What to Do When Your Travel Agency, Hotel, or Tour Company Goes Out of Business

Hearing that a travel company is closing is worrisome enough. But, what about when it’s a month before your trip and you’ve already paid $6,000? That’s what happened to the McDonald family last year. The couple booked a vacation package to China but were left devastated when the booking agency, Sinorama, went out of business. And, they weren’t the only travellers affected. Other travellers had given a total of about $800,000 and they were all left without their money or vacations to look forward to.

If your travel agency, tour company or hotel shuts down, what can you do?

Here are a few tips to help you avoid a travel nightmare of your own.

Filing a Claim

Because this company operated in British Columbia, the travellers needed to file through Consumer Protection British Columbia (CPBC). CPBC can help with offering compensation to travellers if they can't get their money back through the province's Travel Assurance Fund. The CPBC suspended Sinorama's license when they learned the company didn't have money to cover bookings and manage their operations. CPBC recommended customers contact their credit card companies for refunds. While some of the customers that were affected by Sinorama's closing got their money back, about 200 filed claims with the CPBC.

It's important to know that travel agencies, tour companies and hotels can go out of business for a host of reasons. The Sheraton in Brussels went bankrupt in 2016 after a terrorist attack caused them to lose about a 25 percent occupancy rate from tourists visiting the area. In Australia, a travel agency went out of business leaving consumers without their airline tickets or reservations. But, there's a lot you can do.

If You Have Travel Insurance

Travel insurance can cover cancelled flights and trip interruptions. It's a safeguard to protect your vacation plans whether you’re travelling locally or overseas.

Contact the travel insurance company and ask for help in filing a claim for reimbursement. You might be able to get reimbursed for the money you paid in addition to lodging and food if you were bumped from a flight or it was cancelled and you had to stay in a hotel. So, save your receipts.

Note: Travel insurance companies may not offer coverage if a travel agency shuts down. But, they may cover fees for rebooked or cancelled flights and hotels.

If You Don’t Have Travel Insurance But Paid With a Credit or Debit Card

If you paid by credit card

You might have special travel insurance through your credit card provider. Call the phone number on the back of your credit card or go online and look up ‘Member Benefits’. This should outline the type of insurance you might have so you can file a claim.


You should also start a ‘chargeback’ on your credit card right away. You can request the money be credited to you while your credit card company starts an investigation. Some credit card companies will post the money back right away and some will not.

“There are no consumer protection laws specifically concerning chargebacks,” stated Financial Consumer Agency of Canada spokeswoman, Veronique Milot. But you can request assistance.

Here are a Few Tips:

  • Contact the owner or manager of the travel agency, tour company or hotel first. Request a refund right away. If they decline it or you can't reach them, proceed immediately to step 2.
  • Request a chargeback with your credit card company as soon as possible. If the first person doesn't resolve it, ask for a manager.
  • If that doesn't work, file an appeal through the ombudsman that handles independent banking services. They can determine if the bank acted fairly and gave you the right chargeback options.
  • You might consider legal action, but it can be time-consuming and expensive.
  • Start a case file and keep track of the names of everyone you spoke to, the dates and times.

*Note: There are specific time limits for chargebacks. Depending on your bank, it might be 30-days or as much as 120-days to file a chargeback. In the case of the McDonald family, they were rejected because they didn't file within 120-days of their initial booking date. This is something snowbirds and travellers that like to book far in advance may want to keep in mind.

Additionally, if you start a chargeback and the travel agency or tour company says they will give you the refund, keep your credit card company in the loop. But, don't cancel the chargeback until you have the refund. You might not be able to restart or reverse it if you don't get your money back.

If you paid by debit card

If you pay by debit card it can take longer to get your money back. Contact your bank and ask to start an investigation of the travel or tour company closed due to fraud. You might need to file a police report to report the money that’s been taken from you.

Other Agencies You Can Reach Out To

Some travel agencies offer consumer protection information on their websites. Check with the travel agency for more details. If you can't reach them, look in your contract for this information. But, don't stop there.

Reach out to the consumer protection agency in your province or territory. They may be able to offer help in recouping any money lost towards your trip. The McDonald family filed their claim with the CPBC but may not receive the full amount they paid towards their trip. The fund only covers up to $5,000.

Book Your Next Holiday Confidently

The shutdown of a travel agency, tour company or hotel can be a major setback to your travel plans.

To ensure there are no unexpected delays or cancellations, here are a few tips:

With any travel bookings

  • Always read the Terms and Conditions with your travel agency, tour provider or hotel before forwarding payment. And, read the reviews. If other travellers had problems getting a refund, you might, too.
  • Always get travel insurance to safeguard your trip (coverage for hotels, flights, baggage, illnesses).
  • Book your travel with a credit card and not a debit card as select credit cards usually offer better protection if the travel company, hotel or tour operator goes out of business.

With websites and emails

  • Verify that the company you’re using is reputable. There have been fake airline and hotel websites in the U.S. that have targeted travellers. Travellers paid because the sites look like the real airline and/or hotel websites. The fraudster absconded with the travellers money.
  • If you’re ever unsure about booking a hotel, flight or vacation, never open links in emails that you receive.
  • Always verify the URL address to confirm it isn’t a spoofing site that will redirect you to a fake website. Update the software on your computer, tablet or phone to reduce hacking incidents. And, contact the airline or hotel directly by phone if you have any concerns.

Safeguard Your Travel Plans with Travel Insurance

While the McDonald family might get their money back after a lawsuit, it’s a lengthy process and a travel nightmare that a lot of Canadians want to avoid. To find the best travel insurance rates, contact InsuranceHotline.com.

With InsuranceHotline.com, you can compare rates from the leading travel insurance providers in Canada (and safeguard your trip!). Compare insurance quotes.

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