Smart Talks Challenges, Fund Framework, Fees And More At TICO AGM
In sharing the results of ‘another busy and challenging year’ at the Travel Industry Council of Ontario’s (TICO) annual general meeting last week, TICO’s president and CEO, Richard Smart observed that “the only constant we all continue to experience is change itself. This past year has been no different.”
He told those attending the AGM that “With pandemic travel restrictions lifted, global travel demands are quickly approaching pre-pandemic levels. In Ontario, many registrants have experienced increasingly higher demand for travel, as consumers plan long-anticipated vacations, reunite with family and friends, and visit colleagues near and far after extended absences.”
However, Smart warned that “continued economic headwinds, however, are creating potential concerns for the ongoing recovery of the industry. With every challenge, there are opportunities. The industry continues to respond with new enhancements and innovations, and increased attention on customer service and experience.”
In fact, Smart said that earlier in 2023, the Auditor General of Ontario conducted a value-for-money audit on TICO’s operations. That work is nearly complete and a public report is anticipated before the end of this calendar year.
Said Smart: “At TICO, we continue to focus on our core consumer protection mandate, supporting consumers through the challenges associated with the 2022 summer surge and 2022/23 winter challenges, intensified by unusually harsh winter storms. Central to our mandate is our commitment to enhancing consumer and registrant awareness and education.”
TICO’s boss also noted that consistent with best practices, it conducted comprehensive values and satisfaction surveys with consumers and registrants in early 2023.
Smart noted that the surveys confirmed the growing importance and value of travel advisors, as travel complexities and challenges have also grown. Notably, 7-in-10 consumers believe in the value TICO provides as a regulator of travel services.
Her reported that “the surveys also identified the overall travel ‘experience’ was growing in relative importance compared to other factors, such as cost, further supporting the key role of travel retailers and advisors.”
Said Smart: “The ever-changing landscape of the travel industry over the past three years has meant that both consumers and registrants have needed support more than ever before.”
He explained that: “In working with both groups, our aim has always been, and continues to be, to find fair solutions so that consumers remain confident purchasing their travel from Ontario’s registered businesses.”
And he stated that: “We believe that a regulated travel marketplace with sound consumer protection is good for consumers and good for business.”
TICO’s president & CEO said that: “Consumer protection is best achieved in the context of a vibrant marketplace. That’s why TICO has continued to work collaboratively with the government on initiatives that support the viability of the sector.”
Smart also told his AGM audience that 2023 was the third and final year of financial support provided by the government.
“With these transfer payments – $2.5 million during this most recent fiscal year and just over $10 million over three years – TICO was able to provide ongoing financial relief to all registrants,” he said.
And Smart continued: “During this time, we also began a comprehensive review of a new funding framework and fee model for the future. While there are certainly other financial pressures facing travel agencies and tour operators, we’ve heard from industry that these waivers made a meaningful difference.”
In terms of the numbers, Smart reported that on March 31, 2023, there were a total of 1,920 TICO registrants compared to 2,035 the year before, representing close to a 6% decline.
He said: “We experienced 328 voluntary terminations throughout the year, which is higher than the 265 terminations the year before. We continue to experience consolidation in the sector as traditional business models give way to new modern approaches to selling travel. It’s always disheartening when we see a business close its doors, regardless the reason.”
On a positive note, Smart said, there were 140 new applications processed during the year. This is double the new entrants into the travel marketplace when compared with the 70 new applications in the prior year.
TICO continues to focus on enhancing our education program for the benefit of consumers, but also for new travel advisors entering the profession.
Said Smart: “As I noted at our last AGM, the interest in becoming TICO certified is accelerating, which bodes well for the long-term sustainability of the sector. During the most recent fiscal year, the number of exams written swelled to a new record of 7,100 exams – an increase of more than 50% compared to the previous year. There are clear signs the pipeline of new individuals choosing a career in travel sales is expanding as the industry recovery accelerates.”
Smart also told his audience that: “Continuing to enhance the education program remains a key priority for TICO. Our enhanced adult e-learning development platform is expected to be substantially complete by the end of the current fiscal year with implementation the following year.”
TICO’s president & CEO also advised that the findings from the comprehensive review of TICO’s funding framework and fees will be shared with stakeholders soon and will include a recent actuarial study of the Compensation Fund.
Said Smart: “Our Board of Directors have provided the necessary oversight to ensure a fair and balanced approach has been achieved along the way. As required in our agreement with the government, a detailed business case was submitted for government consideration. The changes TICO is proposing will be shared with registrants through a consultation process, which will begin next week.”
In terms of dollars and cents, Smart said that for the third year in a row, TICO operated in a near zero-revenue environment.
“Thanks to financial support from the Ontario government, TICO was able to continue operating on its mandate of consumer protection, while also passing along financial support to registrants,” Smart told the AGM.
He continued: “At just under $4.4 million, our operating expenses were lower than the prior fiscal year and below the Budget approved by our Board. In fact, over the past 5 fiscal years, TICO’s operating expenses have remained flat. Our commitment to prudent financial management and cost containment remains a strong pillar to the work we do.”
Smart observed: “I have learned over many years that continued investment is an important facet to ensuring future success and we will always seek ways to be fiscally prudent while committed to long-term sustainability.”
He told the AGM gathering that: “Since the early years of the pandemic, we have seen an increase in Compensation Fund claims and 2023 was no different. The total amount in consumer claims against the Fund increased to $617 thousand an increase from the 491 thousand dollars experienced in the prior year. This is the highest level we’ve seen in a decade.”
And Smart added that: “The prolonged nature of the pandemic has undoubtedly been the driver behind this increase in consumer claims. In total, the Compensation Fund assisted 278 consumers last year.”
Today, he said, the Compensation Fund balance remains at just under $23 million dollars for future claims, before explaining that “in total, we generated a net deficit of $2.3 million compared to $1.2 million dollars the year prior, ahead of budget but nevertheless an unstainable deficit.”
Smart said that: “Continued acceleration of travel demand now needs to be carefully weighed in light of macro economic trends, including the fast paced rise of interest rates and the likelihood of a recession, which we may indeed be experiencing as we speak.”
Looking ahead, Smart said that TICO has an updated three-year Business Plan that will guide its priorities and activities.
“As we’ve seen over the past three years, it’s difficult to predict the final trajectory of the travel recovery, whether a looming recession will be ‘hard’ or ‘soft’ and the ongoing shift with consumer expectations, emerging technologies and the marketplace in which we operate,” he said.
Smart told the AGM that TICO “will continue to work with the Ministry of Public and Business Service Delivery to be a progressive and modern regulator. One that balances the needs of consumers and industry, while considering the realities of the current travel marketplace.”
TICO’s boss made it clear that “we look forward to the recommendations coming soon from the Office of the Auditor General and are committed to continuous improvement. Our focus will continue to be on enhancing consumer and registrant awareness, improving our educational platform for new talent entering the industry and on supporting consumers in their quest to make fully informed travel purchase decisions.
And Smart concluded: “We will continue our unwavering focus on prudent financial stewardship, striving to enhance the value of the services we provide to consumers and registrants. As I’ve mentioned in the past, I truly believe that resiliency and innovation is the pathway to success. Both registrants and TICO must continue to work together to deliver services, exceed customer expectations and ensure a trusted marketplace.”