THE collapse of city-break operator Travelscene has exposed
widespread confusion in the trade on the lack of consumer
protection on accommodation-only products.
It has emerged that Travelscene’s accommodation-only brand
Citybedz, which traded under subsidiary company Austro Tours,
operated outside Travelscene’s ABTA bond.
It remains to be seen how many agents will be forced to pay out
to customers over unfulfilled bookings, but ABTA said there are no
grounds for Newman Street to offer refunds.
The revelation, which comes with the loss of 61 jobs at
Travelscene, leaves a bitter aftertaste following the resignation
of ABTA president John Harding, Travelscene sales director, who
campaigned for bonding loopholes to be closed. When he first took
the role of president, Harding controversially called for the
failure of a no-frills carrier to highlight the dangers of DIY
packaging (Travel Weekly May 26 2003).
New Monarch Scheduled managing director Tim Jeans said:
“It’s a rich irony that John Harding’s company has gone
bust. I have every sympathy for all his staff, but I was
incandescent with rage when that comment was made because it was so
irresponsible.”
It’s believed the reason to leave Citybedz – which
offered agents up to 50% commission – out of
Travelscene’s ABTA bond was to cut costs and reflects the
demanding state of the market.
An ABTA spokeswoman said: “John is within his rights to operate
an unbonded company. It signifies how tough the market is.”
Association of Independent Tour Operators chairman Martin
Garland said the revelation left ABTA in a “tricky position”. “It
highlights a significant loophole in the law that AITO has been
campaigning for. We don’t want to say ‘we told you
so’, but it demonstrates this issue.”
Questions have been raised over whether agents knew Citybedz was
unbonded. The brand represented 25% of the operator’s
business, or 3,750 passengers. At the time of Travelscene’s
failure there were more than 5,000 clients booked, with £1.5
million owed to 1,000 creditors – 75% of which are
hotels.
Harding said he did not regret the fact Citybedz was unbonded.
“A greater percentage of the short-breaks business was moving
towards accommodation-only, and we were having to compete with the
majority of suppliers who were non-bonded,” he said. “I’m
sorry we went before a low-cost carrier did, but it’s still
true. The playing field is still not level.”