Tour operators are having to work harder than ever to source secure banking facilities for customers’ holiday deposits, according to Classic Collection Holidays managing director Nick Munday.
Munday, who claimed the recession was “shaking the fabric of the travel industry”, said he was spending two hours a day sourcing the best bank rates for the tour operator’s deposit fund of £7 million.
The banking crisis has shaken confidence in the sector and has been compounded by the fall in interest rates to 1% last week, he said.
“I spend two hours a day looking at where to put that money for it to be safe. It’s trying to ensure client money is being well looked after,” said Munday, whose company is now working with seven different banks and looking to work with more.
He added: “A year ago we were chasing the highest rates of interest; there was never a thought that banks could go down the toilet.”
Travel companies are under no obligation to keep company funds and customer deposits separate so money is often kept together in one bank account. The interest rate drop is likely to have hit the rates earned by companies across the trade.
Bank of Ireland and the Allied Irish Bank, which are to receive a £6 billion government aid package, have been traditionally used by travel companies to invest in, added Munday. “These are banks that have been recipients of large amounts of the industry’s money,” added Munday.
Barclays head of travel Chris Lee said the tendency for travel companies to shop around for the best rate was not a new phenomenon but warned: “If customers find rates at smaller banks we advise them not to just look at the reward [interest rate] in isolation but also to consider the bank’s credit grading and its risk profile.”