Industry Advisory - Registration and Renewal Fee Increase Effective July 1, 2011
May 30, 2011
The Board of Directors of the Travel Industry Council of Ontario (TICO) reviewed the feedback received from stakeholders on the proposed increase to registration and renewal fees. Based on its review, the TICO Board has decided to proceed with the fee increase effective July 1, 2011 for the reasons outlined below. Click here for a copy of the new Fee Schedule.
In response to its Fee Review Consultation during the month of April, TICO received 82 responses. Two responses were received from industry associations (ACTA and ARTA), with the other 80 coming from owners or employees of travel agencies. The majority of respondents were opposed to the fee increase, with the main objections summarized as follows:
1. These are tough economic times; travel agencies are operating on tight margins and cannot afford an increase in TICO fees.
2. The amount of the fee increase is too high.
3. TICO should be cutting costs and/or charging consumers a fee rather than increasing fees to registrants.
4. Many smaller travel agencies stated that the current fee structure is unfair and that larger registrants should be paying more rather than increasing the fees of smaller entities.
The TICO Board appreciates that times are tough and that some travel businesses may be struggling. Indeed, this very fact places a greater responsibility on TICO to be vigilant in monitoring the financial health of its registrants. However, the board also recognizes the need for TICO to be fiscally responsible and to manage its own resources efficiently. The Board regularly reviews TICO’s financial position, its budget, its revenue and expenses, and costs are always carefully considered. Further, TICO is transparent in its financial reporting, through audited financial statements that are made available to the public. Moreover, stakeholders have an opportunity to ask questions at TICO’s Annual General Meeting and through other designated forums.
TICO fees are set on a cost-recovery basis, and are designed to cover all costs, including those which cannot be directly attributable to the payors. Examples include, but are not limited to, complaint handling, inspection, investigation, prosecution, consumer awareness campaigns, website development and maintenance, governance programs, initiatives related to legislative and regulatory review, government oversight and reporting, and general administration.
Staffing & Consumer Awareness Campaign represent highest costs
TICO’s two largest costs are staffing and the Consumer Awareness Campaign, and the Board does not believe those components should be reduced at this time. TICO is required under its mandate from the government to ensure consumer awareness of its services and to provide consumer protection. Moreover, in a highly competitive marketplace, where operators from outside the province can easily compete with Ontario registrants via the internet, the Board believes it is more important than ever to get the message out that consumers should book with TICO-registered agencies because of the high standards and consumer protection available. TICO currently spends $500,000 a year on consumer awareness, to reach its wide provincial audience. While this may seem a lot, it has to cover many different markets in Ontario and in order to reach the largest number of consumers as efficiently as possible, it must employ the use of TV, billboards and PR campaigns. Reducing the amount allocated would significantly affect TICO’s ability to maintain and build upon current awareness levels.
Should larger registrants pay more?
The TICO Board considered the feedback received on the fee structure as well as the view expressed that larger registrants should be paying more because of their large sales volumes and the potential exposure to the Compensation Fund were they to fail and/or their ability to pay become compromised. The Board does not believe such a change is warranted for two reasons:
• First, most large registrants are paying more than is reflected in the Registration and Renewal Fee table once branch office operations or both retail and wholesale components are considered. As most of the larger registrants have a number of branch offices, they are paying higher fees than might appear at first glance.
• Second, when setting fees to recover costs, the Board considers how TICO is using its resources. Approximately 57 per cent of registrants have sales of $2 million or less. Monitoring that segment of the industry takes a substantial amount of TICO’s time and resources, and as a result, the Board believes that the fee increase for that group of registrants is fair.
Is the fee increase paying for Conquest or other failures?
The Board noted that some registrants believe that TICO is increasing fees in an attempt to recover the amount paid out in claims as a result of the Conquest Vacations failure. Other respondents indicated that the travelling public should be paying because they benefit from the Compensation Fund. It should be emphasized that registration and renewal fees are distinct from Compensation Fund contributions. While both the Compensation Fund and TICO’s operations are funded by TICO registrants, they are two separate revenue streams. Claims are paid out of the Compensation Fund, not from the TICO’s operating budget. TICO is not recommending a change to Compensation Fund contributions at this time, and the Board is continuing to explore the feasibility of a consumer-pay model for the Compensation Fund.
The case for a consumer pay model.
Looking into a consumer-pay model for the Compensation Fund, which has been advocated by the industry, has costs associated with it. TICO is currently conducting research to determine whether consumers would be willing to pay for enhanced compensation fund coverage or whether it might deter them from dealing with TICO-registered agencies. If TICO were to propose such a change to the government, it would need to support the recommendation with third-party reports and with actuarial data confirming the level of the Fund required and the feasibility of the funding model being proposed.
The TICO Board would like to thank everyone who participated in the Fee Review Consultation. Your feedback is valuable and assists the Board in its considerations and decision making. If registrants have questions or require further clarification, please contact TICO at 1-888-451-8426 or (905) 624-6241 or e-mail us at
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FEE SCHEDULE
REGISTRATION AND RENEWAL FEES
Section 3(1) of Ontario Regulation 26/05 provides that an application for registration or for renewal of registration as a travel agent or a travel wholesaler shall be accompanied by the relevant fee set by the administrative authority under clause 12 (1) (b) of the Safety and Consumer Statutes Administration Act, 1996. This Fee Schedule sets out TICO registration and renewal fees.
This Fee Schedule comes into force on July 1, 2011.
The applicable fees are for a one year period.
REGISTRATION:
The following fees are payable at the time of registration:
| ENTITY |
|
|
Travel Agent or Travel Wholesale - Head Office |
$ 3,000 |
|
Travel Agent or Travel Wholesale - Branch Office |
$ 800 |
Registration fees are not refundable.
RENEWAL:
A renewal fee is payable for each retail and wholesale registration held. The renewal fees are based on reported sales in Ontario during the last fiscal year as follows:
|
SALES VOLUME |
RENEWAL FEE |
|
$2,000,000 or less |
$ 300 |
|
More than $2,000,000 but not more than $5,000,000 |
$ 600 |
|
More than $5,000,000 but not more than $10,000,000 |
$ 900 |
|
More than $10,000,000 but not more than $50,000,000 |
$1,200 |
|
Over $50,000,000 |
$1,800 |
An additional fee is required for each branch office:
|
Branch Offices |
$300 each |
Annual renewal fees are payable 90 days after the registrant’s year end.
Branch renewal dates will be aligned with the renewal date of their head office. Thus, registrants with branches will renew all of their entities simultaneously (head office and all branches).
