In September Thomas Cook, the second largest travel operator in the world, announced that the Algarve would not be on its winter 2010 programme. Shortly afterwards it transpired that the company had also applied a five percent discount to invoices it owed the region’s hotels.
The company has, however, following a meeting with Government representatives, agreed to pay out compensation that will be “satisfactory to both parties”, to those affected by its actions.
Regional hotel associations have applauded the agreement, though have said they want “more concrete solutions”.
Conflict between the operator and Algarve hoteliers kicked off at the end of summer, when it announced the end of its operations to the region as well the discovery of the self-allowed discount.
The “unilateral decision” drove associations such as the Algarve Association for Hotels and Tourist Resorts (AHETA) to join forces with European entities to submit a complaint to the European Commission denouncing “an attitude that represents a dominant position of abuse”, Eldérico Viegas, head of AHETA, said.
It is also believed that these complaints reached the Portuguese Tourism Board.
In the meantime, Portugal’s State Secretary for Tourism Bernardo Trindade told Portuguese newspaper O Público that Thomas Cook has committed to “compensating hoteliers.”
That commitment was reportedly made in writing, in a letter sent by Thomas Cook to the Government representative, following the meeting that was held last week.
In the letter the company explained that it was forced to take “radical measures” due to losses “in the region of €100 million”, because of the Icelandic volcano eruption and subsequent ash cloud in April. Lack of demand for travel because of the global economic crisis further contributed to the need for “radical measures”, which also included the firing of 500 Thomas Cook employees.
According to O Público the company has agreed to meet with Algarve hoteliers to hold negotiations before the end of this year, to reach a settlement that is “satisfactory to both parties.”
In the State Secretary’s opinion, this commitment will “reopen a file that had been closed.”
Bernardo Trindade said that it was possible some hoteliers may still resort to legal action, but stressed that the first step towards resolving the matter had been taken.
Thomas Cook has also reportedly agreed to review its winter programme for 2011/12.
Eldérico Viegas reacted to the news saying “there are too many ‘ifs’ in this commitment”. AHETA said it is “available to listen” to what Thomas Cook has to say, but made it clear that “one of the main principles of tourism, trust, has been shaken.”
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