Although this is nothing to do with the timeshare industry, it was felt that an article on this company was needed.
Lowcost Travel Group announced on Friday 15 July 2016 that it had been placed into administration, the company dealing with this is: Smith & Williamson and CMB Partners. Customers are instructed to contact Martyn Frazer or Paul Stagg at the following email address: [email protected]
It is believed there are currently around 27,000 customers already at resorts, and 110,000 with bookings, who have yet to travel. For those already on holiday, there should not be any problem as their flights and hotels should have already been paid for. It is those yet to travel who will have the problems. The reason for this is the company operated on very narrow margins, it relied on new bookings to help the cash flow and pay for flights and hotels of those already booked. This does seem a little odd, that a company can operate in this way, using payments from new bookings to pay for ones booked earlier. But apparently this is not unusual in this sector of the industry.
Lowcost Travel operated from bases in the UK, Spain, Switzerland and Poland, the number of job losses will be: Gatwick 120, Krakow 264, Mallorca 60 and Switzerland 7.
Although the redundancy numbers are low, it is the cost to the customers that will be the greatest. Those with bookings and yet to travel have been advised they may have to cover the costs of flights, pay transfers and hotel accommodation locally. They may be able to claim back through travel insurance or credit cards, but the CAA (Civil Aviation Authority) who operates the ATOL (Air Travel Organisers Licence) scheme which is a safety net for these eventualities, has stated that these holidays are not covered by them. The reason is that Lowcost Travel relocated to Spain and being registered as an entity in Mallorca, are not in the CAA jurisdiction, the CAA warned about this in 2013. Lowcost Travel had dismissed this by stating they were covered under the Spanish scheme.
So why did this happen?
The reasons being given are, that due to the Brexit referendum, many customers delayed making their bookings, resulting in the cash flow problem, then there was the fall in the pound against the euro after the leave vote. This had the impact of reducing bookings further as they became too expensive. The Guardian newspaper published an article 10 July 2016, on the number of people opting for holidays at home, the article stated that it would cost an extra £245 for a family of four because of the 10% drop in the pound. (see link at the end).
Other reasons are the increased terror threat, which has impacted the travel industry. The list of destinations according to Smith Williamson are: Egypt, Turkey, Tunisia, Orlando, Brussels, Paris and this list will now include Nice.
Lowcost Travel was founded by Paul Evans in 2004, he had previously been resort manager for Club 18 -30. According to their last filed accounts, in the year up to October 2014, they had sold holidays to the tune of £477 million, with a pretax loss of £47,000. It is not hard to see what the impact a drop in bookings would have by these figures.
If you have booked and require any information please go to the following links.
The above link has email addresses for customers who have booked with any of the companies not covered by the administrators.
The Guardian article on UK tourist industry.
BBC News link
Links to information on Section 75 and how to claim from your credit card.
If you have any questions about timeshare or holiday ownership, resales or claims, Inside Timeshare will find the answers.