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The Canadian Association of Tour Operators has issued the following open letter, calling for immediate action in reviewing Ontario’s Travel Industry Act.
The Canadian Association of Tour Operators (CATO), continues to call on the Government of Ontario to initiate the comprehensive review of the Travel Industry Act and its regulations, as recommended by the Auditor General nearly two years ago.
On 28AUG, representatives from CATO, the Ontario Motor Coach Association (OMCA), and the Association of Canadian Travel Agencies (ACTA) met with staff from the Office of the Minister of Public and Business Service Delivery and Procurement to express the industry’s growing concerns about the outdated legislative framework governing Ontario’s travel sector.
Unfortunately, the meeting yielded no firm commitments or timelines for the promised review, prolonging the uncertainty and competitive disadvantage faced by Ontario-based travel companies.
“The core of the problem lies with the Ontario Travel Industry Compensation Fund,” said Jean Hébert, Executive Director of CATO. “This fund is a relic of a pre-internet era. It imposes a financial burden—a ‘TICO tax’—on Ontario-registered businesses, a cost not borne by out-of-province or foreign companies selling directly to Ontario consumers online. This creates an unlevel playing field that penalizes local businesses.”
CATO argues the current model is fiscally unsustainable and fails to adequately protect consumers in a globalized travel marketplace. The fund, which was significantly depleted by claims resulting from pandemic-era travel failures, is now at risk. There is concern that the Travel Industry Council of Ontario (TICO) may need to impose a special assessment on registrants or restart consumer-facing fees to replenish the fund, which would further exacerbate the competitive disadvantage.
“It’s a double failure,” Hébert added. “It harms our businesses and gives Ontario consumers a false sense of security, as they may unknowingly book with an unregistered company and have no protection at all.”
The coalition of industry associations is not merely asking for a review; it is proposing a concrete solution. They advocate for replacing the current Compensation Fund with a mandatory end-supplier failure insurance model. Under this model, the cost of protection against supplier defaults (like an airline or cruise line bankruptcy) would be covered by an insurance policy purchased by the consumer at the point of sale.
This approach, similar to systems already in place in Quebec and the United Kingdom, would:
- Level the playing field by applying the requirement to all travel sold to Ontarians, regardless of where the seller is located.
- Provide more comprehensive and reliable protection for consumers.
- Remove the financial risk and administrative burden from Ontario-based businesses and, ultimately, the provincial government.
CATO, ACTA, and OMCA urge the Ontario government to prioritize this legislative review in the upcoming session. Continued inaction threatens the viability of hundreds of Ontario travel businesses and leaves the province’s consumers vulnerable.
Executive Insights from the Article:
- Regulatory Risk & Advocacy: Major Canadian travel associations (CATO, ACTA, OMCA) are aggressively lobbying the Ontario government to overhaul the Travel Industry Act. The government’s inaction, despite a recommendation from the Auditor General two years prior, presents a significant business risk for operators based in the province.
- Competitive Disadvantage in Ontario: Ontario-based tour operators and agencies face a direct cost disadvantage (termed a "TICO tax") due to mandatory contributions to the Ontario Travel Industry Compensation Fund. This cost is not imposed on out-of-province or international competitors selling online to Ontario residents, creating an unlevel playing field.
- Financial Instability of Compensation Fund: The current Compensation Fund is financially precarious after being depleted by pandemic-related claims. There is a tangible risk that TICO will levy a "special assessment" on registered businesses to replenish the fund, which would translate to a direct, unplanned hit to operators’ bottom lines.
- Proposed Shift to Insurance Model: The industry is advocating for a specific solution: replacing the provincial fund with mandatory "end-supplier failure insurance" purchased by the consumer. This model, used in Quebec and the UK, would shift financial liability from businesses to the insurance market and apply to all travel sold in Ontario, regardless of the seller’s location.
- Key Players & Alliances: A united front has been formed by the Canadian Association of Tour Operators (CATO), the Association of Canadian Travel Agencies (ACTA), and the Ontario Motor Coach Association (OMCA). They jointly met with the Ontario Minister of Public and Business Service Delivery and Procurement on August 28th to press their case.
- Strategic Implication for Operators: Companies operating or selling in Ontario should anticipate potential regulatory changes. A shift to an insurance model could eliminate current TICO contribution costs but would require integrating a new insurance product at the point of sale. Conversely, if no changes are made, the risk of increased TICO fees is high.
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