Agreement reached between Canarian tourism authorities and Thomas Cook over deductions

Update 9 November: Hoteliers and Thomas Cook have managed to reach an agreement at the World Travel Market in London whereby the tour operator will not impose any further discounts, and will compensate next year for any discounts which have already been applied to hotels. The announcement was made by the Canarian Government’s subdirector of tourism, Ricardo Fernández de la Puente, who said he was satisfied by the agreement. The compensation will not be a refund, however, but increased profits throughout next year and more air places to Spanish destinations. It’s not clear to me how this will help those Canarian hotels which have been disadvantaged, but at least full scale hostilities seem to have been avoided. PV

Update 16 October: Thomas Cook has threatened to break completely with the Canaries and to divert holidaymakers to other destinations if hoteliers proceed with legal action over the tour operator’s deduction of 5% from payments due. The company brings over two million tourists to the islands each year, and the threat to divert them elsewhere cannot be taken lightly. Thomas Cook’s “surprise”, howver, at the hoteliers’ response to its arbitrary announcement can hardly be taken seriously. What else can it expect?

José Fernando Cabrera, President of the Asociación Hotelera y Extrahotelera de Tenerife (Ashotel), has meanwhile called on the Canarian Government and the Cabildos to put their weight behind the tourist sector here, saying that the support of these public institutions is essential. Ashotel says that it is attacking on two fronts, firstly through national and European commercial competition defence courts, and also through the ordinary courts. “There’s nothing else we can do”, said Sr Cabrera, who continued that although nobody benefited from a bad relationship with Thomas Cook, such a precedent was too dangerous to ignore. PV

Update 8 October: Thomas Cook has carried out its threat and has applied a 5% discount to payments for invoices from Canarian hotels.  Top level tourism business leaders say that the discount is against British, Spanish, and European laws, and that they will be meeting over the next few days to discuss legal action, which now looks all but inevitable. PV

Update 13 Sept: Tenerife Cabildo Vice President and Tourism Councillor, José Manuel Bermúdez, has asked Thomas Cook to back down from its decision to impose a 5% discount on payments it owes to the Canarian travel industry. The travel giant has announced it will not make full payments on outstanding and forthcoming invoices in order to recoup losses suffered during the Icelandic volcanic ash cloud disruption.

Sr Bermúdez has written to the President of Thomas Cook, Manny Fontella, asking him to seek other means of improving the company’s financial results that don’t involve worsening the situation of Canarian businesses. He indicated in the letter that it is not usual for public institutions to intervene in the commercial policies of tour operators, and said that he wasn’t going to do so on this occasion, but that he felt obliged to express his concern over the possible consequences of the action.

As the person with ultimate responsibility in Tenerife for tourism, the Councillor explained that he shared the concern of all in the travel industry who suffered so much during the last year, but that his concern was especially directed towards Tenerife businesses. The letter comes after tourist authorities, chambers of commerce, and business organizations in Tenerife have expressed their opposition to Thomas Cook’s decision to cut the amount the company is prepared to pay. C24H

Original post 11 Sept: Thomas Cook has announced that it will impose a 5% deduction to their contracts with Canarian hoteliers as from Monday. The deduction will also be applied to July and August invoices pending payment, and those invoiced up to 30 October. The travel giant is passing on losses suffered due to air-travel disruption during the Icelandic volcanic eruption.

Touristic managers, chambers of commerce, and business organizations are all up in arms about the unilateral decision, and say that the travel giant’s decision is an abuse of power. They argue that it will have a significant economic effect on an industry that is only now beginning to show the slightest indications of recovery from a dire crisis, and are now looking into possible legal methods of fighting back. Meanwhile, the tourist authorities are threatening to withdraw their promotions of the tour operator if the deductions are imposed. LO

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