One of the pioneers of the dynamic packaging sector in the UK, bed bank On Holiday Group, has entered administration with forward bookings worth £19 million.
Discussions with another bed bank to take on On Holiday Group’s bookings broke down last night and staff were informed this morning that the business was to close.
The collapse of On Holiday Group Accommodation, which incorporated trade supplier Holiday Brokers came after failed talks to protect forward bookings.
Steve Endacott, chief executive, said the hoped-for deal with another bed bank “would have minimised disruption to customers and On Holiday Group’s travel agency partners”.
But he added: “However, we are saddened to report that only one bed bank was willing to complete a deal to help their travel agency partners.
“Unfortunately, the deal floundered last night because of deliberate and inaccurate leaks to the Spanish press along with legal complexities relating to the client account.”
The collapse of On Holiday Group is expected to leave its creditors, primarily overseas hotels, with unpaid debts of at least £7 million.
Endacott said monies received from agents were being held in ring-fenced client accounts and would be returned in the next few days.
However, clients will have to pay their bills in-resort and claim refunds from agents.
“I am absolutely gutted and deeply sorry to have to have to tell 65 people that they will lose their jobs, unless the administrator can find a buyer willing to take them on in the next few weeks,” said Endacott.
Endacott claims his company was “destroyed” because HM Revenue and Customs (HMRC) was withholding £4.5 million of disputed Toms VAT.
The chief executive of the trade supplier said this left it unable to pay hoteliers and with no choice but to cease trading.
Efforts to sell On Holiday Group, which incorporated bed bank Holiday Brokers and employed 65 people, as a going concern were unsuccessful.
“We have had extensive and detailed discussions over the last six months with a number of interested parties.
“However, all deals have floundered because of the £4.5m VAT dispute and its inherent risks. We would have liked to resurrect these discussions, but we have run out of time,” said Endacott.
Endacott called the timing of Wednesday’s Medhotels victory against HMRC in a £7 million VAT case “ironic and maddening”.
He said: “We are obviously glad that it gives a virtually guaranteed £4.5 million payout to our hotel partners; however it is likely that this will take a further six to nine months to secure from HMRC and we have had legal advice that we cannot trade until this point without going into administration.
“I am outraged that HMRC has been able to take £4.5 million of disputed VAT charges on a ‘guilty until proven innocent basis’ and it has taken a ridiculous four years to receive a Supreme Court ruling that ratifies all our legal advice that we were acting correctly as the agent of the hotelier and HMRC was wrong in its stance.”
On Holiday Group’s trading partner Euro Rooms Direct has also stopped taking forward bookings.
Endacott’s other investments, including Holiday Taxis, Rock Insurance, CWT Digital, Internet Travel and Luggage Mule, are not affected.
On Holiday Group was set up in 2003 by Endacott, previously Airtours commercial director and MyTravel tour operations managing director.
The group of businesses included hotel booking website Holiday Nights, as well as Fresh Holidays, 118 Travel, flightandhotel.co.uk and PortAventura Holidays. It also operated Spanish hotel booking site reserva123.com.
On Holiday Group was a member of the Midcounties Co-operative consortium and operated under its Atol licence, and its consumer websites selling licenced product are expected to continue to trade.
On Holiday Group struck a deal with Midcounties in 2012 to create dynamic packaging brand Co-op Recommends offering exclusive deals.