Germany is set to significantly reduce the cost of protecting package holidays against tour operator insolvency, a move welcomed by the nation’s travel industry. The German travel association DRV announced on Thursday that fees and collateral for its national travel security fund would be cut. From November 1, levies paid into the German Travel Security Fund (DRSF) will decrease from 0.5% to 0.25% of protected travel turnover. The DRSF was established by the government in 2021 following the collapse of Thomas Cook, specifically to guarantee refunds to customers should a tour operator fail. A tour operator is an organisation that designs and organises package holidays, combining flights, accommodation, and activities for travellers.
This reduction in levies is expected to free up approximately €70 million ($79.5 million) annually for the travel sector, enhancing the competitiveness of package tours. In addition to the fee cut, the required collateral for the fund will also be lowered. The DRV described this as a substantial one-off reduction of about €560 million in security postings. This measure aims to reduce capital costs for tour operators and lessen their reliance on bank guarantees or insurance cover, providing further financial relief across the industry.
Leading tour operator TUI welcomed the development as “a correct interim step.” The company also advocated for further, swift reductions to the fund’s requirements. TUI argued that with approximately €1 billion already available to the fund for customer protection, a complete cut to zero percent was feasible without weakening consumer safeguards. This sentiment underscores the industry’s desire for ongoing financial flexibility while maintaining robust protection mechanisms for travellers.
