Tui Group has told hotel partners they will not receive 75% of money owed to them for holidays taken last winter until after the coronavirus crisis.
In a letter sent to Spanish hotel suppliers, Europe’s biggest travel firm set out proposed revised payment terms for January, February and March.
Spanish hotel groups are reported to be considering a legal challenge, fearing some operators could be pushed close to collapse [link to Spanish language website].
Tui said it had already made significant advance payments to hotels for 2020 and it was working in partnership with them to prepare for when travel restarts after the Covid-19 lockdown.
Jorge Marichal González, president of the Tenerife Hotel Association and CEHAT, the Spanish hotel and tourism association, called for more understanding from Tui.
“We know this is a difficult situation for everyone, but the tour operators need to understand that this is a horrible situation for hotels. Maybe some will go bankrupt.
“Some of them only work with Tui, so it’s even worse because they have only one operator. We understand we need to support in any way we can, but Tui needs to understand it’s not the same for every business.
“Companies that are bigger and stronger need to understand smaller hotels with guarantees and exclusives are in a very bad situation. They need to take that into account.”
González said hotels in Spain were unlikely to get a government bail-out. “We are only asking for money that Tui owes us,” he said.
Spanish website Tourinews.es said the proposed new payments terms from Tui had sparked “discontent” among hoteliers and they are considering whether they can challenge it legally.
It reported hotels are being told the new payments plans are non-negotiable and common to all hotel partners.
They involve four separate payments of 25%, the first after hotels sign the new terms and the rest from one month after it is announced travel to the country is allowed.
In a statement, Tui said it was unable to comment on its supplier payment policy, however, the company said: “As we’ve mentioned before, we have long-lasting and very successful relationships with our partners in destinations which remain intact also during these unprecedented times.
“Tui has made significant amounts of advance payments to its hoteliers for the summer season 2020 and we are in close contact with them preparing a re-start of operations when travel resumes.
“In these unprecedented times, we are focused on working together with our partners in our destinations.
“We are working step by step on setting up internal processes, so as to be prepared to return to normal procedures as quickly as we can.
“As soon as travel restrictions ease, we’re confident we, together with our partners, will be able to offer the best product available for our customers.”
Alan Bowen, legal advisor to the Association of Atol Companies, said: “Tui, as the largest operator in Europe, is in a position to do this because there is no one else with the ability to fill the beds with the numbers that the hotels need.
“I suppose they would argue this is the way they are going to survive. It’s an appalling situation. As an industry, we’ve got to be really careful we are treating customers fairly, agents and operators fairly and suppliers fairly. All these relationships are very important.”
Tui is not the only tour operator or wholesaler looking to reduce its costs.
Dnata has written to suppliers to inform them of an extension to its payment terms, meaning hoteliers may not be paid for up to 120 days after a client’s stay.
Meanwhile, accommodation wholesaler Travco has issued a letter requesting a one-off reduction of all outstanding invoices of 50%.
The Caribbean Hotel and Tourism Association said that suppliers changing payment terms was “severely impacting” hoteliers and it has written to Abta on behalf of its members.
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