Travel agency's license stripped because of heavy debts
Updated: 2013-01-09 06:58
By Li Likui(HK Edition)
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Another travel agency, Smart Holiday, has gone out of business after its license was revoked on Tuesday by the Travel Industry Council.
Smart Holiday fell deeply into the red, with debts of around HK$50 million.
The travel agency on Tuesday issued a notice that it was winding up business at all six of its branches, effective immediately. Its headquarters in Lai Chi Kok will continue operating until Sunday.
According to the Travel Industry Council of Hong Kong, about 1,900 customers are affected, involving some HK$2.5 million in deposits. Affected customers can collect 90 percent of their losses through the Travel Industry Compensation Fund.
Michael Wu Siu-ying, chairman of the council, said the council is negotiating with other travel agencies to see if they can take over Smart Holiday's customers to maintain public confidence in the industry.
"I have already contacted several travel agencies and nine of them - including China Travel Service, Miramar Travel and Hong Thai - have agreed to squeeze the affected customers in, so that the tourists can go on their trips as scheduled," said Wu.
A local newspaper reported that Smart Holiday had been taken over earlier by its creditors. The travel agency, however, kept signing up new customers.
The company's financial woes surfaced in November, when it was granted only a one month renewal of its license. A normal license extension would have been for one year. In December, things got worse when the company announced it was closing three branches in Sheung Wan, Tai Po and Tuen Mun. The company said at the time, the closures were to allow for reorganization and restructuring of finances in order to renew its license.
After deliberation, the Travel Agents Registry had extended Smart Holiday's license for another month until Thursday.
A woman surnamed Ho, who paid a HK$1,000 deposit last week for a trip to Vietnam, said she got a call on Monday from the travel agency that the tour group she was to join was canceled.
"It is not right. (They) knew there was a problem and they shouldn't have let customers sign up for service," complained Ho, who arrived at the branch at Causeway Bay only to find the place closed.
The company specialized in short trips such as trips to the mainland and Southeast Asia.
Just a month ago, a relatively smaller travel agency, Sig Holiday, also declared bankruptcy, closing its five branches without notice, stranding about 300 travelers who had paid deposits of about HK$650,000. The travel agency also specialized in outbound trips to the mainland and Southeast Asia.
Wu said the situations were purely individual with both agencies plagued by their own operational difficulties. Rebutting the accusation that the travel industry as a whole is facing a problem, Wu said revenues in the industry actually increased by 5 percent last year.
(HK Edition 01/09/2013 page1)