claim/Lat...) for small outfits to go bankrupt, and otherwise their customers get stuck and then the government has to either suffer terrible headlines about why didn't they do anything, or spend money flying home idiots who took a bad gamble. The account is certainly too small to cover Thomas Cook. But on the other hand, even just having the mechanism in place means the government has a pre-existing organisation to say "OK, fix this, but we understand you don't have the money so we'll pay" rather than trying to cobble something together only now. /Maybe/ this experience will mean the fee is subsequently increased for new holidays. But my guess would be that's unpalatable and the argument will be made that a failure of this scale is not something the rest of the industry should anticipate and fund, whereas the constant drip of smaller failed travel companies is predictable. Compare the 2008 financial crisis. There's a much stronger protection for banks in the UK called "Last man standing". In principle the government can allow banks to fail, and remaining licensed banks pick up the entire cost. This is indeed what happens for small banks. However in practice of course allowing even a single very large bank to collapse might be so disruptive that it's intolerable regardless of whether you believe the other banks can afford to pay for the aftermath.
  - manquer 7y ago
    Isn’t ATOL backed by the government ? i.e government will step in to meet the difference ?
  - kitd 7y ago
    Thanks. ATOL is what I was thinking of, not ABTA.
  - matthewmacleod 7y ago
    Note that ATOL does hold insurance as well.
msh 7y ago
I can't see why they did as they did. It should be prosecuted as kidnapping.
tialaramex 7y ago
> The Guardian article mentions that hotels have to wait up to 3 months to be paid by the holiday company. Ninety day terms are very common in most B2B industries. Large companies quickly learn that their suppliers are dependant on them to stay in business and can be abused almost at will. So nominally "90 day" terms claiming you have 90 days to pay become "We definitely won't pay until 90 days after you bill us" and then "We typically pay in the working week after 90 days is due" and then "We only run routine bill payments on the third Wednesday of a month, so it can be up to 120 days I guess you got unlucky" and next thing you know the work you did in April is only paid for in October by a company that you know is already on the verge of bankruptcy but if you don't do that work they'll cut you off completely. It's crazy but that's how it is. The EU says if in practice you don't pay on or before 90 days you owe interest at a calculated rate on the due amount. But most small suppliers are so in thrall to the huge company they supply that they won't even ask for that money.
- viraptor 7y ago
  Reminds me of a story from HP. They did that as a default way of paying invoices to every business at one of their sites. They thought that everyone will be cool with that. Instead they ended up with one of the managers having to pay the energy bill on a credit card so they get the building reconnected ASAP. Turns out it's all about who can enforce the terms.
- LunaSea 7y ago
  > The EU says if in practice you don't pay on or before 90 days you owe interest at a calculated rate on the due amount. Interesting. Do you have a source for this?
  - meigwilym 7y ago
    Here's a page from the UK government https://www.gov.uk/late-commercial-payments-interest-debt-recovery https://www.gov.uk/late-commercial-payments-interest-debt-re...
  - Someone 7y ago
    https://ec.europa.eu/growth/smes/support/late-payment_en https://ec.europa.eu/growth/smes/support/late-payment_en
sligor 7y ago
>> I can see why the Tunisian hotel did what they did that's hostage taking, it is a crime, there is no excuse.
- Silhouette 7y ago
  The most disturbing thing I've seen in the reporting this week was that the local police were called at one point, but they sided with the hotel and told the holidaymakers to go back inside! I find it remarkable that, at least in the group who were being interviewed on TV yesterday after they made it home, the disagreements did not become physical. If my family were being detained against our will like that, not only spoiling the holiday but potentially leaving us stranded due to missing flights home, by people who were apparently prepared to forcibly prevent us leaving until large amounts of money had been paid that were not due, I'm not sure I would have been so tolerant. Some of the other groups affected at that hotel reportedly were not, but if the local police are going to side with the hotel as well, that's a very disturbing situation.
- pfortuny 7y ago
  This is part of the value added by countries with a clear rule of law, etc.

kitd 7y ago

British travel agents that belong to ABTA, the national association, should have emergencies like this covered by insurance, so the money is there. This is basically the nightmare scenario for a travel agent so you would think ABTA has an emergency process all set up and ready to go.

warrenmiller 7y ago
There is ATOL protection but there's only approx £18 million in the fund. £200 million is needed to pay everyone out.
- Already__Taken 7y ago
  Where do you get numbers like that from and hows the scheme funded by design?
  - tialaramex 7y ago
    The UK requires that any outfit selling flights where you pay them and they promise to sort everything out, rather than they just execute and you get a bunch of tickets, passes etcetera in exchange for your money - joins ATOL and pays a small fee for every such holiday sold. That fee is held by a central organisation that spends the money to fix things when one of these companies collapses, in particular to make sure all the random Brits abroad get put on a plane home. It exists because the seasonal nature of the business means it's very common (routine in fact: https://www.caa.co.uk/ATOL-protection/Make-an-ATOL-claim/Latest-ATOL-holder-failures/ https://www.caa.co.uk/ATOL-protection/Make-an-ATOL-claim/Lat...) for small outfits to go bankrupt, and otherwise their customers get stuck and then the government has to either suffer terrible headlines about why didn't they do anything, or spend money flying home idiots who took a bad gamble. The account is certainly too small to cover Thomas Cook. But on the other hand, even just having the mechanism in place means the government has a pre-existing organisation to say "OK, fix this, but we understand you don't have the money so we'll pay" rather than trying to cobble something together only now. /Maybe/ this experience will mean the fee is subsequently increased for new holidays. But my guess would be that's unpalatable and the argument will be made that a failure of this scale is not something the rest of the industry should anticipate and fund, whereas the constant drip of smaller failed travel companies is predictable. Compare the 2008 financial crisis. There's a much stronger protection for banks in the UK called "Last man standing". In principle the government can allow banks to fail, and remaining licensed banks pick up the entire cost. This is indeed what happens for small banks. However in practice of course allowing even a single very large bank to collapse might be so disruptive that it's intolerable regardless of whether you believe the other banks can afford to pay for the aftermath.
- manquer 7y ago
  Isn’t ATOL backed by the government ? i.e government will step in to meet the difference ?
- kitd 7y ago
  Thanks. ATOL is what I was thinking of, not ABTA.
- matthewmacleod 7y ago
  Note that ATOL does hold insurance as well.

msh 7y ago

I can't see why they did as they did. It should be prosecuted as kidnapping.

tialaramex 7y ago

> The Guardian article mentions that hotels have to wait up to 3 months to be paid by the holiday company. Ninety day terms are very common in most B2B industries. Large companies quickly learn that their suppliers are dependant on them to stay in business and can be abused almost at will. So nominally "90 day" terms claiming you have 90 days to pay become "We definitely won't pay until 90 days after you bill us" and then "We typically pay in the working week after 90 days is due" and then "We only run routine bill payments on the third Wednesday of a month, so it can be up to 120 days I guess you got unlucky" and next thing you know the work you did in April is only paid for in October by a company that you know is already on the verge of bankruptcy but if you don't do that work they'll cut you off completely. It's crazy but that's how it is. The EU says if in practice you don't pay on or before 90 days you owe interest at a calculated rate on the due amount. But most small suppliers are so in thrall to the huge company they supply that they won't even ask for that money.

viraptor 7y ago
Reminds me of a story from HP. They did that as a default way of paying invoices to every business at one of their sites. They thought that everyone will be cool with that. Instead they ended up with one of the managers having to pay the energy bill on a credit card so they get the building reconnected ASAP. Turns out it's all about who can enforce the terms.
LunaSea 7y ago
> The EU says if in practice you don't pay on or before 90 days you owe interest at a calculated rate on the due amount. Interesting. Do you have a source for this?
- meigwilym 7y ago
  Here's a page from the UK government https://www.gov.uk/late-commercial-payments-interest-debt-recovery https://www.gov.uk/late-commercial-payments-interest-debt-re...
- Someone 7y ago
  https://ec.europa.eu/growth/smes/support/late-payment_en https://ec.europa.eu/growth/smes/support/late-payment_en

sligor 7y ago

>> I can see why the Tunisian hotel did what they did that's hostage taking, it is a crime, there is no excuse.

Silhouette 7y ago
The most disturbing thing I've seen in the reporting this week was that the local police were called at one point, but they sided with the hotel and told the holidaymakers to go back inside! I find it remarkable that, at least in the group who were being interviewed on TV yesterday after they made it home, the disagreements did not become physical. If my family were being detained against our will like that, not only spoiling the holiday but potentially leaving us stranded due to missing flights home, by people who were apparently prepared to forcibly prevent us leaving until large amounts of money had been paid that were not due, I'm not sure I would have been so tolerant. Some of the other groups affected at that hotel reportedly were not, but if the local police are going to side with the hotel as well, that's a very disturbing situation.
pfortuny 7y ago
This is part of the value added by countries with a clear rule of law, etc.