Progress on the Tourist Guarantee Fund: A Step Closer to Implementation
After nearly 15 years of discussions and attempts to establish a Tourist Guarantee Fund (TGF), which have often stalled, we are now on the verge of a breakthrough. The Ministry of Tourism has released proposed amendments to the Tourism Act for public consultation, focusing on the creation of the TGF. The proposed legislation outlines a systematic approach to the fund, which will be built on a three-pillar protection system: preventive measures (the first pillar), insurance or bank guarantees (the second pillar), and participation from tour operators in the guarantee fund (the third pillar). The fund will operate under the auspices of the Ministry of Tourism.
One notable change in the proposed amendments is that tour operators will no longer be subject to registration but will instead operate under a licensing system, which they will need to transition to within eight months of the amendments coming into effect. However, a crucial detail is missing: the specifics of the contributions that tour operators will be required to make, as well as the initial capital needed to establish the Guarantee Fund. It is anticipated that these details will be finalized in subsequent regulations.
Initial Financial Structure and Contributions
It is worth recalling that during the tenure of interim Minister Ilin Dimitrov, when the initial concept of the TGF was first introduced, it was proposed that the Fund could initially rely on borrowed capital—either 5 million or 10 million leva—repaid by its participants. This loan could potentially come from the state budget or a bank. Contributions were to be calculated as a percentage of the agencies’ turnover, which, based on calculations at the time of the initial proposal, suggested contributions ranging between 80 and 1000 leva.
Functions and Responsibilities of the Tourist Guarantee Fund
What exactly will the Tourist Guarantee Fund entail? Among its responsibilities will be the organization of repatriation for tourists stranded abroad due to a tour operator’s insolvency. In such cases, the bankrupt operator can use funds from the TGF to cover the costs of returning clients to their home country. The amendments do not eliminate the existing “Tour Operator Liability Insurance,” but they do change its name to “Consumer Guarantee for Tour Operator Services in the Event of Insolvency.” The bill states that this change serves to “semantically clarify the type of protection and does not create unrealistic expectations, as the main condition of this protection is clear from its name.”
To enhance accountability and predict potential financial issues, tour operators will be required to report their turnover monthly. Additionally, a minimum capital requirement of 5000 leva is introduced, regarded as a standard preliminary guarantee of seriousness and commitment. Another condition for tour operators is the establishment of a “hotline,” designed to enable travelers to maintain quick and effective communication with the operator for emergencies.
Overall Objectives of the Guarantee Fund
The overarching goal of the Tourist Guarantee Fund is to ensure that funds are readily available in emergencies, allowing for immediate disbursement to affected tourists, rather than forcing them to wait for compensation claims that can take years to resolve.
Governance Structure of the Guarantee Fund
The management of the Tourist Guarantee Fund will consist of a chairperson and four additional members who will form its governing board. The chairperson will oversee the operations and ensure the fund’s objectives are met effectively.
Board Member Selection Process
In the upcoming governance framework, two members of the board will be appointed directly by the Minister of Tourism. The remaining two members will also be designated by the relevant minister, but only after receiving nominations from representatives of industry organizations.
Qualifications for Board Members
It is essential that all board members possess a higher education degree in economics or law, along with a minimum of three years of professional experience in the tourism sector. This ensures that the board is well-equipped to make informed decisions regarding the management of tourism-related initiatives.
Term Duration and Reappointments
The term for board members will span four years; however, they may be re-nominated and appointed for additional terms without any limits on the number of terms they can serve. This approach aims to maintain continuity and leverage the accumulated experience of board members.
Compensation and Administrative Structure
The salaries of the fund’s members will be determined by the Minister of Tourism. Additionally, the fund will establish an administrative body, the size of which will be regulated by guidelines that the tourism minister is expected to issue within six months following the implementation of these changes.
Public Consultation and Feedback
The complete text for public discussion is available for review, and feedback will be accepted until September 2, 2024. Stakeholders and the general public are encouraged to participate in this process to ensure a comprehensive dialogue about the proposed governance structure.
