Acquiring a tour operator business: allocating customer-money security to the new legal entity

Article 17(1) of Directive (EU) 2015/2302 requires Member States to ensure that tour operators established in their territory provide security for all payments made by or on behalf of travellers when the services are not performed because of the operator insolvency. If passenger transport forms part of the package travel, the security must also cover repatriation. The protection must be effective and cover the costs that can reasonably be foreseen.

Section 3(1) of the Austrian Package Travel Ordinance names deposits and final payments already made by the traveller to an authorised travel-services operator. It also covers necessary costs of repatriation, accommodation before repatriation and, where relevant, continuation of a package or linked travel arrangement. This statutory scope describes the protection required, but it does not replace a review of the actual security agreement.

The transaction review should therefore start with the identity of the protected company. The travel authorisation, security provider, term, booking inventory and services planned after closing must then be matched. The economic acquisition of a customer base does not answer that allocation question.

In a share deal the target company generally remains the same legal entity. This can make the allocation of existing operator agreements and the travel authorisation easier to track. The buyer must still check whether the change of ownership, new officers, a new distribution structure or a change in the business model must be notified to the security provider and whether the existing cover continues to match the planned operation.

In an asset deal a new legal entity acquires selected assets, contracts or the operating business. The existing protection does not automatically become protection for the buyer. Before closing, the travel authorisation of the new operator, its security instrument and the start of cover must be clarified. The fact that the seller received customer money does not create a sufficient allocation for the new entity.

A new operator may also take over trips that have already been booked. The file must then show which entity assumes which duties towards travellers and suppliers, how payments are allocated and who finances repatriation or refunds if the operation fails before performance. These points belong in the structure decision and closing plan.

The booking inventory should show deposits and final payments separately. For each trip, record whether the amount has already reached the existing operator, whether a service has been fully performed and which part must still be financed after closing. Vouchers, changes and partial cancellations cannot be assessed through one total balance alone.

Article 17(2) of the Directive requires effective security for reasonably foreseeable costs. The review takes account of the period between deposits and final payments, the end of the trips and the estimated cost of repatriation if the operator becomes insolvent. The Austrian Ordinance adds necessary accommodation before repatriation and, where relevant, the cost of continuing the package or linked travel arrangement.

Section 3(4) of the Austrian Ordinance also includes customer money accepted contrary to the requirements of the Ordinance. The buyer should therefore review more than compliant bookings. Deviations in payment routes, accounts, advance payments and the timing of allocation can matter for valuation and for the contractual indemnity.

Before signing, prepare one booking list with a consistent data status. It should record at least the booking or traveller reference, travel dates, booked services, suppliers, amounts paid, amounts outstanding and the operator intended after closing. Group travel and linked travel arrangements require their own allocation notes.

The cut-off date in the purchase agreement is only a technical anchor. It does not answer who economically receives a payment or who owes performance to the traveller. These questions must be brought together from the contract, booking system and payment evidence for trips already under way, trips beginning shortly before closing and trips beginning afterwards.

Give special attention to refund requests, changes, vouchers, unpaid supplier invoices and trips that include transport to the departure point. The buyer should also confirm who communicates after closing and whether the security provider accepts the new contact and data process.

Section 3(3) of the Austrian Package Travel Ordinance identifies three methods of covering the risk: an insurance contract with an insurer authorised to operate in Austria, a bank guarantee from an eligible credit institution or a guarantee from a public-law corporation. For the transaction, this means that the provider and the specific instrument must be documented.

The buyer should read the complete agreement or guarantee, including amendments. The review should cover the named operator, travel authorisation, start and end of cover, limits, notification duties, exclusions, information rights and the rules for changes to the operation. A confirmation that the business is insured leaves these points unanswered.

Booking confirmations must also refer under section 3(6) of the Ordinance to the public GISA query and the allocated GISA number. This information is not a substitute for customer-money protection. It belongs in the document review because it makes the authorised operator and the stated company visible.

The purchase agreement should identify the protected entity and the booking inventory transferred. It should cover the travel authorisation, security provider, relevant bookings, handover date and responsibility for refunds, repatriation and open services. General assurances about proper operation are too vague for this risk.

If the legal entity changes, written confirmation from the insurer, credit institution or guarantor may become a condition precedent to closing. If confirmation is not available, the parties must define the economic and legal consequence precisely. An indemnity between buyer and seller does not replace protection required for travellers.

The handover also needs reliable data transfer. The buyer should record the booking system, payment status, supplier contacts, open refunds, repatriation information and communication routes to the security provider. This allows each amount to be traced to a travel contract and legal entity after closing.