Consumer Council Submission on the Review of the Operation and
Regulatory Framework of the Tourism Sector in Hong Kong (July 08,
2011)
1. The Consumer Council (the Council) is
pleased to submit views to the Tourism Commission (TC), Commerce
and Economic Development Bureau (CEDB) regarding the consultation
on the review of the operation and regulatory framework of the
tourism sector in Hong Kong.
2. The following sets out some of the
consultation questions that have direct implication on consumer
interests, and the corresponding response of the Council for
consideration of the TC and CEDB. The numbering in brackets depicts
the question numbers used in the Government consultation
paper.
Regulatory Arrangement of Travel
Agents
(1) Does the existing regulatory
arrangement for travel agents require any changes?
3. Yes, back in 2009, the Council urged
the Government to conduct study and review the self-regulatory
structure of the tourism sector. In this regard, the Council is
glad that the Government has taken on board its suggestion and
conducts the public consultation on the review of the operation and
regulatory framework of the tourism sector and also puts forward
options for reform.
4. Whilst recognizing the important role
of the Travel Industry Council of Hong Kong (TIC) and its
contribution to the tourism sector in the past two decades, the
Council is of the view that the self-regulatory mechanism may not
be effective in providing adequate protection to consumers in light
of rapid development of the tourism sector nowadays.
5. The views quoted in Chapter 3 of the
consultation paper reflect the real situation. For instance, the
TIC lacks sufficient power to carry out investigation and
sanctioning of the trade; the same licensing and regulatory
framework is not able to address the different modes of operation
in the outbound and inbound sectors. More importantly, the TIC is
still perceived by the public as having vested interest despite
participation of increased number of non-trade
directors.
6. The Council considers that reform of
the present regulatory framework presents an opportunity for the
Government to strengthen the supervision of the tourism sector and
regulate its operation more closely, much needed in view of serious
travelling consumer issues that have arisen over the past few
years.
7. The Council fully supports change of
the existing self-regulatory system in the tourism sector and sees
it as advancement in the protection of the interests of travelling
consumers and enhancement of the service quality of the travel
industry in Hong Kong.
(2) If changes are required, apart from
examining the merits, drawbacks, implications and
cost-effectiveness of the reform options, are there factors other
than those in paragraph 4.2 (of the consultation paper) that should
be considered?
8. Paragraph 4.2 of the consultation
paper lists out a number of key factors (e.g. effective
coordination amongst the different organizations, balance between
sufficient trade participation and independence, resource
implications and timeframe for implementation of the reform). The
Council is of the view that some of those key factors such as
timing and costing are important but are not overriding factors in
determining which reform option would provide the best way
forward.
9. The Council believes the interest of
the consuming public should be an overriding factor to be
considered by the Government and as such should be included in
working out the best regulatory model to be put in place for
enhancing the overall level of traveller protection and promoting
sustainable development of the tourism sector.
(3) Which of the four options set out in
the consultation paper would best cater for Hong Kong's situation
and needs?
10. On the basis of information given in
the consultation paper, the Council generally prefers introduction
of a direct regulatory model (Option 3 or Option 4) for reasons set
out below.
11. To a certain extent, Option 1 (i.e.
to revamp the composition of the TIC) and Option 2 (i.e. to review
the functions, powers and responsibilities of the TIC) retain the
current two-tier regulatory regime. The Council believes that a
crucial question to be seriously considered is whether the options
of merely restructuring the TIC will really bring about benefits to
the tourism sector and travellers in the long run. The Council is
of the view that for any regulatory framework to emerge from these
two options in which the TIC remains the self-regulatory body, the
lack of recognition and accountability issues will remain to be
resolved.
12. In recent years, the tourism sector
has attracted much public attention involving both internal and
external problems. The problems include: an upsurge of tourist
complaints as a result of the Mainland's relaxation of travel of
mainland visitors to Hong Kong, disputes arising from some tourist
guides' undesirable practices of forced shopping, and
criticism/suspicious of "insiders regulating insiders".
13. The Council believes that a
piece-meal reform approach (which had been done so in the past) as
suggested in Option 1 and Option 2 is unlikely, to effectively
address the problems and respond to rising public expectation of a
fair and independent mechanism for greater traveller
protection.
14. Option 3 and Option 4 will put an
independent statutory body or the Government in place of the TIC to
take over the overall regulation of the tourism sector. The Council
considers that Option 3 and Option 4 could enhance the independence
and credibility of the regulatory framework for the tourism sector,
as compared to Option 1 and Option 2.
15. In terms of regulatory efficiency,
Option 3 and Option 4 recommend bringing the licensing and
regulation functions under one roof. This will strengthen the
powers of the regulatory body to regulate the trade and facilitate
the coordination and execution of regulatory policies.
16. Although Option 3 and Option 4 are
similar in that in creating a direct regulatory role, the Council
sees that Option 4 will cover a wider range of responsibilities as
a result of bringing enforcement of tourism policies, planning and
regulation all under the purview of the Government. This will also
have the advantage of helping the Government to better understand
market development and manage the implementation of
policies.
17. However, it may be of concern that
the Government (or the new government department), in view of
greater scope of work, might pay less attention to dealing with the
urgent need of improving the protection of travellers. If this is
indeed of issue, the Council considers Option 3 may be preferable
to Option 4.
18. Regardless of which reform option
will be chosen ultimately, the Council considers it important to
set out clearly that the key objective in establishing the relevant
regulatory framework is the protection of travellers.
(4) Do you have any comments regarding
the substantive arrangements (such as functions, power,
composition, governance and checks-and-balances) of the preferred
option?
19. Considering the interest of the
consuming public, the Council views it important that any
regulatory body to be set up should be independent, and its
regulatory framework should have the following fundamental
attributes:
- Comprehensiveness and
representativeness: A regulatory framework will be effective only
if aimed with full power to monitor the overall operation of the
tourism sector. This entails power not limited to monitoring the
financial position of travel agents, but also covering regulation
of the operation of travel agents as well as of the conduct of
their frontline staff (tourist guides and tour escorts);
- Credibility: The
regulatory body should have credibility and be independent, command
public recognition and support so as to boost public confidence in
the trade;
- Fairness: Disputes
between frontline staff and travellers are to be dealt with fairly
and effectively, regardless of whether a complainant is an outbound
or inbound traveller, to ensure equal and indiscriminate treatment
to all;
- Accountability: The
licensing and regulation functions are taken up by the same body
(i.e. performed under one roof), they will be better able to
complement each other, and serve to enhance effectiveness in the
oversight of the tourism sector; and
- Sustainability: The
regulatory framework should be sufficiently flexible to cater for
rapid changes in the business environment which is conducive to the
sustainable development of the tourism sector.
20. The Council supports vesting the
regulatory body with explicit powers to carry out regulation,
inspection and investigation of the trade, powers to impose
supervisory sanctions and the power to handle complaints and
disputes between travellers and the trade, as proposed in the
consultation paper.
21. In dealing with emergencies or
incidents (e.g. forced shopping, desertion of tourists), the
Council suggests that the regulatory body should be empowered with
power of intervention to direct travel agents or frontline staff to
stop undesirable practices or conduct for the protection of
travellers and the reputation of Hong Kong's tourism sector as a
whole.
22. On the proposed governance
arrangements for the regulatory body, the Council considers a
governing board comprising a wide cross-section of the community
should be established to provide direction to the body. As to the
composition, the Council supports having non-trade members forming
the majority of the board in order to ensure its credibility.
Furthermore, the Council suggests that the Customs and Excise
Department should become a board member to secure effectiveness.
The Council also believes that setting up an advisory committee
open to inputs from user/consumer groups is important for enhancing
understanding of issues of interest to travellers.
23. If it is eventually settled that an
independent body should take up the overall regulation of the
tourism sector, the Council considers that necessary arrangements
should be made by the Government to ensure close collaboration with
the relevant stakeholders including the TC and the TIC to minimize
inconsistencies, overlap or gaps in tourism policies, planning and
regulation.
Regulation of Tourist
Guides
(6) If the tourism sector is to be
regulated by an independent statutory body or the Government (i.e.
Option 3 or 4), should a statutory tourist guide licensing system
be introduced? If yes, should there be a transition period and how
long should the period last?
24. Yes, the Council supports
introduction of a tourist guide licensing system as soon as
practicable, given that similar arrangements (i.e. the Tourist
Guide Accreditation System, and the Continuing Professional
Development Scheme for Tourist Guides) are already in place in the
trade.
(7) Given the problems associated with
Mainland inbound tours, should a separate Tourist Guide Pass or
Licence be introduced to further regulate the qualification
requirements for tourist guides receiving Mainland inbound
tours?
25. Yes, the Council believes that it is
appropriate to introduce a separate tourist guide licence to
further regulate the qualification requirements for tourist guides
receiving Mainland inbound tours, since mainlanders are a major
source of tourists visiting Hong Kong but there have been rising
number of complaints in relation to Mainland inbound
tours.
(8) If a separate Tourist Guide Pass or
Licence for tourist guides receiving Mainland inbound tours is
introduced, what additional requirements should be prescribed for
the Pass/Licence? Would it be unfair to tourist guides receiving
Mainland inbound tours if the requirements are more stringent than
those for the existing passes?
26. The Council does not consider it
unfair to impose a more stringent licensing system for tourist
guides receiving Mainland inbound tours given the extent of
problems associated with Mainland inbound tours. The Council is of
view that licensing requirements should take account of the case or
risks of misconduct associated with the activities
involved.
27. Applying different licensing
conditions for different business activities within a trade is not
uncommon in Hong Kong. Reference can be drawn from the Securities
and Futures Ordinance which requires that a person engaging in
different regulated activities (e.g. dealing with securities,
futures contracts, foreign exchange trading) to apply different
licences (with specified licensing conditions imposed for each type
of regulated activity) in order to carry out those regulated
activities.
28. In respect of what additional
requirements should be prescribed for the licence, the Council
considers that professional conduct (e.g. no forced shopping)
should be upheld to improve the service quality of tourist guides,
and unscrupulous practices must be banned to prevent tourists from
being cheated, mistreated, or forced to participate in shopping
trips which would tarnish Hong Kong's reputation. Disciplinary
provisions should be in place to ensure regulatory
compliance.
29. The Council would expect to see that
tourist guides and tour escorts who provide tourism services,
whether they are receiving inbound tours or outbound tours, to be
more directly and robustly regulated than they are now. For
instance, closer monitoring of compliance and stricter regulatory
controls should be implemented to prevent recurrence of incidents
of illegal use of tourist guide licenses.
Licensing System for Travel
Agents
(9) Do you think different licences
(with different requirements) should be introduced to regulate
outbound and inbound travel agents?
30. In light of different operating
environment with different associated risks for the trade and
travellers, the Council considers it appropriate to introduce
different licences with different requirements to regulate outbound
and inbound travel agents. Again, requirement should take into
account the nature of services rendered and the associated risks to
travellers.
31. To ensure effective supervision of
the tourism sector as a whole, the Council is of the view that the
regulation should be comprehensive (despite different licensing
requirements) so as not to leave any areas unregulated. Activities
should not be left unregulated due to absence of risks as perceived
by the regulator.
(10) Do you think a separate licence for
travel agents receiving Mainland inbound tours should be introduced
in view of the problems associated with those tours?
32. Yes, for reasons similar to those
provided under response to question (7).
(11) If you think a separate licence
should be introduced for travel agents receiving Mainland inbound
tours, what additional requirements should be prescribed for this
licence? Would it be unfair to the travel agents receiving Mainland
inbound tours if the requirements are more stringent than those for
the existing licence?
33. Yes, for reasons and suggestions
similar to those provided under response to question
(8).
Financial
Arrangement
(12) Regardless of your chosen option,
do you agree that the financial arrangement should be based on a
"user-pay and cost-recovery" principle? If yes, do you agree that
reasonable means to generate additional income should be
considered? What means would you consider appropriate?
34. Yes, the Council generally agrees
that the financial arrangement should be based on a "cost-recovery"
principle.
35. In considering the appropriate
funding source, the Council is of the view that the mechanism
should provide a means of recovering, from the trade, the costs of
the prudential supervision and regulation of that trade to be
performed by the regulatory body.
36. Apart from recovering cost with
reference to various licence fees and registration fees, the
Council recommends introduction of other fees for demand-driven
services e.g. charging regulated entities for complaints
handling.
37. In any case, the financial
implication of implementing any of the reform options should not
become an overriding factor which would lead to choosing an option
that requires the least resources.
(13) If an independent statutory body is
to be established, do you consider it reasonable for the Government
to provide the body with a one-off grant or loan to support the
expenditure at its initial stage of operation? If you consider it
unreasonable, what other approach would you suggest?
38. Yes, the Council believes it is
important for the Government to provide adequate resources, both in
terms of finance and supporting services, to back up the regulatory
body in its initial stage of operation.
39. If the body is to have only limited
resources at hand and lacks staff experienced and well-skilled
enough to perform the regulatory tasks in question, it is difficult
to see how regulation and supervision can be effectively enforced,
for the protection of travellers.
Other comments
40. The Council would like to take this
opportunity to voice out its concerns with some other issues which
are of paramount importance not only to the traveller protection
but also to the development of the tourism sector and other
economic activities related to tourism in Hong Kong.
Zero-fee or negative-fee tours and
forced shopping
41. Problems arise from "zero-fee" tours
where Mainland tourists joining those tours are forced to make
purchases, and undesirable practices are employed to get shopping
commissions to recoup costs (as well as to remunerate tourist
guides and tour escorts). The Council is of the view that priority
should be given by the Government to urgently resolve these
structural issues.
42. Notwithstanding measures (e.g.
refund guarantee scheme, unified outbound contracts) launched to
tackle the problems, incidents of unscrupulous practices still come
up in Hong Kong. This led to public concern whether the measures as
well as the existing regulatory framework for the tourism sector
can effectively protect the interest of travellers.
43. The Council urges the Government to
take this opportunity not just to consider the desirability of an
institutional revamp, but also to carry out a comprehensive review
of the operation of the tourism sector to build up confidence of
travellers and foster the long-term sustainable development of Hong
Kong's tourism sector.
Appeal mechanism for
travellers
44. As the present mechanism does not
provide an appeal channel for travellers aggrieved by the TIC's
decision, the Council urges the Government to set up forthwith an
independent appeal mechanism to handle appeals from travellers
concerning disputes between travellers and travel
agents.
Conclusion
45. The Council understands that any
reform inevitably entails changes which could lead to compliance
burden to the trade. Yet, it is necessary to confront problems at
root and bring about changes because tourism is an important pillar
of Hong Kong's economy. The Council strongly supports reforming the
regulatory framework of the tourism sector as operations of the
sector impact directly not just travellers but also the image and
reputation of Hong Kong as a leading international city and a
world-class tourist destination.
