p5 news June12 10/6/09 21:29 Page 5
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news
Low interest rates
hit agency profits Morgan snaps up
RECORD LOW interest rates could force travel
agencies into administration, according to a
study.
Analysts at PricewaterhouseCoopers warned
falling sales, squeezed margins and the 0.5%
two HWT outlets
interest rate meant many could suffer the same
fate as Harvey World Travel.
Chris Gray.
Harvey World shops, in Nor-
The accounts of 20 Abta members were HARVEY World Travel failed wich and Wymondham, both
studied as part of the research. by becoming too centralised formerly part of East An-
Russell Glass, a senior manager in the travel and losing touch with glian miniple Galaxy Travel.
sector for PwC, estimated an average reduction its customers, an agent who Buckell said the shops
in pre-tax profits of 55% and said there was a has bought two of the were losing about £30,000
“real danger” agencies would go to the wall later chain’s outlets has claimed. a year but had loyal
in the year. Miles Morgan of Miles customers, and that cutting
The total cash balance of the 20 agencies was Morgan Travel bought two costs would help make them
£368 million, while the average interest received of the 16 Harvey World shops profitable quickly.
was £920,000, calculated when rates tipped at that remained after 25 were Buckell had hoped to buy
5.4%. But as the Bank of England has cut rates to sold to Vacation World, a another five shops in a joint
0.5% the average figure will plummet to £92,000. firm set up by Harvey World’s venture with Hays Travel
Glass said: “Even if an agent makes the same previous owner, Stuart Miles Morgan has bought two HWT shops boss John Hays, but the
sales and gross profit margin as last year, Arnott, and 16 others closed. deadline for bids closed on
the pre-tax profit will be decimated by the lack of Morgan’s two acquisitions, in Yeovil and Wednesday before a deal could be settled.
interest received.” Taunton, are making losses on a turnover of £2 Former Galaxy Travel owner Geoff Blagg has
He said a travel agency’s business model is million each, which he blamed on excessively also said he is interested in acquiring the East
such that for every £1 it makes in operating profit high cost bases and a failure to meet demands Anglia properties.
it makes a further £1.08 in bank interest income. from local customers after Harvey World bought Administrators Tenon Recovery reported
The study revealed the growing lates market them from West Country miniple Lets Go Travel. growing interest in the remaining shops, with
also has a negative effect on interest received as Harvey World’s tie-up with Virgin Holidays was five parties making offers. Bidders are due to
agencies have cash for shorter periods of time. a prime example because it concentrated on hear if they are successful today.
Gatwick departures rather than alternatives such Morgan’s new shops will be part of the Hays
as Bristol, Birmingham and Cardiff, Morgan said. Independence Group, along with the 25 sold to
Peter Buckell, managing director of Norwich Vacation World, and other bidders were thought
In brief
agency Global Travel Lounge, has bid for two to be liaising with Hays.
■ BAA traffic falls in May – except at Edinburgh
Edinburgh was the only airport owned by BAA to
record a rise in passengers in May, with numbers
up 1.4% to 821,700 compared with May 2008.
Stansted suffered the biggest decline, down
18.5%, while passenger numbers fell 3.9% at
Heathrow, 6.5% at Gatwick, 11.7% at Glasgow,
12.5% at Southampton and 14.1% at Aberdeen.
■ Turkey specialist Scottravel Holidays folds
Glasgow-based operator Scottravel Holidays
ceased trading last week with 1,300 customers
overseas and tens of thousands of forward sales.
The Turkey specialist operated mainly through
Glasgow, Edinburgh and Aberdeen airports to
destinations such as Marmaris. It was unrelated
to Buckinghamshire-based agency Scott Travel. FACE OF TRAVEL: Meet 24 of travel’s brightest who are gunning for the
TTG Face of Travel 2009 title this year. They are just a small selection of
ttglive.com
For the latest news, reviews and comment
entries so far, and we have extended the deadline
from the travel industry, visit ttglive.com by one week. Enter now at faceoftravel.co.uk
12.06.2009 05
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