Rhode Island, which for decades has required all the state's travel agencies to be licensed and to carry a $10,000 bond, may repeal the law before the end of this year.

At the behest of the Department of Business Regulation, Kenneth Carter, a member of the state's house of representatives, and three co-sponsors introduced a bill to repeal the law. In addition, the governor's proposed budget for the next fiscal year eliminates funding for travel agency regulation.

Richard Berstein, executive counsel for the department, said Michael Marques, the department's director, concluded it was time to eliminate agency licensing and bonding "for a myriad of reasons," including the dwindling number of agencies in the state.

"We looked at the figures, and there has been a dramatic decline in the number of travel agencies, by about 40% in the last five years," Berstein said. He said there were approximately 80 agencies left in the state, not a large enough number of businesses to justify much manpower for licensing.

That's particularly true given the state's looming budget deficits in fiscal 2008 and 2009, totaling $1 billion.

When the department's chief examiner for travel agencies and a few other industries retired about a year ago, the position was not filled.

Moreover, most other states don't regulate travel agencies at all, and that leaves Rhode Island's agencies to compete, at times, with businesses that don't have to obtain licenses and bonds, Berstein said. This includes Web sites, he said, "which are huge competitors for our agents."

In addition, he noted that most travel complaints are consumer-protection issues, and it is only the attorney general who can require restitution. Besides, he said, "we don't have the resources to police the rogues who are not licensed."

By itself, dropping agency regulation does not eliminate much expense, but it "will save us money," Berstein said, while, in the travel agency business, "competitive forces are self-regulating."

Not so fast

The Northern Rhode Island Chamber of Commerce strongly opposes repeal. David Carlin III, vice president of government affairs, said it appeared that repeal would make the state's agencies vulnerable to new competition from those who could not survive the licensing process. He compared the travel trade to other industries, saying, "With any professional industry -- investment counseling, insurance, real estate -- it would be poorly received to remove licensing requirements."

When Rhode Island's law was first implemented in the 1970s, some retailers supported it in the expectation it could help clear the state of unsavory competitors and give them a tool to use when marketing their travel agencies.

Since its inception, however, the law has been amended to impose testing for managers and staff. It also requires individual counselors and managers as well as the businesses to be licensed.

Nancy McAdams, owner of Anchor Travel in Pawtucket, said getting rid of the law would be "good news. ... It is a big chunk of money" to buy the bond and pay licensing fees for employees as well as the agency.

Meanwhile, she said, "a lot of people from other states are selling in Rhode Island and are probably not licensed."

The bill to repeal is pending in the House corporations committee, where it is being held for further study.

However, Berstein noted, if the governor's budget is accepted in the statehouse with the article that eliminates agency regulation, the licensing law will be effectively repealed anyway. It may be a few months before the outcome is determined. 

To contact the reporter who wrote this article, send e-mail to Nadine Godwin at ngodwin@travelweekly.com.