Are you thinking about setting up as a tour operator or starting a tour business in Australia?
There’s a world of opportunity for you to organise safaris in Africa, treks in Nepal, meditation and yoga retreats in Bali and in India; and in Australia, tours of the outback and National Parks, bicycle and motor bike tours along the east coast.
Make sure you follow the seven legal essentials:
#1 Business Structure
Individual name or company?
You can operate in your personal name as a sole trader or you can form a company and operate in a company name. The risk you take in operating in your personal name is that if anything goes wrong on the tour you are personally liable.
That is why most people set up a company and put the risk of anything going wrong on the tour in the company. Companies cost money to set up and cost money to run but on balance it’s money well spent because tours are full of legal risks.
And there are Australian Business registration requirements such as obtaining an Australian Business Number (an ABN) and a possible GST registration. Before you register, you need to choose a business entity such as a sole trader, a company or a company/trust. Then register a business name to trade under, and register it as your domain name.
#2 Licences
Do you need a licence?
Licensing for travel agents and tour operators was abolished in Australia on 30 June 2014.
The purpose of the licensing scheme was to operate a Travel Compensation Fund to compensate the public if their travel agent or tour operator misappropriated their travel payments or became bankrupt. Now, travellers need to rely upon their travel insurance to protect against defaults and bankruptcy of travel agents, tour operators and suppliers.
That means no Australian licence is required for Travel Agents to book travel or tours for Australians travelling overseas. Of course, IATA accreditation is needed for booking airfares. No Australian licence is required for Outbound Tour Operators to arrange tours for Australians travelling overseas.
Inbound Tour Operators require licences to conduct some activities in Australia.
There are Tour Operators Licences for tour operators in Victoria, South Australia and Queensland where the tour operator desires to conduct an organised tour or recreational activity for profit on public land (national parks, nature reserves, marine areas). The 'activity' can be bush-walking, trail bike touring, horse riding, canoeing, rock climbing, river rafting and abseiling.
In Tasmania, it is called a Commercial Visitors Service Activity Licence. In Western Australia there is a Fishing Tour Operator's Licence.
In NSW, there is no Tour Operators Licence - but a permit is still required to use public land for a tour for profit.
It is usually a licence requirement to be a member of a trade association. Trade Association membership confers ATAS accreditation.
It is also usually a licence requirement to hold Professional Indemnity and Public Liability Insurance of at least $10 million.
#3 Business Insurance and Travel Insurance
There are 2 types of insurance:
- Business insurance (Professional Indemnity Insurance) which a business takes out against claims by travellers for breach of the duty of care, including public liability cover for injury and death. The coverage for most business insurance is quite limited, but then the premiums are not high. If you are serious, take out business insurance.
- Travel insurance which travellers take out. It is essential that everybody you take on the tour must have comprehensive travel insurance which applies to the country or region the tour takes place. This means coverage for cancellations, delays, loss or damage to baggage or personal possessions and unlimited medical, hospital and repatriation expenses. The medical and hospital insurance is the most important because the bill could be very high: if you are in hospital for 7 days in Hawaii, the bill could be $80,000.Travel insurance will cover the tour operator against claims by the traveller for loss and damage to baggage, injuries and so forth, provided the tour operator is not at fault. Be careful of the common travel insurance policy exclusions for activities such as cycling, riding motor bikes over 125cc, skiing, under the influence of alcohol, etc. And don’t travel to places where the Australian Government warns “Reconsider your need to travel” or “do not travel” because that is another travel insurance exclusion.
#4 Passports and Visas
You must have a valid Australia passport when you’re travelling overseas. When I say valid, I mean it must have at least 6 months validity from the due date of return to Australia. Check the currency of the passports of your tour group.
You must have a visa, which is the right to enter a specific country, to enter most countries around the world. Visa requirements vary.
There are some countries in Europe, such as Spain, Italy, France and Germany (the Schengen zone) where you do not need a visa to enter, provided you are travelling on an Australian passport and you stay for no longer than 90 days. So if your tour is a cycling tour in Spain or in Italy, the tour group just goes to the entry gate at the airport, presents their Australian passport, and are admitted for 90 days as a tourist.
There are countries such as the USA and Canada where you need to have a visa waiver (an ESTA or eTA) before you go. And yet other countries such as India and China, which require a formal visa to be issued by the embassy or consulate of that country before you go. The Australian Government website smartraveller.gov.au has a comprehensive guide to visa requirements.
If you don’t have a visa when you’re boarding a flight to a country which requires a visa, you will be denied boarding at the airport. You’ll lose your flight. Visas are not things that can be obtained in an hour or two: sometimes they take up to a week..
#5 Booking Forms and Terms and Conditions
How do you protect against traveller claims?
Everybody going on your tour must sign a booking form. The booking form will have questions in it such as: Do you have medical ailments? Do you have allergies? Do you have a valid passport? At the end there will be a place to sign and the words “I have read, understood and agree to the terms and conditions”.
The terms and conditions (T&Cs) are there to protect you, the tour operator. They restrict the traveller’s right to claim compensation for a whole list of things such as delays, change of itinerary, cancellations. Most importantly, the T&Cs limit or exclude your liability for injury or death on the tour. They give you the right to alter the itinerary or cancel the tour, charge cancellation fees if a traveller cancels, and to vary the price. Activities such as trekking, white-water rafting, mountain climbing, hot-air ballooning, skiing and scuba diving need additional T& Cs because they are ‘dangerous recreational activities’.
Terms and Conditions are something I can help you with as a Travel Lawyer.
#6 Consumer Law Compliance
Consumers have many rights in Australia. You must not mislead consumers when you are giving your itinerary or when you are putting prices, photos and descriptions on your website. Inclusions and exclusions need to be accurately described. Because if your descriptions are not accurate, the consumer has the right to claim a refund and other compensation.
As Travel Lawyer, I will vet your website for Australian Consumer Law compliance.
#7 Business Name Protection
You have come up with this brilliant business name, which nobody else uses. If you don’t take steps to protect your business name, someone else could start using it. So when you come up with your brilliant business name, you check the register to see that nobody else has come up with it and then you register it as a business name. Once you register it as a business name you register it as a Domain name for your website, and then if you have a cute logo you register it as a trade mark.
To summarise: to fully protect your business name, you register it as a business name, you register it as a domain name and you register it as a trade mark.
As a Travel Lawyer, I can help you with trade mark registration.
So there you have it. The seven essentials for setting up a business of Tour Operator in Australia. Go out there and do it.
