California auto club's travel ties not illegal
LOS ANGELES The Automobile Club of Southern California did not break the law by selling Hawai'i vacations through a company it secretly owned, the state attorney general's office said.
The nonprofit auto club, which runs a travel agency, bought a controlling interest in tour operator Pleasant Holidays two years ago, but did not reveal the purchase to its nearly 5 million members or to people booking trips through the company.
When the relationship was revealed by a trade publication in June, media calls prompted the state attorney general's office to investigate.
"We couldn't find any statute that requires a company to make this disclosure," said Herschel Elkins, senior assistant attorney general in charge of consumer law. "We determined other large groups, like American Express, also own travel agencies that they promote without disclosing it.
"Whether it should be, whether companies should tell people they have an interest, is another matter."
The auto club said it bought the popular tour operator in part to prevent competitors from buying the company.
"At the time Pleasant Holidays was up for sale, American Express was interested in it for a while and we couldn't be sure our members would have the same access at the same prices," auto club spokeswoman Carol Thorp said.
The sale was kept a secret at the request of owner Ed Hogan, who was concerned his longtime customers would be upset and take their business elsewhere, Thorp said.
Hogan still owns part of the company, she said, and runs it without interference from the club.
Pleasant Holidays is a leading tour packager for Hawai'i vacations. Last year, the company sent about 450,000 people to Hawai'i, bringing the company about $450 million in revenue.
The company also serves other destinations, including Mexico.