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Travel surcharges
Introduction
We think adventure tour operator Sundowners Overland’s advertising of its prices has been pushing the limits of what’s fair and reasonable.
Sundowners Overland offers tours along the mysterious and exotic Silk Road. Some of that mystery appears to apply to the pricing of its tours. A "currency surcharge" of over $2000 was added to a price advertised on its website and in its brochure.
Matthew's experience
Self-described "world leading" tour operator Sundowners Overland is based in Australia but offers tours here through Kiwi travel agencies. In April 2009 Matthew Weir (not his real name) booked through the House of Travel a Sundowners Overland trans-Mongolian cultural tour leaving in July.
It was the trip of a lifetime – a small-group tour from Hong Kong to St Petersburg via the Gobi Desert and the Mongolian Steppe. You don’t expect trips like this to be cheap but you do expect the price to be fair.
A $2338 currency surcharge
Matthew’s father Roy approached us in June asking if we could clarify why the tour increased significantly in price. According to the pricing featured in the Sundowners Overland brochure and displayed again on the company’s website (during April, May and June) the tour cost NZ$9760. But according to pricing provided by the House of Travel Matthew’s tour incurred an additional “currency surcharge" of NZ$2338, an increase of around 20 percent.
Nowhere on the website could Roy (or we) find an accurate NZ dollar price for the tour. The House of Travel (which booked the tour for his son) hasn’t been able to give Roy a detailed explanation of the charge.
No explanation
We contacted Sundowners Overland, seeking an explanation of the currency surcharge. However, none was forthcoming. The fine print in the tour brochure states the company “reserves the right to adjust the prices listed due to currency fluctuations ....”
The brochure also states “the prices were correct at the time of publishing ... for the most up-to-date information on pricing please see our website”. The website quoted US dollar prices in the booking section. Prices in NZ dollars and other currencies were quoted on other pages of the website and appeared to be scans from the company’s glossy brochures.
In April when Matthew made his booking via the House of Travel, the Sundowners Overland website reported a NZ dollar price significantly lower than the booking price he eventually paid. And when his father Roy checked in June, the website still reported the price as NZ$9760; yet the House of Travel confirmed that the booking price for the trip remained over NZ$11,000. When we spoke to the House of Travel we were told the currency surcharge for the tour was still 20 percent.
In early July, after we had contacted the company, Sundowners Overland temporarily removed all pricing from its website. By late July the company appeared to have loaded up-to-date brochures on to its website and altered the way prices were reported. Instead of reporting online booking prices in US dollars, booking prices were now quoted in NZ dollars. The trans-Mongolian cultural tour price was now quoted at NZ$11,350.
Out-of-date exchange rate
Without any explanation from Sundowners Overland about how it calculated its final price for the tour, we have had to work it out ourselves.
The tour prices in US dollars and NZ dollars quoted on the website between April and June (and in the printed brochure) were consistent with the NZ dollar buying US71 cents. This was a currency level last seen in August 2008. When Matthew booked his trip in April 2009, the NZ dollar was more than 20 percent below this level.
However, during May and June when Matthew was paying for his trip, the NZ dollar recovered ground and by the end of June was only 11 percent below the August 2008 level. The surcharge seems to have missed the recovery altogether.
So a reasonable currency surcharge would seem to be closer to 11 percent rather than 20 percent. The surcharge seems higher than it needed to be to compensate for the movement in currencies.
Exchange rates are published daily, so there’s no reason why accurate prices can’t be quoted on the Sundowners Overland website.
What others do
Reporting up-to-date prices on its website, in a variety of currencies and including any currency surcharges, is how Intrepid Travel (which also offers Mongolian tours) gets around currency volatility.
As well, the company’s tour prices for Kiwi customers are based on Australian dollars, not US dollars. The Australian-NZ dollar rate is less volatile than the US-NZ dollar rate so it’s less likely currency surcharges will be applied.
Low advertised prices
Sundowners Overland knew in April when it quoted a price for the tour to the House of Travel that it would be charging a substantial currency surcharge. But it didn’t include the surcharge in any published or advertised “headline” price in NZ dollars distributed through its agents here or on its website.
Using artificially low headline prices in advertising to gain business from competitors is an unfair trading practice that’s outlawed here and in Australia.
Our Fair Trading Act is administered by the Commerce Commission. The commission considers it “best practice for the full price that a consumer has to pay to be clearly specified ... Any fine print disclosure of additional costs to be paid, or disclosing the true costs of the purchase when a customer is about to make the purchase is unlikely to prevent a breach of the Act”.
In our view Sundowners Overland’s advertising of its trans-Mongolian cultural tour up till late June is a possible breach of the Act.
Who is accountable?
If the only way Kiwis could buy the tour was from the Sundowners Overland website, they wouldn’t be covered by our trading laws. But Sundowners Overland has contracts with local travel agents that are paid a commission to sell the tours and rely on the company’s brochures and advertising.
When we raised the issue of accountability for misleading advertising with Mark Sullivan from the House of Travel’s head office, he denied that its agents had any accountability. He said their role was strictly that of an agent and that the tour contract was between the tour operator (the “principal”) and the customer.
TAANZ code of ethics and practice
However, the House of Travel is a member of TAANZ. That means it is bound by the TAANZ code of ethics and practice. The Code imposes a duty on members to protect their customers from misrepresentation. It stipulates that “Members shall not ... when promoting the services of their principals make … false, misleading, deceptive or dishonest statements. This prohibition shall apply equally to direct communications ... indirect communications ... and to their advertising”.
The Code also requires members to “protect their customers and the public ... against ... misrepresentation and unethical practices … within the industry as a whole”.
The House of Travel and TAANZ maintain these provisions don’t apply to material provided by tour operators that TAANZ members distribute. If that’s the case, we think they should apply.
In our view, travel agents have a clear responsibility of care to their customers. That responsibility includes insisting that tour operators they represent have fair and clear pricing and advertising. Matthew really enjoyed his Silk Road experience, the only sour note was the excessive currency charge.
Our view
- Travel companies must accurately advertise their prices. Relying on scanned copies of tour brochures isn’t acceptable for website prices unless the brochure price applies.
- Ask for an accurate price from the agent or tour operator. Get it in writing.
- Ask what surcharges might apply and how they will be calculated. Find out what notice you will be given if a surcharge is to be imposed and whether you can avoid it by paying earlier.
- Travel agents should insist that tour operators they represent have advertising material that’s clear and fair.
- If you have a problem with a tour you booked through an agent, take it up with the agent. If it’s a member of TAANZ it has a duty of care to you. Don’t be fobbed off by the agent telling you to “take it up with the tour operator”.
More information
- Travel Agents Association of NZ: www.taanz.org.nz
More from consumer.org.nz
Report by Susan Guthrie.