One question has been asked more than any other since news of the collapse of Goldtrail Holidays broke on travelweekly.co.uk last Friday night: why now?
The Turkey specialist ceased trading on the last weekend of the summer term for English schools with 16,000 clients abroad and 150,000 booked to travel.
Although speculation had been rife for some time that Goldtrail was in trouble, the timing of the failure surprised many. Even the Civil Aviation Authority was unprepared, with head of licensing Andy Cohen admitting the demise has been “a shock for all of us”.
Questions to be answered
Administrators Begbies Traynor, who were appointed on Friday, are coming across more questions than answers. Partner Jamie Taylor said: “Normally we ask firms why they didn’t go into administration earlier, but in this case the question is why did they go under so quickly?”
Evidence suggests that when director Abdulkadir Aydin went into work on Friday was not planning to pull the plug. The firm paid out £1.3 million to six airlines on the day it went under. Taylor said: “It didn’t seem to be in his mindset that he was putting it into administration.”
Taylor denied press speculation that Aydin had fled to Turkey. “He’s in the UK and he’s willing to talk to us.”
Pile ’em high, sell ’em cheap
The failure cannot be explained away by a cash shortfall. One industry expert said the operator was likely to have been holding 80% of its annual turnover. As a Turkey specialist, Goldtrail would have benefited from the recent increase in demand from Brits seeking to avoid the costly eurozone.
However, in recent years, Goldtrail has been plagued with accusations of “horrendous” customer service issues and poor accommodation.
The operator was featured on BBC’s Watchdog in March 2009, with former customers talking of sun loungers “caked in people’s sweat” and a cat eating the breakfast buffet.
Agents said the operator would change flights and hotels at short notice, leaving them to sort out the mess.
While some high street agents put them on stop-sell, others admitted they felt they had no choice but to book Goldtrail because there was a demand for cheap holidays.
Commenting on Goldtrail in 2009 when it expanded into Greece, Mike Greenacre, managing director of The Co-operative Travel, said: “Demand for this product is driven by price rather than quality, evidenced by the larger-than-normal level of complaints.”
Online dynamic packagers such as Travel Republic and On the Beach also sold high volumes of flight-only supplied by Goldtrail, a market estimated to have been 75% of its business. With prices as low as £49 each way, others could not compete.
Rather than prompting its demise, this approach apparently made Goldtrail profitable. In the year to September 30 2009, it turned over £54 million and made a profit of £445,000, an increase on 2008.
However, company accounts for 2009, prompt questions. One striking figure is a huge jump in prepayments to hotels in Turkey and airlines, from £1.2 million in 2008 to just under £4 million in 2009.
A victim of its own success
Another anomaly was an increase in Goldtrail’s wage bill by £200,000 over the year to £771,604, despite the number of staff falling from 21 to 20.
Abhi Dighe, head of Amathus Holidays, worked for Goldtrail until August last year. He painted a picture of a company that was a victim of its own success.
He said: “It had real issues from growing quickly in a short period and not keeping up its quality control and infrastructure.”
Dighe said the operator’s model meant it would commit to a large amount of flights and, on a lesser scale, hotels, for both Turkey and Greece. He added: “A lot of their commitments were whole aircraft, especially on the Turkish routes.”
Another ex-employee Joe Lavers said: “There were a lot of things I was uncomfortable with there but I never thought things were as bad as this.”