The failure of two small tour operators in the past few days hasn’t yet raised alarm bells in the industry, but there are concerns about the impact of this summer’s tough trading.
Online agents tipped to be most at risk of failure
The failure of two small tour operators in the past few days hasn’t yet raised alarm bells in the industry, but there are concerns about the impact of this summer’s tough trading.
On Monday it was confirmed Turkey and northern Cyprus operator Lorenz Voyager Travel had joined Students Adventures on the late-summer casualty list.
However, ahead of the autumn, the traditional time for failures, there are fears of a flurry of collapses, with online agents said to be most at risk.
Privately, industry regulator the CAA was said to have expressed concerns, although a spokesman declined to make any comment on trading prospects for Atol-holders.
Alan Bowen, legal adviser to the Association of Atol Companies, said OTAs had probably had a difficult summer because the crucial lates market never materialised.
He said this would have had an impact on cashflows, particularly as competition has pushed up the costs of marketing online, whether on Google or other deal-publishing platforms.
“Mainstream operators were selling packages at ludicrous prices,” said Bowen.
“Obviously, if you can get a package for £150 why would you go to the stress and strain of putting it together yourself?
“There was a lot of excess capacity and that’s not good for OTAs.”
The CAA is currently consulting on stricter regulations for smaller firms turning over less than £5 million a year – the vast majority of Abta and Aito members with Atols.
Observers say this indicates the degree to which the CAA is determined to prevent these firms posing the greatest risk to the Atol financial protection scheme.
Abta has branded the plans “over the top”, but Bowen said: “The CAA is probably right to say we need to know more information about these people.”
