Search for efficiencies sees Lowcost Travel Group move operations to Poland

Search for efficiencies sees Lowcost Travel Group move operations to Poland

The lure of a plentiful supply of tech savvy graduates has prompted Lowcost Travel Group to look to Krakow to drive further efficiencies and maximise profit.

The British online travel agent, through its Lowcost Holidays brand, and trade supplier, through bed bank Lowcost Beds, is not the only travel firm to have a base in Poland’s second biggest city.

American technology giant Sabre Holdings has operated a significant development centre there for the last decade-and-a-half and has been busy expanding it in recent years.

Lowcost’s decision to move functions like IT, finance, customer service, sales and marketing to Krakow is the latest in the firm’s moves to extricate itself from the UK.

An increasingly internationalised business, Lowcost previously moved its bed bank base to Switzerland and much of its operations to Palma, Majorca.

This has proved controversial in the past, with Lowcost interpreted as trying to take advantage of what is seen as Spain’s less rigorous and costly consumer protection rules, compared to the UK’s Atol scheme.

Its move overseas also saw the end of its membership of trade association Abta.

The latest decision to switch operations to Krakow has prompted less widespread concern within the industry than among the employees who are set to lose their jobs.

Lowcost said there will be “considerable cost savings” in moving divisions to Krakow, where it already employs more than 200 staff.

Employees at the group’s Gatwick and Majorca offices have started a 30-day consultation. The Gatwick offices, where 250 staff are based, will be retained but with fewer staff.

Lowcost Holidays will retain its Palma office, and trade supplier Lowcost Beds its headquarters in Switzerland.

The company would not reveal the exact number of staff affected. Under UK law, a 30 day consultation is required for between 20 and 99 redundancies.

Alex Gisbert, chief operating officer, said: “There will be redundancies. We are not closing down, but there are certain departments affected.

“We have done a review and we are re-engineering the business and centralising it in Krakow. We have grown very quickly over the past 10 years and are pleased with how it is going in Krakow.

“We are trying to drive better profits and more efficiencies.”

Paul Evans, chief executive, said: “Unlike other large multinational employers in Poland, we are insourcing [employee own staff] not outsourcing our teams.

“We strongly believe this will drive greater loyalty and a better customer care ethos, making us an attractive employer in a competitive market.”

According to the most up-to date accounts filed at Companies House, for the year to October 31, 2014, Lowcost’s turnover rose to £73.8 million. The group posted earnings before tax and interest of £2.2 million, turning around a loss of £1.6 million in 2013.

However, Lowcost posted an operating loss of £210,000 after £40 million of distribution costs and £20 million of administration expenses had been taken into account. ‘Total recognised losses’ for the year were about £922,000.

Staff costs were £9.9 million, up from £8.8 million the previous year, and remuneration for the five directors was £533,000.

A statement on trading stated the directors were satisfied with the performance “given the general economic climate”. It added: “The Group remained focussed on growing its sales in the international markets and continues to carry out significant investment in technology.

“The core profitability of the business has increased as a result of increased revenue from the international markets. The Company expects to deliver further growth from international markets in the coming year.”

Agency consortium Advantage Travel Partnership said no agents had raised concerns. Head of commercial John Sullivan said: “Most agents are a little apprehensive about change and potentially would worry about call centre customer service, but if it is in Lowcost’s control, there is less to worry about.”

As well as Palma, Gatwick and Krakow, Lowcost Travel Group has offices in Switzerland, Atlanta, Sao Paulo and Bangkok.

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