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THE SENATE                           S.R. NO.              
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                    SENATE  RESOLUTION

  REQUESTING THE DEPARTMENT OF COMMERCE AND CONSUMER AFFAIRS TO
    ADOPT RULES TO REQUIRE REGISTERED TRAVEL AGENCIES AND
    REGISTERED CHARTER TOUR OPERATORS TO UNDERGO PERIODIC
    SEMINARS ABOUT THE FINANCIAL PITFALLS OF THEIR BUSINESS.



 1        WHEREAS, the recent sudden closure of a local travel
 2   agency, whose clients paid in advance for air fare and hotel
 3   for a charter tour to the mainland, resulted in those clients
 4   being defrauded because they could not get their money back;
 5   and
 6   
 7        WHEREAS, when a travel agency goes defunct, particularly
 8   if the agency was engaged in one or more charter tour
 9   operations, many clients could be out of money that they paid
10   for their travel or tour; and
11   
12        WHEREAS, Act 258, Session Laws of Hawaii 1999, requires a
13   travel agency that plans to engage in the business of a charter
14   tour to:
15   
16        (1)  Be registered as a travel agency;
17   
18        (2)  Post a bond or irrevocable letter of credit in a
19             statutory amount ranging from $300,000 for seven to
20             fifteen charter tours, and $1,000,000 for more than
21             fifteen charter tours, less the amount of any
22             security required under federal law; and
23   
24        (3)  Establish a charter tour client trust account with
25             maintenance and audit requirements;
26   
27   and
28   
29        WHEREAS, many travel agencies may not be aware of the
30   financial pitfalls of operating a charter tour operation, due
31   to a lack of experience and the industry practice of taking
32   clients' money in advance to pay expenses incurred before the
33   tour, which could result in the tour operator paying off a
34   prior tour with money received for a future tour; and

 
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                                  S.R. NO.              
                                                        
                                                        

 
 1        WHEREAS, the popularity of the tour business in Hawaii
 2   necessitates that travel agencies and charter tour operators be
 3   knowlegeable in their business so that they can avoid financial
 4   ruin and deliver their paid-for in advance services to their
 5   clients; now, therefore,
 6   
 7        BE IT RESOLVED by the Senate of the Twentieth Legislature
 8   of the State of Hawaii, Regular Session of 2000, that the
 9   Department of Commerce and Consumer Affairs (DCCA) adopt rules
10   requiring registered travel agencies and charter tour operators
11   undergo a periodic seminars conducted by the DCCA on the
12   financial hazards and statutory requirements of operating a
13   travel agency and a charter tour operation; and
14   
15        BE IT FURTHER RESOLVED that the object of the seminars be
16   educational in nature to prevent financial losses to the
17   businesses and their clients; and
18   
19        BE IT FURTHER RESOLVED that the DCCA charge a fee for the
20   seminars; and
21   
22        BE IT FURTHER RESOLVED that a certified copy of this
23   Resolution be transmitted to the Director of Commerce and
24   Consumer Affairs for transmittal to each registered travel
25   agency and each registered charter tour operator.
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29                         OFFERED BY:  ____________________________