450 travel companies are at a “real risk”Including around 160 tour operators
Tough trading in the travel industry
Travel companies are finding it tough, according to a report from Company Watch. The report says that there are 1,800 (26% of the UK travel industry) with a “warning rating”.
Of these, 450 are at “real risk”, including around 160 tour operators.
The H Score
Information analysed by Company Watch is given a ‘H Score’. This is derived from a company’s published financial results and how closely the accounts resemble those of companies which subsequently failed.
A company spokesperson said:
“We actually predict if a company will fail, which we can prove with the information we hold on the report.”
Company Watch reports on various industries on a regular basis. In a report based on the construction industry last year, Companies Watch warned of the possible failure of two companies.
“There were two main companies that we knew where going to go into liquation and they did do. [This was based] purely on the H Score.”
To help to protect their money, holidaymakers need to be aware of who they are booking with, and if the company provides financial protection. The protection provided depends on how the holiday was booked, and what it contains.
All package holidays sold in the UK should include financial protection, should their travel company go out of business. This means that the holidaymaker should get a full refund if they haven’t travelled, or be repatriated if they are enjoying the holiday at the time of the company closing.
Package holidays also provide holidaymakers with other legal rights should there be a problem with the holiday.
ABTA, which uses a bonding system, last year found more than 100 travel businesses that were selling package holidays without having proper financial protection in place.
These companies were referred to the relevant authorities.
Atol covers holidays with flights
People booking a holiday that is ATOL protected should always receive an ATOL Certificate.
Financial protection from travel companies is usually provided by bonding, trust accounts or by insurance.
Just checking that a company provides financial protection isn’t always a guarantee. Low Cost Holidays did state that their holidays were covered.
However, as they were based in Spain, the guarantee did not match that provided by UK companies. It turns out that while EU companies based in a member state can sell their services to someone in another member state, they don’t have to provide the consumers rights that the client could get locally.
A pan European financial protection scheme is something that Frank Brehany, Consumer Director for HolidayTravelWatch called for in a speech to the member states, but there “was no appetite for it whatsoever”.
“We need to be careful as consumers about those contracts that we make, and make sure that there is adequate consumer protection in place.”
ABTA – a ‘record low’ number of failures
In a statement, ABTA, the Travel Association, said that the association was experiencing a “record low” in the number of members failing. Also that the members’ strategies for adversity had to match the standards set by the association.
Around a third of the holidays for this summer will be booked during January and February. However, instead of stories about great deals and new places to visit, there are warnings of scams, misleading advertising and collapsing companies.