At the Sydney Inter-Continental Hotel in Australia on Oct. 17, Helga Schley, a tour manager for the Hemphill Harris Travel Corporation, received a faxed message from the corporation's home office in Encino, Calif.
It was directed to her and the eight Americans she was escorting on the deluxe Tour PX-908, South Pacific Highlights. It said that Hemphill Harris was involved in a dispute with its local tour subcontractors and "to avoid further anguish," South Pacific Highlights was being terminated as of Oct. 16."If you should decide to continue on with your tour," the letter added, "we would like you to know that you would be doing so at your own risk and expense."
The message was signed by David J. Dukesherer, head of Weststar Acquisitions Corp., which bought Hemphill Harris last December.
At least seven other leaders of tours operated by the prestigious Hemphill Harris company got similar messages; two others were in Australia or New Zealand, the rest were apparently in Japan and India.
Hotels and local tour companies had already asked tour members to pay for their rooms on the spot or to leave the hotels, although all had paid the tour operator in full for their trips. The hotels said the tour company's credit was no longer good.
In a statement to the American Society of Travel Agents on Oct. 17, Hemphill Harris said that cancellations of trips to China had brought on a "cash flow crisis" but it "anticipates a swift resolution" of its "strained relationships" with various vendors.
"Clients whose tours have been canceled or recalled should contact Hemphill Harris for a full refund," the statement said.
A later message to the travel agents' group said the company was being refinanced and had "no intention of filing Chapter 11," meaning reorganization under the bankruptcy laws.
Many calls to the company's office seeking comment brought no response from any executive. Anni Kezik, Dukesherer's secretary, said that the Oct. 17 statement was all that was being given to the press.
Within days, another long established company, Lindblad Travel of Westport, Conn., suspended operations and last week said its lawyers were preparing to file for bankruptcy or dissolution.
Lars-Eric Lindblad, the president, said a very few travelers had to pay themselves for the end of their trips but no one had been stranded, and refund certificates would be provided.
Buyers of package tours stranded halfway around the globe are in a dilemma.
They have spent time and money to get there. They can pay a second time for remaining hotels, meals and sightseeing and enjoy what they came to see, hoping for a refund.
Or they can take a plane home, losing the balance of the tour.
How can travelers avoid getting into this fix?
Were there warning signals about Hemphill Harris tours?
There were indeed warnings that travel agents should have heard, but clearly some did not.
Prospective travelers should ask these questions before buying a tour:
How long has the operator been in business? Has it recently been sold? Who bought the company and what is their experience in travel?
Has the travel agent noticed any news in trade publications about the operator? Does the Better Business Bureau have any reports?
Which trade associations are on the operator's letterhead? Do they have any reports of changes in status?
And perhaps the most important question: Will trip cancellation insurance cover an operator's failure?
People using travel agents should insist that their agents check the recent performance and business status of an operator: a good reputation can go to pieces rapidly, as the Hemphill Harris case shows.
One person who was cut adrift by the operator, Shirley Levick of Wilton, Conn., said she had paid $11,165 for her land arrangements, including a charge for a single room, plus $7,000 for first-class round-trip air fare.
Her tour, Best of the South Pacific, PH-904, was to take her to Fiji, New Zealand, Australia and Tahiti over 35 days.
When the Dukesherer message came, although Mrs. Levick and the others had already paid for everything, many paid again to finish their trips.
Others gave up and came home on their return airline tickets, which remained valid.
Mrs. Schley, who signed up as an independent contractor to manage tours for Hemphill Harris in 1986 after some years with Pan American Airways, was in a miserable spot.
Her contract provided that all her travel expenses would be paid, at the same price level as the clients, and that she would earn $60 a day plus $2 a day for each client, in lieu of tips.
One hotel in Melbourne asked $210 for a double room a night, plus $100 a person a day for food. Mrs. Pennington could not continue to shepherd her eight travelers, paying her own way, without rapidly going into a hole.
Mrs. Schley sent a message asking the operator to send $3,000 so that she could assure safe travel for her clients.
She received no reply, so after completing the Australian itinerary on traveler's checks that Hemphill Harris had given her for emergencies, she shifted six clients to other tours and came back to the United States with two "who could not take it anymore."
Mrs. Schley added that before she left, she was aware of "a lot of squabbling" in the Encino office but that she had just brought a tour back from Eastern Europe and "everything was fine" so she "had no doubts" when she left for Australia with her clients on Oct. 14.
But difficulty was building up.
Since early in the year, travel publications have been reporting on turmoil resulting from the sale of Hemphill Harris: suits and countersuits, dismissals and resignations.
After the sale to Weststar, Hemphill and Harris stayed on, but eventually they left and the United States Tour Operators Association, a 45-member group of large operators, suspended and then in July terminated the company's membership because it requires three years under the same ownership or management.
Robert E. Whitley, president of the tour association, said he had received at least 100 phone calls from travel agents about the company.
If they had any doubts, he advised them to sell clients trip cancellation insurance covering operator failure. Many such policies exclude coverage for failure of the organization or person who sells the traveler the policy.
The USTOA did not refund Hemphill Harris's $100,000 bond, a membership requirement, noting that the association's logotype was still on company brochures and people would presume that the bond was in force.
With tour prices at $5,000 and $10,000, a bond of $100,000 would be of little help if Hemphill Harris does not provide refunds from some other source.
. Whitley said that when Lindblad resigned from USTOA, the bond was refunded. Lacking other bonds or methods to provide repayment, when a company files for bankruptcy, its clients enter a claim against any company assets.
Hemphill Harris has promoted its own tour cancellation "protection plan" for a charge of $50 a customer. This means that if a client cancels a tour or has to leave halfway through, the company pays the client out of operating funds. But in a cash flow pinch, the value is dubious.
Unless they bought outside trip cancellation insurance, stranded clients and their travel agents may pay dearly for placing their confidence in a reputation.