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Apartments Abroad: Bed bank bosses predict more failures

The collapse of Apartments Abroad on January 21 has prompted predictions of more failures in the accommodation-only sector.


Other bed banks said Apartments Abroad, which was one of the first companies to launch in the accommodation-only sector, had failed because it did not offer volume.


Youtravel.com sales and marketing director Paul Riches said: “It’s indicative of the speed of change in the accommodation-only market. Apartments Abroad was a very well-run, established and traditional business but we’ve seen an explosion in online retailing and the rise of the no-frills airlines in the past five years and it seems they didn’t adapt their business model to compete.


“Much like traditional tour operating, you need to either have your niche or be volume-driven, and not get stuck somewhere in the middle.”


On Holiday Group chief executive Steve Endacott added: “It is a natural progression that the number of players will shrink. The bigger are getting bigger and the smaller companies are getting squeezed.


“The market has now reached maturity with one market leader, Hotels4u and Med Hotels, then the On Holiday Group and youtravel.com – then a big gap. If you’re in that gap, you’re in trouble.”


Getabed.co.uk managing director Matt Stuart predicted further consolidation in the bed bank sector, as companies reliant on Mediterranean destinations are hit by the weak pound.


“The accommodation-only sector has already seen huge consolidation in recent years with both Hotels4u and Medhotels being brought under Thomas Cook umbrella. I believe this sector may still see further consolidation before the year is out, as in many European beach destinations, there is still oversupply.


“Plus, companies with large reliance on western Mediterranean destinations will continue to suffer this year as the pound will not strengthen a great deal, and could actually weaken back to near parity.
 
He added: “We are keeping a keen eye out for any potential acquisition opportunities, as there may be some bargains to be had as companies fail to recover from the downturn.”

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