The new Tourism Act

About amendments of the Tourism Act and the Law of Obligations Act which entered into force on 1 July 2018
 

On 6 December 2017, the Riigikogu adopted amendments of the Tourism Act and the Law of Obligations Act, improving consumer protection by harmonizing the regulation for travel packages with the changes which took place on the market over the past decades. Namely, an increasing number of travellers shape their holiday travel according to their wishes, incl. online, and the environment of travel purchases as well as the behaviour of consumers has changed significantly.

The amendments:

  • increase the rights of travellers in concluding contracts for travel services
  • ensure a better protection of travellers in a situation where a travel service included in a package or linked travel arrangements are not rendered due to insolvency of the undertaking
  • decrease demands on activities of a travel retailer and increase the flexibility of demands on undertakings – e.g. exceptions to the security obligation (for an undertaking who does not collect prepayments, if the package does not include passenger transport services) and the requirement of a minimum security does not apply to travels within Estonia
  • obligate the undertaking to provide more information about the contract to the passenger, make cancelling the contract cheaper for the passenger and establish the limit for increasing the travel fee

The Act transposed the EU directive on package travel and linked travel arrangements into national laws.

The amendments entered into force on 1 July 2018 and travel undertakings had to bring their register data, incl. securities to conformity with the amended requirements by 30 September 2018 at the latest.

Männikjärve raba. Foto autor: Sven Zacek Männikjärve bog. Photo: Sven Zacek / Visit Estonia


 

Benefits for the consumer:


- Increased protection for independently arranged travels.

- Clearer information on who is the responsible travel undertaking, and more advantageous terms of contract.

-Additional protection for linked travel arrangements.

What changes for the undertaking:

  • - The need to review the terms of contract and start providing information via a standard information sheet. The number of tour operators and the need for security may increase. At the same time, the requirements to an undertaking become more flexible.

    - The load on travel retailers decreases and they are not required to register with the Register of economic activities (REA).

    - Due to the changes in requirements for areas of activities and security, the undertakings who were registered in the REA before 1 July 2018 had to update their registry data by 30 September 2018.

    - Undertakings providing linked travel arrangements must register with the REA.
 
 

Frequently asked questions


Here, you will find answers to the frequently asked questions. If you have more questions, feel free to contact us at kati.kikas [at] mkm.ee.


1. What is a travel package?
2. What is travel service?
3. What are linked travel arrangements?
4. Who is a traveller?

5. How should a traveller understand that they have purchased a package?
6. What’s the benefit for me as a consumer?
7. Does the draft result in a price increase for travels for the consumer?
8. What happens if the travel fee increases by more than 8%?
9. What to do for travels organised only occasionally?
10. What expenses are incurred by the undertakings in performing the new requirements?
11. Will the new directive result in a series of bankruptcies or smaller undertakings going out of business?
12. Which undertakings do the new requirements concern?
13. Where does a security come from and what does it cost?
14. Will the draft result in a price increase for travel?
15. Will EU undertakings be in a poorer situation compared to undertakings from 3rd countries?
16. What happens when the notification requirement specified in the draft is not fulfilled?
17. What are the traveller’s rights upon unavoidable and extraordinary circumstances?

18. Who is a travel undertaking?

 

1. What is a travel package?
The combination of at least 2 different types of travel services for the same travel, offered by one trader, including  at the traveller’s own request (incl. online) or in accordance with the selection of the traveller, before a single contract on all services is concluded. A package is also when the traveller is redirected from the sales environment of one undertaking to the sales environment of another undertaking for an additional booking, resulting in forwarding the data of travellers to another undertaking.
A package is also if regardless of concluding separate contracts with single service providers, the traveller selects travel services from the same point of sale before granting consent of payment; if travel services are offered or charged at inclusive or total price (NB! also includes issuing a single invoice for services); if services are advertised as “travel package” or similar, or a package can be purchased with a gift card.

Examples: The traveller adds a ship ticket and accommodation at the destination into the cart in the online store of the travel agent and pays for these services with a single payment. The same applies to making the purchase on site of the travel agency.

Exceptions which do not constitute a package (or linked travel arrangements):
Travel is not a package when only one type of travel service – either passenger transport, accommodation or car rental –is bundled with other tourism service(s) and if the other tourism service(s):

  1. form less than 25% of the total value of travel services and if it is not advertised as an significant proportion of the combination or if it is not an essential feature of the combination in other ways
  2. are selected and the provision is agreed upon only after the commencement of passenger transport, accommodation of car rental.

Travel is not a package when accommodation service and catering service are offered simultaneously with carriage of passengers in a means of transport providing regular carriage of passengers, provided the carriage of passengers is the basic service. The Act does not apply to travel lasting for less than 24 hours unless overnight accommodation is included.

2. What is travel service?

  1. Passenger transport
  2. Accommodation
  3. Renting a car, other motor vehicle or motorcycle
  4. Other tourism service.

Other tourism services include: selling a ticket to a concert, sports event, tour or theme park, guided tour, ski pass, rent of sports equipment (e.g. ski equipment) or a spa treatment, etc. Financial services (e.g. travel insurance) or visa services are not considered to be tourism services.

3. What are linked travel arrangements?
These are travel services where undertakings ease the procurement of travel services and concluding single contracts for travellers. Linked travel arrangements are at least two different types of travel services for the same travel, which is not a package and for which separate contracts are concluded with single providers of travel services, if the undertaking facilitates:

  1. on the occasion of a single visit with his point of sale, the separate selection and separate payment of each travel service by travellers; or
  2. in a targeted manner, the procurement of at least one additional travel service from another trader where a contract with such other trader is concluded at the latest 24 hours after the confirmation of the booking of the first travel service.

Examples: single travel services selected and paid separately at the travel agency; travel services targeted towards the travellers by airlines in addition to plane tickets. Targeted offering of travel services is, for example, the traveller purchasing a plane or train ticket and being invited to select additional services with a link directing to the booking site of the other service provider. These become linked travel arrangements when additional services are agreed upon within 24 hours as at booking the train or plane trip at the latest.

4. Who is a traveller?
A traveller is any person who wants to conclude a travel package contract or linked travel arrangements contract or who has a right to travel under such a contract. In other words, the definition of a traveller is broader than the definition of a consumer, involving the consumer in its regular meaning as well as a person who is not a consumer and who is not travelling under a general contract (e.g. business traveller). A general contract is a contract, with which a business trip is organised between an undertaking and a natural or legal person operating for purposes related to economic or professional activities.

5. How should a traveller understand that they have purchased a package?
A travel undertaking must provide a standard information sheet to the traveller before concluding the contract, indicating whether the travel is a package, what the traveller’s rights are, which undertaking is responsible for the travel services, and who is the institution providing protection against insolvency. The similar information sheet must be given to the traveller for linked travel arrangements.

6. What’s the benefit for me as a consumer?
The traveller gains greater protection for independently arranged travels and clearer information on who the responsible travel undertaking is. Some rules under contractual law also become more advantageous and there is additional protection for concluding linked travel arrangements contracts.

7. Does the draft result in a price increase for travels for the consumer?
A small price increase may result for the traveller, the price of services covered by the duty of security is expected to increase by approx. 1 euro per 100 euros.

8. What happens if the travel fee increases by more than 8%??
The traveller has the right to withdraw from the contract if the travel fee increases by more than 8%. If the travel organiser increases the travel fee because, for example, the fuel prices will go up after concluding the contract, then they must also include a clause for lowering the travel fee to an equivalent amount in the contract.

9. What to do for travels organised only occasionally?
The Act does not apply to packages and linked travel arrangements provided or facilitated occasionally, on a not-for-profit basis and only to a limited group of travellers.

10. What expenses are incurred by the undertakings in performing the new requirements?
The travel organiser must still have security for all their packages, same as today. For an undertaking who operated as a travel organiser (tour operator) until now, the effects are minimal. Expenses (first and foremost the security expenses) are increased for undertakings who become a travel organiser under the new amendments – these may be travel agencies first and foremost, but also some accommodation facilities or transport companies. In general, the need for securities in the travel sector may increase somewhat , but this is distributed differently between different types of companies and travel retailers are completely relieved of the security requirement.

11. Will the new directive result in a series of bankruptcies or smaller undertakings going out of business?
According to the Ministry of Economic Affairs and Communications, undertakings going out of business is not expected because the total security requirement does not increase significantly (assessed to be up to approx. 5% compared to the present, distributed separately between different types of undertakings). An approximate 1% of undertakings may narrow down their activities and 10% of travel undertakings may change their business model. The Act has also attempted to alleviate the situation of small undertakings as much as possible – a more flexible security regulation is created, together with the opportunity to operate without a security under certain conditions. The minimum security requirement is no longer established for companies arranging travels within Estonia, only the requirement of a sufficient security remains.

12. Which undertakings do the new requirements concern?
The requirements apply to all undertakings whose services meet the criteria for packages or linked travel arrangements. This is first and foremost going to impact the work of travel organisers and travel agencies, but may also influence the activities of e.g. accommodation companies, transport companies and car rental companies.

13. Where does a security come from and what does it cost?
The security may be issued by any insurance company, credit or financing institution operating in Estonia or another country of the European Economic Area. The price of security is formed by the security grantor. Ask different providers for an offer!

14. Will the draft result in a price increase for travel?
A small price increase may occur for a traveller, the price of services covered by the security obligation is expected to increase by approx. 1 euro per 100 euros.

15. Will EU undertakings be in a poorer situation compared to undertakings from 3rd countries?
According to the Act, undertakings from a country outside the European Economic Area, who offer packages in the EU or direct them to the EU, must also meet the requirements here.

16. What happens when the notification requirement specified in the draft is not fulfilled?
If the undertaking does not perform the pre-contractual notification obligation then the traveller is able to exercise relevant legal remedies against them, first and foremost to demand for compensation for damages caused by the violation. In addition, the Consumer Protection and Technical Regulatory Authority has the right to demand that the undertaking, who violated the notification obligation, cease the violation and avoid further violation. If the precept is not fulfilled then the Authority has the right to impose a penalty payment on the undertaking.

For linked travel arrangements, additional special regulations are provided – upon violation of the notification obligation, certain provisions applying to packages are applied to the contract, meaning significantly more extensive obligations for the undertaking.

17. What are the traveller’s rights upon unavoidable and extraordinary circumstances?
Unavoidable and extraordinary circumstances include natural disasters, terrorist attacks, etc. The Act has used this definition instead of the previous definition of force majeure, in order to ensure maximum harmony with the provisions of the directive.

The traveller as well as the travel organiser has the right to withdraw from the contract before the start of the trip, if unavoidable and extraordinary circumstances are in effect at the destination or its immediate vicinity. The traveller has the right to demand for repayment of all payments made.

After the start of the trip, only the traveller has the right to cancel the contract due to unavoidable and extraordinary circumstances, while the travel organiser is not relieved of their duties. Upon cancellation of a contract, the travel organiser must adopt the measures arising from the expiry of the contract, particularly if passenger transport was agreed upon in the contract, and immediately and for no extra fee ensure an equivalent return trip to the place of departure or another place agreed upon. Unlike the law earlier in effect, the traveller is not required to cover part of the additional expenses related to the return trip. Thus, the regulation becomes more advantageous for the traveller.

18. Who is a travel undertaking?
A travel undertaking is an undertaking who, for the purpose of economic or professional activities, is operating as a tour operator (organiser), travel retailer or undertaking which facilitates the conclusion of contracts on linked travel arrangement. A tour operator is an undertaking which combines packages and offers them or enters into package travel contracts itself or through another travel undertaking. Also, an undertaking who transmits the data of the traveller from their online sales environment to another undertaking in order to allow the traveller to select additional travel services there. A travel retailer is a travel undertaking which offers packages combined by a tour operator or enters into package travel contracts on behalf of a tour operator.

 
Last updated: 19 June 2019