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Monday,  July 15, 2024 7:03 AM 

An "unfavourable outcome": ACTA disappointed with TICO's new fee structure

An "unfavourable outcome": ACTA disappointed with TICO's new fee structure
From left: Wendy Paradis, president, ACTA; Richard Smart, CEO, TICO. (Pax Global Media/file photos)
Michael Pihach

Michael Pihach is an award-winning journalist with a keen interest in digital storytelling. In addition to PAX, Michael has also written for CBC Life, Ryerson University Magazine, IN Magazine, and Michael joins PAX after years of working at popular Canadian television shows, such as Steven and Chris, The Goods and The Marilyn Denis Show.

The Association of Canadian Travel Agencies and Travel Advisors (ACTA) is expressing its disappointment with The Travel Industry Council of Ontario's (TICO's) recent announcement regarding the "significant" increase in fees.

“We have consistently advocated for a shift to a consumer-pay model for the Compensation Fund, seeking a minimized fee structure for our members,” said Wendy Paradis, ACTA's president, in a statement Thursday (Feb. 8).

This decision to increase fees while maintaining a registrant-paid model for the Compensation Fund is a significant setback for travel agencies and advisors. These changes impose an undue financial burden on our industry, particularly during a period of recovery and rebuilding.”

ACTA says that it has persistently advocated with the Government of Ontario and TICO over the years, voicing the concerns of its members about the TICO funding formula.

READ MORE: Ontario Auditor General notes "significant concerns" in TICO audit; Richard Smart, ACTA respond

“Unfortunately, despite lengthy consultations with the Ontario government and TICO, our concerns have not been addressed, leading to this unfavourable outcome,” said Paradis.

ACTA says it asked for a pause while a thorough review of TICO was taking place. 

“We have strongly advocated for key items, including pausing any changes proposed by TICO until a thorough review of the Travel Industry Act is completed, as recommended by the Auditor General’s report,” said Paradis.

Updated fee structure

TICO, following a review last fall, on Feb. 1 announced fee changes that it says aligns with the Auditor General’s recommendations to revise the organization's structure.

The following fee updates are set to take effect on April 1, 2024:

Decreased Compensation Fund payments to $0.05/$1,000 from $0.25/$1,000 of Ontario Gross Sales (proposal #1 from consultation). 

As a “burden reduction measure,” Compensation Fund assessments will only be due one time per year, payable within 90 days of year-end, TICO says. Mid-year filings will no longer be required.

READ MORE: TICO updates fee structure, announces April 1 start date

And secondly, recalibrated fee bands and a new method for calculating renewal fees. 

Ontario Gross Sales (OGS) continues to be the basis for calculating fees, TICO said, posting the following chart to illustrate how it breaks down: 

New Fee Bands (OGS)
New Renewal Fees
Less than $10M
Flat rate of $750
$10M - $50M
$0.29 per $1,000 in OGS
$50M - $100M
$0.27 per $1,000 in OGS
$100M - $250M
$0.25 per $1,000 in OGS
Greater than $250M
$0.23 per $1,000 in OGS
  • New late filing fees 
Late Fee
Annual financial filing (due within 90 days of year-end)
Registration renewal (due within 90 days of year-end)
Notice of business change (due within 5 days of change)

TICO has also made two additional proposals that require government consideration: 

One, to remove end-supplier coverage from the Compensation Fund and two, double the maximum per person Compensation Fund limit to $10,000.

"These proposals have been brought forward to government with a request for consideration," TICO says. 

Voluntary consumer pay model

TICO says it "understands" that the travel industry is looking for added flexibility to recover regulatory costs. 

"As part of the consultation, TICO asked registrants if there was an interest in a voluntary consumer pay model, where regulatory fees would be disclosed and passed through to consumers at the point of sale," the association said. 

READ MORE: TICO CEO Richard Smart unpacks proposal for future funding; consumer pay model a no-go

"Overwhelmingly, we heard that registrants were not interested in this option. Registrants expressed concerns that any fees passed to consumers would be a competitive disadvantage, an added burden and potentially cause consumer confusion."

Why is TICO changing its fees?

TICO has not changed its renewal fees since 2011, but since then, the travel industry "has become more complex with the evolution of technology, the post-pandemic environment and the prevalence of fraud," the association said. 

Its says its expenses have grown by an average of approximately three per cent each year. 

"TICO has done its best to keep expenses reasonable while adapting to these new demands. During this time, inflation has accumulated at a rate of approximately 30 per cent (according to the Bank of Canada)," the association said. 

The new funding model represents a 3.4 per cent aggregate increase in total fees paid by registrants, based on sales from 2019/2020, the association said. 

"While some registrants will see fee increases higher than this rate, the new fee bands are more equitable at distributing fees across all registrants. Additionally, there is a minimum cost to regulating a registrant of any size, which the new minimum fee of $750 addresses," TICO said. 

Eliminate the Comp. Fund?

ACTA, meanwhile, has emphasized the need to re-evaluate prior studies, assess the provincial government’s role in federally-regulated sectors like airlines, expedite consultations, and rethink TICO’s core mandate and value to consumers.

The association has advocated for simplifying the Travel Industry Act, focusing on priorities that protect consumer funds and reduce burdens on Ontario registrants, particularly small travel businesses.

“ACTA’s stance has been clear: if the current, costly compensation fund system, which provides minimal benefit to consumers, is to continue, significant changes are necessary,” said Paradis. “Yet, despite advocating for a consumer 'insurance' contribution model for enhanced protection, ACTA has been met with resistance to this change.”

If substantial improvements to the Compensation Fund model are not forthcoming, ACTA is urging the government to consider eliminating the fund or advocating for a national program funded by the beneficiaries - the travel consumers.

"The fee changes are likely to have detrimental effects on the travel industry. It places ACTA members at a competitive disadvantage in what is becoming a global marketplace – and adds an additional layer of financial strain,” said Paradis.

ACTA says it will continue to advocate for the interests of its members with TICO and the Ontario government. 

“We are committed to engaging further with government officials and TICO to revisit and reconsider this decision, advocating for a more equitable approach,” said Paradis.

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