It took a little longer than he had planned, but Michael Pepper, long-time leader of the Travel Industry Council of Ontario (TICO), is finally able to enjoy his retirement.
The organization made the announcement of his decision to move-on in October 2013, which he had first intended for July 2014. Although the search process was more drawn-out than anticipated, Pepper is content with how things played out, confident they've "found the right man for the job."
Richard Smart has taken on the role of CEO, a title Pepper held since TICO's inception in 1997. He is a chartered professional accountant and most recently served as chief financial officer at the Technical Standards and Safety Authority. Prior to that, he held the position of CFO at both AMJ Campbell Inc. and Air Canada Vacations.
Smart's experience and expertise in finance, planning, risk management and governance is what Pepper sees as key qualifications for a very complex role, he tells PAX in an interview with the pair about the past, present and future of the organization.
"I've worked at large multinationals before and the focus was: 'What are you doing for me this quarter?' In fact, 'What are you doing for me this month?'" Smart explained. "When I joined the Technical Standards of Safety Authority (TSSA), their mission and mandate was all around public safety; it was for a broader mandate, a societal-type grid. Fiduciary responsibility was still important but wasn't the number one priority. TSSA was passionate about safety and at TICO, it's a passion for doing the right thing for the consumer and consumer protection."
Taking a moment to reflect on the past number of years, Pepper admitted that the challenges ahead for Smart are different from those TICO faced in the early days when there were a number of competing businesses, many of which have now been consolidated.
"The consolidation has helped.... The risk on the tour operator side is minimized and we don’t need to be as diligent, although we are; we oversee the risk of those industries," Pepper said. "What we look for now is new operators coming in, to make sure they’re financially sound with a good business plan, that they apply the rules properly – putting that money into trusts and not using it for today’s liabilities, which is what was happening in the past.
"The risk now, over the years, has shifted to the smaller operators; there's a lot of credit card fraud and you've seen a shift in the business model with the Internet, consumers going direct, e-commerce. We've seen a shift in how consumers do their shopping and how the travel agencies have their outside sales reps selling the travel for them, not in the office or on the road – everything is electronic... There’s a lack of control; money’s changing hands and that’s where the fraud can happen."
TICO has witnessed a continual growth in sales despite the Internet and other ingredients, he went on; when TICO was established in 1997, gross sales through retailers were $7 billion, which is now at about $10 billion.
Looking ahead, Smart referred to his three adages: think big picture, think long term and embrace change.
"Those are important because if you try and address an issue today, by the time you take a short-term perspective on it, it’s leapfrogged you," he said.
Items such as the examination process introduced in 2009 are important for Smart in continuing what Pepper has established, in addition to consumer engagement and registrant awareness.
"I think the overall awareness is not where we want it to be – it’s not bad but I’d like it to become that the majority of the travelling public in Ontario recognize what TICO stands for," he said.
Another obstacle he sees, in addition to Pepper's point on possible incidents of fraud, is managing out-of-province operators that can easily connect with Ontario consumers via online platforms.
"Some of them are very good and diligent operators but some of them are not and it creates a disadvantage from a competitive standpoint; from TICO’s standpoint, we want to make sure it doesn’t create a disadvantage to the consumer."
"We also need to work in partnership with the government," he continued. "They’re a key stakeholder and we have to work hand-in-glove with them and ensure that our regulation and act are reflective of the current business environment which we’re in."
Pepper agreed that this is one of the biggest challenges his predecessor will face, especially with the continual turn-over at that level.
Does Ontario have an advantage?
While British Columbia and Quebec have similar governing bodies to protect the travelling public, all others do not have the same security blanket.
When asked if it puts those provinces at a disadvantage, Pepper said, "It gives the consumer the confidence that they're going to get what they pay for. There are higher standards, there are professional education standards and financial criteria businesses have to meet so they're all raising the bar. The unfortunate thing is that the other provinces across the country are not subject to the same rules - principally because they are smaller and the risks aren't as high - the major tour operators are here, B.C. or Quebec."
"The fact is that the number of claims made on the compensation fund have significantly reduced over the past decade-plus," Smart said. "Numbers speak for themselves. It's a combination of the industry putting their own safeguards in place and TICO enforcing rules and regulations and taking a hard line on those who break them. I think the model does work and I think it works in the other provinces; whether or not there's a day you can harmonize those across all provinces, that's probably utopia. Michael started some discussions on that in the past and we'll see where that goes - I'd like to continue that way but we need to get our own house in order in our own province first."
Leaving his position with a positive outlook on the state of the travel industry in Canada, Pepper said his philosophy has never been to regulate with an iron first but instead to work with registrants.
He has not fully taken his hat out of the ring, as he is now statutory director for TICO, as appointed by the Board of Directors.