Experts query the timing of collapse

Lee Hayhurst

The timing of Lowcost Travel Group’s failure ahead of the peak travel period raised eyebrows in the trade, with claims that Brexit caused the collapse dismissed as “unhelpful” and “untrue”.

The online travel agent and

trade supplier collapsed at an unusual time for a holiday firm when it should have collected most revenue from customers. Steve Campion, managing

director of Holiday Discount Centre, estimated Lowcost should have had about £20 million of customer money for holidays yet to be taken. “If it’s run out of cash now, that’s

a pretty big hole in the accounts,” he said. “I find it odd that Lowcost has run out of cash at this time.” Sources suggested Lowcost was

selling rooms for less than it paid for them and yet was one of the UK’s heaviest travel advertisers on Google. “Given the margins Lowcost

was working on, you would have to question that,” said Campion. The inference that Brexit tipped

Lowcost over the edge came from Finbarr O’Connell, a partner at administrator Smith & Williamson. He said the group experienced “significant market headwinds” before the referendum and “this was compounded by the Leave vote itself” and “fall in value of the pound”. However, Steve Byrne, managing

director of Travel Counsellors, said: “You do not go bust because of two weeks of poor trading. Someone has taken a view at this point in the cash cycle that this was the time to go. “Anyone who’s saying Brexit

is having a dramatic impact on bookings is just not being helpful – and it’s not true. “In the weeks after the

referendum, we saw a reduction, but it’s bounced back. There have been price movements because of the exchange rate, but not massive.” Lowcost’s concerns about Brexit

prompted it to email its customers on June 22 to encourage them to vote Remain.

Agents quick to step into breach

Hollie-Rae Merrick

Agents have worked around the clock to “pick up the pieces” and rebook thousands of customers who booked direct with Lowcost Holidays.

But the effect on trade bookings appears to have been less than feared, with many agents reselling Lowcostbeds’ accommodation in Atol-protected Flight-Plus arrangements as members of Atol-accredited groups. Travel Weekly understands

some agents also had payment- on-departure agreements with Lowcost, and others had reduced their share of business with the firm due to concerns about its lack of an Atol. Spear Travels was among the agencies to heed the CAA’s warnings in 2013-14 and stop working with Lowcostbeds. Managing director Peter Cookson said: “We will be picking up the pieces because people [who booked direct] have come to us wanting alternative accommodation.” Alistair Rowland, group

general manager of Midcounties

Co-operative, said the firm had “a couple of hundred bookings with Lowcost” that were protected by failure insurance. Julia Lo-Bue Said, managing

director of Advantage Travel Partnership, said the number of her members affected was low and the booking volumes minimal. “If ever there was a time for

agents to demonstrate their value, it is now,” she said. “They can prove the value of an agent can’t be matched.” Steve Byrne, managing director

of Travel Counsellors, said the firm had 1,500 bookings with Lowcost, accounting for 4,000 customers, and all the bookings were protected under its trust. The firm’s 24/7 duty office and a special team worked until 3am on Saturday to resolve any issues. Byrne said: “We sorted out 70%

of customers within 24 hours and are working through the rest.” Steve Campion, managing

director of Holiday Discount Centre, said there was “no huge financial exposure for agents”. He added: “Agents are well versed in dealing with these situations, particularly after the failure of

On Holiday Group in 2014.” › Talk Back, page 15

21 July 2016 5

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