More than 40 commercial property travel agencies crashed in 2011 thanks to the economic downturn and disasters worldwide.
Research reveals, the economic downturn, Arab Spring and the natural disasters have combined with increased internet bookings to force 41 UK commercial property travel agents into bankruptcy during 2011.
The woeful year for the travel sector has made the deficit worse for the compensation pot that looks after holidaymakers when tour operators collapse. The Air Travel Trust (ATT) Fund is £42.3 million in deficit, a 33% increase on last year.
Anthony Cork, a partner at accountants Wilkins Kennedy, who conducted the study, said: “With Thomas Cook forced to go through a dramatic restructuring programme and a number of major tour operators, such as Holiday 4 UK and Dream Holidays, ceasing trading over the last year, the travel industry is clearly suffering.”
He further added: “Lower real incomes as a result of higher inflation have greatly impacted consumers’ discretionary spending. Rising unemployment is also causing many to worry about their job security, so they are holding off booking their holidays or downsizing their holiday plans.”
The accountants added that uprisings in the Middle East and floods in Asia have hit bookings, especially to popular package destinations such as Egypt, Thailand, Morocco and Tunisia. Nonetheless, the long term trend is for travellers to bypass traditional commercial property operators and tailor their own packages by way of the internet.
Mr Cork added: “The internet has turned the traditional tour operators’ business model on its head. People are increasingly confident in booking their holidays online. Rather than booking from a catalogue months in advance, they use low-cost airlines, put together the components themselves and wait for last-minute special-offer hotel deals.”
The accountants warned that the Civil Aviation Authority, which administers the ATT fund, will come under great pressure to plug the deficit by increasing the tax, which stands at £2.50 per package holiday.
The accountants said: “It is inevitable that if there continue to be more insolvencies within the industry, the level will increase. Travel companies will have to raise their prices to reflect that, making it even more expensive for customers to go on holiday.”
Wilkins Kennedy’s melancholy review of the year came as a separate study found that Britons booked an increasing number of holidays in the UK in 2011. A survey carried out by Travel Company Expedia.co.uk found that Britons made 7% more bookings for trips in Britain than in 2010. Turkey and Spain gained more UK visitors as holidaymakers turned away from some North African countries. The most popular place for travellers was southern England, followed by London.
The survey of booking patterns also showed that commercial property hotel bookings for Madeira, the Greek islands and the Algarve, as well as Kenya and European destinations such as Tallinn in Estonia and Sofia in Bulgaria, had growth of 25% this year. Expedia UK and Ireland managing director, Andy Washington, said: “This year has highlighted the mixed approach to holidaying taken by Brits in troubled times. As some are drawn to holidaying at home, others look for alternative destinations, with Spain and Turkey particularly growing in popularity during the Arab spring.”
