An economic recession will shake out the accommodation-only sector, says the head of a leading provider to the trade.
Bluebookonline managing director Philip Read warned: “There is a recession coming in the UK and some of our competitors, working on very low margins, are at risk. There will be casualties and consolidation.”
Read estimates 50% of the booming sector’s business provides no financial protection to consumers and no insurance for retailers in the event of injury to a client overseas – when providing both would add just £1-£2 to the price.
Speaking at World Travel Market yesterday Read said: “There will be blood on the carpet for agents.”
Bluebookonline was among the first accommodation suppliers to the trade, launched out of the back office of a south London travel agent in 1996 to sell land services in the US.
It has been wholly online since 2002 and sells almost exclusively through the trade in the UK, providing financial and liability protection through a trust account.
However, half the rapidly expanding company’s £15 million in annual business now comes from outside the UK, with a Cairo sales office and website opened this month to serve the Middle East.
Read anticipates hitting £25 million in annual turnover next year and £100 million by 2010.
Ninety percent of Bluebookonline’s business comes through accommodation sales, with the remainder comprising transfers and sightseeing trips. The firm pays an average 13% commission on agency sales.