It is more and more common to see tour operators advertising sustainable products (accommodation and activities) and philanthropic initiatives in destinations (own programmes or support of existing ones – like conservation or social initiatives). It seems that many operators feel that this is enough to make them a responsible operator. And there is no doubt that this is a big step in the right direction! But what about in-house factors like wages and working conditions for own staff, and environmental initiatives in the office? And, perhaps even more importantly, how much and when do they pay their suppliers?
In 2009, FTTSA convened a number of focus groups to elicit what was perceived not to be fair in the existing workings of the tourism and travel value chain. We invited product owners (from micro to large enterprises) as well as inbound and outbound tour operators. A few issues stood out as “problem areas”:
- Payment terms: many tour operators require that they be invoiced after the service has been rendered, often with 30 days payment terms. This is a huge problem, especially for small businesses that suffer severe blows to their cash flow since their expenses are incurred during the time the guest actually stays. To add insult to injury, many tour operators stretch their payments into 60 and sometimes even 90 days…
- Cancellation agreements: there seems to be an “unwritten rule” that cancellation fees should not be charged, in order not to damage future relationships with the tour operator. But the possibility for a hotelier to re-sell a room that was cancelled close to the date is very small, especially if the property is located outside of a main urban hub.
- Commission levels: many product owners, especially small businesses, feel that in order to get into the big tour operator’s brochure they have to offer commission levels that barely enable them to break even. But they need the exposure and volumes that these operators can offer so badly that they feel they have no choice.
This is why before FTTSA certifies a travel package as “Fair Trade Tourism”, 3 core areas need to be fulfilled:
- All accommodation in the package must be FTTSA-certified in order to ensure that the products are operated responsibly;
- The tour operator/s that offer the package must demonstrate in-house compliance with the Fair Trade Tourism standard. This includes, for example, wages and working conditions, in-house environmental initiatives as well as committment to protecting children from exploitation through being a signatory to The Code;
- All contracts must comply with the Fair Trade Tourism standard. This includes, for example, pre-payment to product owners, fair levels of commission and adherence to cancellation agreements. In addition, the tour operator must pay a compulsory contribution to the Fair Trade Tourism Development Fund (more about this in a blog to follow shortly).
The Fair Trade Tourism system is modelled on the succesful international Fairtrade system, especially around the trade standard. This is a world first in certification of tourism products, and we believe that addressing the inequalities in trading terms is crucial in order to establish fair value chains in tourism. However, you can actually buy a bunch of Fairtrade bananas from a supermarket that is not paying its own staff minimum wages, since there is no company check. Surely that can’t be right? Therefore, we say that it is NOT enough to offer sustainable products in order to be a responsible tour operator; you need to also walk your own talk! We hope that this company check will one day also be compulsory for retailers of Fairtrade products.
There are currently 7 outbound and 5 inbound tour operators that have undergone the Fair Trade Tourism company check. You can read about these tourism pioneers on our website, under Fair Trade Travel.