Hawaii has a thriving tourism industry, and for a good reason. While it may seem like travel agents in Hawaii have it easy, not even the beauty of this archipelago can counteract the legal requirements of operating a travel business. Anyone interested in starting a business selling travel in this state should be well-versed in the requirements in order to operate successfully.
First, unlike most of the states in the US, Hawaii does require licensure for sellers of travel services, and a seller of travel (SOT) must comply with Hawaii’s legislative guidelines. The requirements for obtaining a license are summarized below.
Application Process for Hawaii Sellers of Travel
Hawaii requires that potential sellers of travel complete an application form to obtain their license and pay the appropriate fee. If you are completing your application in an even-numbered year, the fees will total $215. Registrations submitted in odd-numbered years only cost $146.
This difference in fee amounts is due to Hawaii’s bi-annual registration renewals. All sellers of travel registrations must be renewed by December 31st of odd-numbered years. The additional cost incorporated into applications completed in even-numbered years includes added fees for the second year of registration and a higher expense for the Compliance Resolution Fund.
If you are opening a travel agency as a corporation, LLC, LLP, or partnership, Hawaii requires proof of registration with the Business Registration Division. You can submit your Certificate of Good Standing to satisfy this requirement.
Fail to pay the required fees or provide the requested information, your application will be rejected. If you believe your application was denied in error or want to request reconsideration, you can file for an administrative hearing.
Please note that activity desk registration is a separate process from SOT licensure, so this may apply if you’re also selling or arranging activities like excursions.
Sellers of travel may also be required to establish a trust account, which can be in the form of either a checking or savings account. The trust account must be with a federally insured bank that is located in Hawaii. In order to prove you have opened a trust account, you can submit either a letter from the bank or a copy of a blank voided check.
If you choose to provide a letter from your financial institution, be aware that it must include the following information:
- Name and address of the bank
- Name on the account, which must match the name on the SOT application
- “Client Trust Account” designation
- Date the account was established
- Account number
There may be a workaround for SOTs that want to work for a host outside of Hawaii. If you are not or will not be handling any client money directly, you can apply for a waiver of the trust account requirement.
However, if you do open and operate a trust account, there are strict procedures and rules you must follow when handling funds. This account is for the benefit of your clients, and the money in the trust account must be used to pay for travel services or make refunds to clients. You can also withdraw up to a 15% commission from the account or any remaining consumer balance after you’ve paid all the necessary travel service expenses.
Hawaii also provides requirements for trust account record keeping. Sellers of travel must maintain trust account records for at least two years. This includes deposit slips, canceled checks, bank statements, and transaction documents that relate to the client’s trust account funds.
For sellers of travel with an activity desk registration and travel agency registration, each must have their own separate trust accounts. Do not confuse two trust accounts or try to combine funds from an operating account and a trust account. It’s important that the money in your trust account is handled carefully and exactly as is required in Hawaii statutes.
Hawaii’s Consumer’s Rights Requirements
Sellers of travel in Hawaii must provide each of their clients with a written disclosure of their rights. This notice must be provided before issuing tickets or other travel services documents. You are only required to provide this consumer disclosure to clients once, so repeat customers who are aware of the provisions listed in the disclosure do not need to be given the notice again. Also, in the case of a group of travelers, only the leader needs to receive the written disclosure.
The consumer’s rights disclosure includes, but is not limited to, the following:
- The right to be notified regarding any limitations, conditions, circumstances, and other factors that could affect services availability
- The right to rely on guarantees and information provided by the seller of travel
- The right to have the SOT fulfill conditions of a contract regardless of whether the terms were stated in writing or otherwise
- The right to obtain a ticket or other documentation evidencing travel services after full payment has been made
It is a good idea for each SOT to read the consumer’s rights to ensure you are aware of your obligations to your clients and their rights when buying services from you.
Key Takeaways About Hawaii’s SOT Requirements
- A license is required if you sell to residents of Hawaii, even if you aren’t located in the state
- Registration as an LLC, LLP, Partnership, Corporation or Foreign Entity is required
- Many sellers of travel are required to open a trust account
- Licensing costs differ on odd and even years ($146 and $215, respectively)
- Clients must be informed of their rights
Would you like to learn more about becoming a seller of travel in Hawaii? Travel Industry Solutions (TIS) is not only an excellent resource for finding answers to any questions you may have, but you can also join other travel agents and industry professionals for camaraderie and connection. With sales scripts, legal contracts, marketing materials, and training tools, you will have everything you need to build a thriving travel business. You can find out more about the perks of membership by visiting our website.