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CANADA TOUR OPERATORS

 

Canada's tour operators accused of anti-competitive action against Go Travel Direct

Canada’s giant travel firms accused of bid to snuff out low-cost competitor.

 


BY A CORRESPONDENT
March 8, 2007

In a rare happening in Canada’s travel business, a few big travel companies and an industry association of Canada have been charged with threatening hotel operators in Mexico, the Dominican Republic and Cuba.

The threat is seen as an effort to wreck low-cost competitor Go Travel Direct, according to court documents filed by the federal Competition Bureau of Canada.

Tours Mont-Royal, Transat A.T., Air Canada Vacations and Signature Vacations, as well as the Association of Canadian Travel Agencies and a Quebec-based association of travel agents are named in a request for a search warrant filed by the Competition Bureau.

The Bureau has supported its request with copies of e-mails between some of the parties and various hotels.

The Competition Bureau believes the tour operators, who collectively control about 86% of Canada’s packaged-vacation market, did engage in illegal or anti-competitive behaviour to hurt Ottawa-based Go Travel, which has less than 4% of the market. The allegations have not been proven in court.

While traditional tour operators, or wholesalers assemble flights, ground transportation, hotel rooms and meals into packages sold through travel agents, Go Travel sells directly to the public, cutting out the travel agents and thereby cutting prices by between 15% and 20%.

Go Travel started its business in Ottawa in 2000 and entered the Quebec market in September 2004.

The arrival of the low-cost operator immediately created a commotion in Quebec, with numerous articles posted on an industry website – www.tourismeplus.com – discussing the best way to counter Go Travel.

On September 13, 2006, the website reported that the biggest travel companies were planning to meet to discuss the state of emergency presented by “Hurricane Go Travel.”

In an affidavit filed as part of the warrant request, Go Travel chairman Hugh Boyle said: “While there was some pressure when we first entered the Ottawa market, it was nothing compared to the sustained and intense pressure we experienced once we expanded into the Montreal market.”

Go Travel sells approximately 82,000 travel packages annually, including about 22,000 in Quebec.

Hugh Boyle says his company has lost 80% of its hotel-room suppliers because of pressure from tour operators and travel agents. In Cancun, a Mexican city, Go Travel no longer flies “because no hotel will deal with us.”

Boyle alleges that the large numbers of cancellations have cost his company hundreds of thousands of dollars by forcing it to find new suppliers of hotel rooms, thus making its advertising brochures obsolete.

Among the documents obtained by the Competition Bureau is a letter sent on October 15, 2005, by Jean Collette, chairman of the Quebec regional council of the Association of Canadian Travel Agencies, warning the Cuban tourism minister that his members “will think twice before selling a destination, hotel or resort that supports the Go Travel Direct model.”

And, in the months that followed, four Cuban hotels or resorts cancelled their contracts with Go Travel.

 

 

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